A QuickStart Guide to Your Questions About the 941 Employment Tax

In most instances, if you pay employees, you’re responsible for withholding federal income and other payroll taxes and reporting them to the Internal Revenue Service (IRS) on Form 941, Employer’s Quarterly Federal Tax Return. So long as you follow IRS guidelines on how and when to file, the process doesn’t have to be confusing or complicated.

Below is a short guide to common questions that may arise as you strive to meet your business’s federal tax obligations.

What is the 941 employment tax?

The 941 employment tax is not a tax itself, but rather a form used to report the amount of payroll taxes you are paying to the IRS.

With each employee paycheck, you should withhold federal income and FICA (Social Security/Medicare) taxes, report those amounts on Form 941, and pay any sums due to the IRS. You must also report the total number of your employees and the amount of total wages and taxes you’ve withheld.

Other calculations to include on the form: required payroll tax contributions from both you and the employee; amounts already paid to the IRS; and adjustments for sick pay and tips.

Some employers are exempt from filing Form 941 and file other forms instead. For example, those who hire household workers such as nannies must file a Schedule H along with their Form 1040, while those who hire agricultural workers must use Form 943.

Employers with only seasonal workers only need to file for the quarters in which their employees work; therefore, businesses only open during the summer wouldn’t be responsible for filing Form 941 in January, etc.

When must a business owner file Form 941?

Employers must file the form quarterly, at the end of the month following the end of each quarter: April 30, July 31, October 31 and January 31. If the due date falls on a weekend or holiday, it is pushed until the next day.

Note that you may receive an automatic ten-day extension for filing the form if you have paid all of the taxes owed by the due date.

How does an employer submit the form?

You may submit the form electronically through E-file.

How does an employer pay 941 employment taxes?

Although you must file a Form 941 reporting all amounts, you should be paying the taxes either monthly or bi-weekly. You could owe penalties  if you underpay or fail to file a Form 941 in a timely fashion. Employers can make all payments through the Electronic Federal Tax Payment System (EFTPS).

As you can see, meeting 941 requirements is critical to your business. If you have more questions, or aren’t sure if you’re in compliance, call us or send us a message today.