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What Every New Employer Needs to Know About Form 941

If you’re a business owner, you probably know about Form 941. But if it’s your first time to start a business, you may be confused with all the tax forms you need to deal with.

So, here’s a primer on Form 941, the quarterly form you probably need to file when you hire employees. 

What is Form 941?

Form 941 is an IRS form known as the Employer’s Quarterly Tax Form. As an employer, you need to remit the income taxes and other payroll taxes you withheld from your employees. This form reports those taxes.

Your Form 941 contains all the information related to income and payroll taxes withheld for the quarter.

Am I required to file Form 941?

Any business or person who pays wages to an employee needs to file Form 941. There is an exception if you only employ household employees, such as a nanny, or farm employees.

When you’re required to file Form 941, you need to file the form even for quarters where you didn’t hire an employee. You file in every quarter where you paid wages.

Seasonal employers are not required to file this form if they don’t have employees for one or more quarters. However, they need to mark Line 18 on the form each time they file to let the IRS know that they won’t be filing for the quarter one quarter.

Is there another option if the taxes I remit are not that high?

If you think your total employment taxes for the calendar year will be $1,000 or less, then yes. You may request to file Form 944, the Employer’s Annual Federal Tax Return, instead of the quarterly Form 941.

Make the request to the IRS by calling the IRS between January 1 to April 1 of the applicable year or send a written request from January 1 to March 15 to the IRS offices at Ogden, Utah or Cincinnati, Ohio.

After sending your request, wait for the written notice from the IRS that your filing requirements have been changed to Form 944. If you don’t receive this notice, you need to continue filing Form 941.

What do you report in Form 941?

IRS Form 941 will ask information about the number of employees under your employ, the wages they received and how much tax you withheld from their pay. It also reports the employer’s portion of the payroll taxes. Always consult your payroll figures while filling out this form. And don’t forget to include all taxable tips.

Aside from taxes withheld, you also need to remit payments for Social Security insurance and Medicare.  

How can I file Form 941?

You have two options when filing Form 941 – do a paper filing or file electronically. The IRS encourages all taxpayers to e-file, but you can still file a paper return.

E-filers can choose from this list of providers designated by the IRS. Take note that you’ll need your EIN for e-filing, and you may have to pay a fee when you file electronically.

Most of the time, you will receive the e-file acknowledgment within an hour. However, when the IRS is processing a high volume of returns, you may have to wait up to 48 hours.

What if I’m closing my business?

If you’re closing your business, you should file a final return where you check Line 17 to indicate the last date you paid wages. Moreover, you need to attach a statement to the return indicating the name of the person who will keep the payroll records and his or her address.

When should I file Form 941?

The deadline for filing Form 941 is the same whether you a file paper return or an electronic return. The deadline for filing your Form 941 is on the last day of the month following the close of the quarter. This means that filing deadlines are on April 30, July 31, October 31 and January 31.

For electronically filed returns, you have until midnight to complete your submission. Returns filed after midnight of the deadline may be subject to penalties.

If you file a paper return, the IRS will treat the form as filed on time if you send those forms through the post or any private delivery service designated by the IRS on or before the due date.

I filed my Form 941, is that it?

Not yet. This is just the first step. You still need to reconcile all amounts you reported on Form 941 to Form W-2 amounts. You need to input all this information on Form W-3 Transmittal of Wage and Tax Statements and make sure the figures match.

Your W-3 Form along with the Form W-2s should be submitted on or before January 31 of the following year. And before you submit these forms, make sure that there are no discrepancies. So, if you committed an error, you may amend the form with Form 941-X.

Managing your business while dealing with taxes can be stressful. And remember, your Form 941 is just one of the many tax forms you have to complete.

Depending on the circumstances, it may be better to hire professionals to help you with doing these tasks and ensuring that all your numbers are accurate.

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