What Is IRS Form 941: Employer's Quarterly Federal Tax Return?
In general, an employer must electronically transfer to the Internal Revenue Service (IRS) withheld employment taxes on a monthly or semiweekly basis. This includes withheld federal income tax, and the employer and employee share of Social Security and Medicare taxes. Then, once a quarter, the employer reports these payments on Form 941, Employer’s Quarterly Federal Tax Return.
How to File Form 941: Employer's Quarterly Federal Tax Return
Form 941 is six pages consisting of five parts. At the top of page 1, the employer provides a name (including a trade name if one is used), address, and employer identification number (EIN). Also, the employer indicates the filing period:
- First quarter (January, February, March)
- Second quarter (April, May, June)
- Third quarter (July, August, September)
- Fourth quarter (October, November, December)
Part One is where the employer reports the number of the staff employed, their compensation, and the taxes owed. This part also shows whether the employer owes taxes (balance due) or has overpaid employment taxes. Any overpayment can be applied toward the next quarter or received as a refund. The choice is indicated by checking the appropriate box on Line 15.
Part Two, which begins midway on the second page, explains the tax deposit schedule for employment taxes. The deposit schedule for most employers is either monthly or semiweekly. If depositing monthly, a breakdown of tax liability by month is entered here. Employers depositing taxes semiweekly explain their tax liability for their deposits on Schedule B. There is a next-day deposit requirement for taxes exceeding $100,000. Taxes of less than $2,500 can be paid with the form and need not be deposited.
In Part Three, the employer must answer two questions: did the business close or stop paying wages (and the date this happened), and is the business a seasonal employer (and thus filing a return every quarter is not required).
Parts Four and Five
In Part Four, the employer is asked whether they will authorize an employee, paid tax preparer, or another third party such as a Certified Public Accountant (CPA) to speak with the IRS regarding the return. If yes, the employer must provide the designee's name, phone number, and a self-selected five-digit personal identification number so the IRS can confirm the person's identity.
In Part Five, the employer signs, dates and provides a daytime phone number.
If the employer used a paid preparer to complete the form, the preparer must enter their information in Part Five. This includes name, Preparer Tax Identification Number (PTIN), firm name, EIN of the preparer or the firm, address, and phone number.
Should the employer owe employment taxes for the quarter, payment can accompany the filing of Form 941. Using the Form 941-V: Payment Voucher will help the IRS process the payment correctly.
Form 941 is available on the IRS website.
Taxes Reported on Form 941: Employer's Quarterly Federal Tax Return
As mentioned earlier, Part One is where the employer reports the amount of taxes paid on wages, tips, and other compensation. There are four types of taxes:
- Federal taxes withheld from employee wages (Line 3).
- Social Security taxes (Lines 5a and 5b). The tax rate is 12.4%, covering both the employee and employer share.
- Medicare taxes (Line 5c). The rate is 2.9 percent, covering both employer and employee share.
- Additional Medicare taxes on compensation over $200,000 (Line 5d). The tax rate is 0.9% and is paid solely by the employee.
Special Considerations When Filing Form 941
For Small Employers
An employer that owes employment taxes of $1,000 or less for the year can file Form 944, Employer’s Annual Federal Tax Return if given IRS permission to do so. Call 800-829-4933 or send a written request, as you must receive permission before filing this form instead of Form 941.
If you need to correct Form 941, use Form 941-X, Adjusted Employer Quarterly Tax Return or Claim for Refund. For example, if wages were understated or Social Security tax on tips was overstated, and you discover the error, this form is used to correct it.
The Bottom Line
Employment taxes are a big responsibility. Learn more about what payments to employees are taxable and how to figure employment taxes in IRS Publications 15 (Circular E) and 15-B.