Using Form 941 to Pay Quarterly Payroll Taxes

What is IRS Form 941?

IRS Form 941 is the Employer’s Quarterly Federal Tax Return. Anyone who operates a business with employees must file this form when paying their employees’ quarterly payroll taxes.

As an employer, you must use Form 941 to report the total amount of taxes you withheld from employees’ paychecks during the quarter. You must submit this form four times per year by the scheduled filing dates to avoid penalties.

Federal income and payroll tax withholding

Employers must withhold federal income tax and other employer payroll taxes from their employees’ paychecks and remit those taxes to the IRS every quarter. The amount you must withhold for federal income tax depends on the information in your employees’ W-4 forms. The amounts in IRS Form 941 are calculated according to each employee’s Medicare and Social Security wages. As an employer, you must also calculate your portion of FICA taxes.

Some exceptions enable businesses to file annually instead of quarterly. For example, if your annual payroll tax and withholding liabilities are less than $1,000, you may request approval from the IRS to instead file Form 944, the annual version of Form 941. You must contact the IRS by phone or mail to get permission to submit Form 944 instead of Form 941.

Who should file a Form 941?

Anyone who pays employees a wage must file Form 941 quarterly. Employees don’t file this form or receive a copy. 

The employer is required to file this form even if they have no employees working for the business during a specific quarter. For example, even when many businesses were forced to shut down due to government-imposed lockdowns during the pandemic, they were still required to file Form 941 quarterly.

Some employers are exempt from the legal requirement to file Form 941, including the following:

• Seasonal employers
• Employers of household staff
• Employers of agricultural staff

How to fill out Form 941

Form 941 is three pages long and has five parts. It also comes with a payment voucher, which you must submit with the form when sending a payment by mail. You’ll enter your business name and employer identification number (EIN) at the top of every page.

Here’s how to fill out Form 941:

1. Prepare information before you fill out Form 941.

Form 941 requires a great deal of information. To make the process easier, collect all of the necessary data before completing the form. You can pull information on tax receipts from your payment history in the Electronic Federal Tax Payment System or your business bank account statements.

You’ll need the following information to fill out Form 941:         

• Employer identification number
• Basic business information (e.g., business name, address, contact information)
• Total number of employees working at the business
• Total wages paid during the quarter in which you are filing
• Total amount of Social Security and Medicare wages for the quarter
• Total amount of federal income tax, Social Security tax and Medicare tax withheld from all employees’ wages during the quarter
• Any deposits already made on employment taxes this quarter (most employers must make monthly or semiweekly employment tax deposits)

2. Fill out the top and Part 1 of Form 941.

The top of the form asks for your EIN and other basic business information. You’ll also indicate the quarter you’re addressing. After completing this section, turn your attention to Part 1.

Part 1 takes up the first page and a good portion of the second page. This is where you’ll input most of your financial information and calculations. You can pull many of these numbers from your accounting or payroll software to fill in the necessary fields. 

Complete Part 1 with the following information for the current quarter:

• Total number of employees you have paid
• Total compensation (including wages and tips) paid
• Federal income tax withheld
• Taxable Social Security and Medicare wages
• Total taxes owed before adjustments
• Adjustments to report for fractions of cents, sick pay, tips and group-term life insurance 
• Total taxes after adjustments
• Payroll tax credits
• Total taxes after adjustments and credits
• Tax deposits already made
• Balance owed or overpayment due

3. Calculate the tax payment you owe to the IRS.

To calculate the amount of taxes to send to the IRS in addition to federal income tax, the payment must show the following:

• Social Security: 2 percent of each employee’s wages, up to a maximum of $160,200 for 2023
• Medicare: 1.45 percent of all taxable wages (with an additional 0.9 percent Medicare withholding tax for employees who earn more than $200,000 for the year)

4. Fill out Part 2.

In Part 2, you’ll indicate your deposit schedule (monthly or semiweekly) and your tax liability for this quarter. Semiweekly depositors who owe more than $50,000 in tax liability for the quarter must also fill in Schedule B.

5. Fill out Part 3 (if necessary).

You must fill out Part 3 if your business has closed, you have stopped paying wages, or you are a seasonal employer that does not file quarterly. If none of these criteria apply, you can leave it blank.

6. Confirm whether you hired a professional to represent you (Part 4).

Check “yes” in Part 4 if you have authorized a third party (such as a tax professional) to speak with the IRS on your behalf, and if so, provide their information. Otherwise, check “no” in this section.

7. Sign and complete Form 941 (Part 5).

Review all of the information you’ve entered into Form 941 to ensure it’s correct, and have your tax professional do the same. Once you have verified all of the information, sign and date Part 5 of the form.

When is Form 941 due?

Employers must file a separate Form 941 for each quarter. The IRS sets four mandatory filing deadlines each year:

• April 30 for Q1
• July 31 for Q2
• Oct. 31 for Q3
• Jan. 31 of the following year for Q4

If the due date falls on a holiday or a weekend, the adjusted due date is the next business day. For example, if April 30 falls on a Saturday, the due date for an April 30 payment would be Monday, May 2.

The easiest way to remember these dates is to note that filing deadlines always fall on the last day of the month at the end of each quarter. This gives you one month to prepare Form 941 before submitting it to the IRS.

The good news is that as long as you send in the complete payroll tax deposits for the quarter on time, you can spend an extra 10 days filling out and filing the Form 941. The filing deadlines to submit the form when payment has been made on time are:

• May 10 for the first quarter ending March 31
• Aug. 10 for the second quarter ending June 30
• Nov. 10 for the third quarter ending Sept. 30
• Feb. 10 for the fourth quarter ending Dec. 31

How to avoid penalties

If you don’t file Form 941 by the deadline, you may incur a penalty of 5 percent of the tax due with that tax return for each month or part of a month when the return is late. The maximum penalty for a late return is 25 percent of the tax due. 

The IRS can impose a separate penalty for making late tax payments or paying less than you owe. The IRS will impose a fine ranging from 2 percent to 15 percent of the underpayment amount, depending on how many days past the deadline the agency receives the correct amount.

How do you file Form 941?

You can use the free federal e-filing system to submit Form 941 electronically or fill out the form by hand and mail it in. You can also use tax preparation software or work with a tax professional to pay any tax balance electronically. Visit the IRS website to determine where to file taxes for Form 941 and what mailing address to use.

The best accounting and payroll services to manage quarterly payroll taxes and Form 941

Payroll tax obligations, including Form 941, are made infinitely easier when you use highly rated accounting software and the top payroll services. We’ll highlight examples of top solutions business owners should consider. 

Oracle NetSuite Accounting Software

NetSuite is a great option for businesses with domestic and global payroll, helping them manage, file and pay domestic payroll taxes via Form 941 while complying with international payroll taxes and regulations. NetSuite provides various modules, including one for taxes. Our full NetSuite Accounting Software review details the platform’s robust payroll reporting and planning and billing functions, including its seamless accounts receivable and payable features.

Zoho Books

Zoho Books automates many accounting-related processes, including payroll management. You can set up custom automated processes that make it easier to report wages and file payroll taxes promptly. If your tax situation is more complex, you can integrate Zoho Books with many other programs, such as specialized tax applications. Our Zoho Books review discusses other unique features, such as Zoho’s helpful audit trail that helps catch errors. 

ADP Payroll

ADP is a leader in the payroll services industry. It offers compliance support and payroll features while automating payroll and tax filings. Our ADP Payroll review notes that if ADP makes an error when calculating payroll taxes, the company will pay any fines or penalties you are assessed.

Rippling Payroll

Like many other payroll services, Rippling calculates and files payroll taxes automatically. However, as we explain in our review of Rippling Payroll, the platform allows employees to electronically sign, update and store their own tax documents online. Rippling also gives you a 100 percent error-free guarantee, so you can feel confident using the service for payroll taxes.

Jennifer Dublino contributed to this article.