IRS 941 Form

Having employees puts requirements on a business, and one of the most important is making sure you get your IRS 941 form filed on time each quarter.  This is a form that’s due four times a year if you have a business that has employees.  The requirements include making any 941 deposits deemed necessary by the IRS, according to what you’ve paid in the previous twelve months.

As an employer, you have to pay the IRS taxes on wages and tips, and your share of the Social Security and Medicare taxes for each employee.  If you withheld Federal Income tax on your employees’ paychecks, the IRS 941 form is used for that too.

Here are some very important things to know about deposits and payments on the IRS 941 form.  Often a business is required to make deposits to the IRS to cover the amounts due on the IRS 941 form.  The deposit schedule is a regular payment made into the coffers of the IRS and is not to be confused with a payment.  The 941 deposit vs payment difference is an important one, especially if there are disputes down the road with the IRS.



941 Deposit vs. Payment

IRS Deposit vs. Payment

The 941 deposit is an amount sent to the IRS that is equal to the amount thought to the owed on employee taxes.  A deposit is accepted by the IRS but the IRS does not own that money yet.  A 941 deposit is returnable but a payment is not.  A 941 payment is money paid to the IRS on taxes that are due, and is not returnable.  That’s pretty much all there is to the 941 deposit vs. payment issue.

How to Get Your IRS Deposit Back

If there is a dispute over what’s owed, a taxpayer can simply ask in writing to have the IRS form 941 deposit returned.  Not so with a payment.  The 941 deposit, and any IRS deposit, is treated like a cash bond and the taxpayer can ask for it back at any time.  A payment is a payment…the money is gone to the IRS and if the taxpayer thinks there was an error and deserves some or all of the payment back, a claim will have to be filed.

IRS Form 941 Instructions

The IRS From 941 instructions state that employers are required to withhold taxes from your employees’ paychecks.  Every paycheck must have withholding amounts taken out, which is then credited to that employee’s tax account.  Employers must also pay liability for their share of the Social Security and Medicare taxes.  This part is not withheld, but rather paid directly by the employer.  All this is done according to the IRS From 941 instructions

IRS From 941 is used by the employer to report wages paid, Federal income tax withheld, social security and medicare taxes withheld, and tips received by the employees, if any.  The IRS Form 941 instructions state that the form is required each quarter.

There is an exception to the quarterly requirement, according to the 940 instructions.  Seasonal employers who don’t pay any wages during a quarter do not have to file for that quarter.   Also, if an employee is a household employee, the employer does not have to file, according to the IRS form 941 instructions.  Same goes for farm employees…a different form is used.


IRS Form 941

If you own a business with employees, you should be filling out and submitting IRS form 941.  This is a form that’s due every three months and is used to report social security or Medicare taxes, or taxes withheld from wages.

Federal law is very clear on this: employers are required to withhold taxes from their employees’ paychecks.  Every time a paycheck is issued to an employee, money must be taken out of the total amount, and paid to the IRS.  This money is for federal income tax, social security tax, and Medicare tax.

Employees pay into social security and Medicare and so do the employers on behalf of each employee.  The employer’s portion is not withheld from paychecks of employees.  This is paid via the IRS Form 941.

IRS Form 941 is due 30 days after the close of each quarter.  Fees and interest are charged if it’s late.  If an employee is paid only once per year, the IRS Form 941 must still be filed each quarter even if no wages were paid.

There is a pdf online at the IRS website.  Employers wishing to file the IRS Form 941 can go there and fill it out.