Tax Form 941 – Employer’s Quarterly Federal Tax Return
Posted on December 1, 2010 | No Comments
Ian R L asked:
This article is (hopefully!) a simplified version of the “Instructions for Form 941″. Form 941 is what most employers use to record and pay income tax, social security, and Medicare withholdings. Its not the step by step, line by line version, but will teach “show you the ropes” of Form 941.
Purpose And Filing of Form 941:
If Joe is an employer, Federal law requires that he takes out of his employees’ paychecks (withholds) sums for federal income tax, social security tax, and Medicare tax. Under this withholding system, taxes withheld from Joe’s employees are credited to them when they pay their “tax liabilities”. Of course, Joe has to withhold from himself, to help pay his social security and Medicare taxes.
The IRS warns Joe not to use form 941 to report withholdings on nonpayroll payments including but not limited to pensions, annuities, and gambling winnings. The IRS also says that Joe must file an initial 941, then one each quarter, even if he has no taxes to report, unless he fits one of the exceptions listed below.
Exceptions
Seasonal employers have no need to file form 941 in quarters they have paid no wages. Employers of solely Household employees don’t usually file form 941. Employers of farm employees don’t usually file form 941 either. Agricultural employers file form 943.
Unless Joe fits on of these exceptions, he has to file form 941.
Joe must use form 941 to report these amounts to the IRS:
Wages he has paid. Tips his employees were given. Federal income tax he withheld. All the social security and Medicare taxes he withheld (including his own). The current quarter’s adjustments to Medicare and social security taxes. These adjustments are for fractions of cents, sick pay, group-term life insurance, and tips. Advanced EIC payments. Credit for COBRA premium assistance payments.
Business/Name/Address Changes
If Joe sells or transfers his business, both he and the new owner must file form 941 (two forms, one by Joe, and one by the new owner) for the quarter in which the transfer happened. If two businesses merge, the continuing one must file a return for the quarter in which the change took place, and the other should file a final return. See the *”Instructions for form 941″ to learn about changing forms of business.
If Joe changes his business name or address, he must notify the IRS ASAP. In this event, he must write to the IRS office where his returns are filed, and complete and mail form 8822 (Change of Address) for address changes.
In the event that Joe–or the government–closes his business he must file a final return. There will be other forms Joe has to file is he goes out of business.
When must Joe File Form 941?
Joe must file his first form 941 for the quarter in which he first paid wages that were subjected to social security and medicare taxes; or subject to federal income tax whithholding. He must then file every quarter thereafter (each quarter is three months) even if he has no taxes to report, unless he is filing/has filed his final return, or one of the exceptions apply to him. Joe must file form 941 only ONCE for each quarter, even if he chooses to file it electronically.
Quarterly form 941 is due the last day of the month following the end of the quarter it is to be filed for. Quarters are:
January, February, March.
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This article is (hopefully!) a simplified version of the “Instructions for Form 941″. Form 941 is what most employers use to record and pay income tax, social security, and Medicare withholdings. Its not the step by step, line by line version, but will teach “show you the ropes” of Form 941.
Purpose And Filing of Form 941:
If Joe is an employer, Federal law requires that he takes out of his employees’ paychecks (withholds) sums for federal income tax, social security tax, and Medicare tax. Under this withholding system, taxes withheld from Joe’s employees are credited to them when they pay their “tax liabilities”. Of course, Joe has to withhold from himself, to help pay his social security and Medicare taxes.
The IRS warns Joe not to use form 941 to report withholdings on nonpayroll payments including but not limited to pensions, annuities, and gambling winnings. The IRS also says that Joe must file an initial 941, then one each quarter, even if he has no taxes to report, unless he fits one of the exceptions listed below.
Exceptions
Seasonal employers have no need to file form 941 in quarters they have paid no wages. Employers of solely Household employees don’t usually file form 941. Employers of farm employees don’t usually file form 941 either. Agricultural employers file form 943.
Unless Joe fits on of these exceptions, he has to file form 941.
Joe must use form 941 to report these amounts to the IRS:
Wages he has paid. Tips his employees were given. Federal income tax he withheld. All the social security and Medicare taxes he withheld (including his own). The current quarter’s adjustments to Medicare and social security taxes. These adjustments are for fractions of cents, sick pay, group-term life insurance, and tips. Advanced EIC payments. Credit for COBRA premium assistance payments.
Business/Name/Address Changes
If Joe sells or transfers his business, both he and the new owner must file form 941 (two forms, one by Joe, and one by the new owner) for the quarter in which the transfer happened. If two businesses merge, the continuing one must file a return for the quarter in which the change took place, and the other should file a final return. See the *”Instructions for form 941″ to learn about changing forms of business.
If Joe changes his business name or address, he must notify the IRS ASAP. In this event, he must write to the IRS office where his returns are filed, and complete and mail form 8822 (Change of Address) for address changes.
In the event that Joe–or the government–closes his business he must file a final return. There will be other forms Joe has to file is he goes out of business.
When must Joe File Form 941?
Joe must file his first form 941 for the quarter in which he first paid wages that were subjected to social security and medicare taxes; or subject to federal income tax whithholding. He must then file every quarter thereafter (each quarter is three months) even if he has no taxes to report, unless he is filing/has filed his final return, or one of the exceptions apply to him. Joe must file form 941 only ONCE for each quarter, even if he chooses to file it electronically.
Quarterly form 941 is due the last day of the month following the end of the quarter it is to be filed for. Quarters are:
January, February, March.