Who Must File Form 941?

If you pay wages subject to federal income tax withholding or social security and Medicare taxes, you must file Form 941 quarterly to report the following amounts.

•     Wages you’ve paid.
•     Tips your employees reported to you.
•     Federal income tax you withheld.
•     Both the employer and the employee share of social security and Medicare taxes.
•     Additional Medicare Tax withheld from employees.
•     Current quarter’s adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance.
•     Qualified small business payroll tax credit for increasing research activities.

Don’t use Form 941 to report backup withholding or income tax withholding on nonpayroll payments such as pensions, annuities, and gambling winnings.

Report these types of withholding on Form 945, Annual Return of Withheld Federal Income Tax. Also, don’t use Form 941 to report unemployment taxes. Report unemployment taxes on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

After you file your first Form 941, you must file a return for each quarter, even if you have no taxes to report, unless you filed a final return or one of the exceptions listed next applies.

Exceptions

Special rules apply to some employers.

•     If you received notification to file Form 944, Employer’s ANNUAL Federal Tax Return, you must file Form 944 annually; don’t file Form 941 quarterly.
•     Seasonal employers don’t have to file a Form 941 for quarters in which they have no tax liability because they have paid no wages. To tell the IRS that you won’t file a return for one or more quarters during the year, check the box on line 18 every quarter you file Form 941. See section 12 of Pub. 15 for more information.
•     Employers of household employees don’t usually file Form 941. See Pub. 926 and Schedule H (Form 1040) for more information.
•     Employers of farm employees don’t file Form 941 for wages paid for agricultural labor. See Form 943 and Pub. 15 for more information.

If none of these exceptions apply and you haven’t filed a final return, you must file Form 941 each quarter even if you didn’t pay wages during the quarter.

When Must You File?

File your initial Form 941 for the quarter in which you first paid wages that are subject to social security and Medicare taxes or subject to federal income tax withholding. See the table titled When To File Form 941, later.

When To File Form 941

Avoiding Penalties and Interest

You can avoid paying penalties and interest if you do all of the following.

•     Deposit or pay your taxes when they are due.
•     File your fully completed Form 941 on time.
•     Report your tax liability accurately.
•     Submit valid checks for tax payments.
•     Furnish accurate Forms W-2 to employees.
•     File Form W-3 and Copy A of Forms W-2 with the SSA on time and accurately.

Penalties and interest are charged on taxes paid late and returns filed late at a rate set by law.