IRS Form 941 Explained - 2023 Updates
Employers are responsible for keeping track of taxes for themselves, the business, and their employees to ensure compliance with the IRS tax code, and one of the tax forms that are utilized to manage payroll taxes is form 941.
IRS form 941 is the employer’s quarterly federal tax return form that is used for determining their tax liability owed to the IRS.
TABLE OF CONTENTS
- IRS form 941 must be completed by the last day of each quarter of the year, including March 31, June 30, September 30, and December 31. In the case that the last day of the month falls on a Saturday, Sunday, or legal holiday, form 941 can be completed the following day.
- If the Social Security and Medicare taxes on Form 941 differ by fractions of cents from the total on your payroll records due to rounding up or down each time you worked on the payroll for an individual employee, you must adjust the amounts you reported to correct the tax liability.
- Taxpayers with a monthly deposit schedule must use Part 2 of Form 941 to report the combined sum of withheld federal income taxes, Social Security, and Medicare taxes for each month. Employers with a semiweekly depositing schedule must instead use Section B (Form 941).
What Is IRS Tax Form 941?
IRS tax form 941 is the employer’s quarterly federal tax return form that helps them determine how much they owe in taxes to the IRS. Within this form, the employer can report the wages paid to their employees and the tips reported by their employees. Additionally, form 941 is used to report employment taxes, such as federal income tax withheld, Social Security and Medicare tax withheld, and the employer’s share of Social Security and Medicare tax.
Every time an employer files form 941, they must report:
- The total number of employees
- The total wages paid
- The amount of withheld taxes
Using these amounts, they can follow the instructions to calculate what is owed to the IRS.
Do I Need To File A Separate Form 941 For Every Quarter?
Yes, IRS form 941 must be completed before the end of every quarter to be accurately considered by the IRS.
The four quarters of the year are as follows:
- Quarter 1: January – March
- Quarter 2: April – June
- Quarter 3: July – September
- Quarter 4: October – December
This form is due by the final day of the quarter, so each quarter the four forms must be submitted before the deadlines of March 31, June 30, September 30, and December 31 respectively. In the case that the last day of the month falls on a Saturday, Sunday, or legal holiday, the tax return can be filed the following day. See chapter 11 of Publication 15, (Circular E), Employer’s Tax Guide for a full list of legal holidays.
Guideline for Depositing Taxes
Employers are generally required to deposit their taxes instead of paying the tax liability at the time the return is filed. You can file for an additional 10 days after the due date of the return if you have deposited your taxes on time.
Adjustments and Corrections
If the Social Security and Medicare taxes on Form 941 differ by fractions of cents from the total on your payroll records due to rounding up or down each time you worked on the payroll for an individual employee, you must adjust the amounts you reported to correct the tax liability. The corrected difference that must be subtracted or added from the taxes can be reported on the fractions-of-cents line on form 941. An adjustment line can also be used if you were unable to withhold Social Security and Medicare taxes from reported tips or employee wages for sick leave.
Calculating Tax Liability
The tax liability can be calculated by adding the federal income tax withheld, Social Security, and Medicare taxes on form 941 and then making the appropriate adjustments and corrections to find the net total of taxes you owe for the current quarter. If your quarterly tax liability amounts to more than $2,500, use part 2 of form 941 to complete the tax liability if you schedule your deposits monthly.
If you have a semi-weekly deposit schedule and file form 941, your tax liability must be reported using Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors. The IRS uses part 2 of form 941 and Schedule B (Form 941) to determine if employment taxes were deposited on time.
Taxpayers with a monthly deposit schedule are required to use Part 2 of Form 941 to report the combined sum of withheld federal income taxes, Social Security, and Medicare taxes for each month.
The taxpayers who deposit semiweekly must report the combined federal income taxes, Social Security, and Medicare taxes owed for each day on Schedule B (Form 941).
If you want professional help to ensure you reported your payroll taxes correctly, consult with a tax professional at Ideal Tax to feel confident in the accuracy of your return.