Form 941 Filing: Deadlines, Instructions, and Common Mistakes

Form 941, or Employer’s Quarterly Federal Tax Return, is a small business tax form employers use to report quarterly taxes withheld from their employees.

Regardless of whether you're an employer who isn't sure how this form works or simply someone who wants to know more about it, this article is here to help! We teach you what Form 941 is, how and when it should be filed, and what practices should be avoided.

Key Takeaways

• Form 941 is a small business tax form for employers who must file quarterly employee taxes.
• This form must provide information about all the federal tax, Social Security, and Medicare withholdings, adjustments made for group life insurance, and the like, as well as the number of employees with total wages paid.
• The main difference between Form 941 and W-2 is that the former does not report state tax withholdings and is a quarterly tax form, unlike the latter, which reports annual taxes.
• Missing quarterly tax deadlines, providing inaccurate employee information, miscalculating wages, and similar issues are common errors employers should avoid when filing this form.

What Is the IRS Form 941?

The IRS Form 941 is an employer’s form used to report quarterly taxes taken from their employees’ salaries.

Form 941 should be used to report the following information:

• Number of employees and total wages paid
• Federal income tax withholdings
• Social Security and Medicare taxes
• Adjustments for sick days, tips, and group life insurance

Some may confuse this document with other forms that employers should file. For example, unlike Form W-2, which should be filed once a year, Form 941 should be submitted quarterly. Besides this, the first document reports annual earnings and tax deductions of each employee separately, while the latter reports payroll taxes for all employees in the company.

There’s also a significant difference between Form 941 and Form 1099, which report different types of income given to service providers. Apart from the fact that Form 1099 is also issued annually, it’s also provided to both recipients (independent contractors and non-employees) and the IRS. Meanwhile, Form 941 should only be submitted to the IRS.

Plus, Form 941 is used by employers to report taxes withheld from employees' wages. On the other hand, Form 1099 does not show any withheld taxes, as it refers to recipients who pay those on their own. Lastly, employers and employees pay FICA taxes on Form 941 equally. In contrast, employees who file Form 1099 pay all the FICA taxes in full.

Form 941: When and How to File It

Employers must meet the Form 941 due dates in order to avoid issues with the IRS. Specifically, the quarterly tax deadlines are April 30, July 31, October 31, and January 31 every year. Failure to follow these due dates can result in tax penalties for late filing.

In case an employer fails to file Form 941 by the due date, they may face a penalty of 5% of the unpaid tax for each month or part of a month the return is late. The sum owed may go up to a maximum of 25%. However, if the return is more than 60 days late, there’s a minimum penalty—the lesser of 100% of the unpaid tax or $485 for returns due after December 31.

Besides this, there are also penalties for failing to deposit the payroll taxes owed. So, if a tax deposit is late by 1-5 days, the penalty is 2% of the unpaid sum. For 6-15 days late, the penalty increases to 5%, while for deposits more than 15 days late, it rises to 10%. In case an employer fails to pay within 10 days of receiving an IRS notice, the penalty jumps to 15%.

Electronic vs. Paper Filing

There are two ways to send Form 941 to the IRS.

The first and the most efficient one is to use a Modernized e-file for employment taxes(MeF), which allows you to report taxes electronically. Needless to say, filing taxes this way is easier and quicker; besides that, the IRS will receive your report instantly and reply sooner if amending Form 941 is needed.

The alternative way to deliver this form is to use the Form 941 mailing address. There are two primary addresses divided into two large state groups; for both groups, you can find one address returning mail without payment and vice versa.

In addition to these two groups of addresses, there are two more—one for employers with nolegal residence in any state and the other for exempt organizations and other governmental entities.

How to Fill Out the Form 941 in 5 Easy Steps

You can fill out Form 941 by completing five sections of the document—questions about your business for the quarter, deposit schedule and tax liability, information about your business, details about a third-party designee, and the signing part.

Let’s see a more detailed breakdown of all the necessary steps:

Part 1: Business and Quarter Data

This part consists of 15 questions about your taxes for the given quarter. These refer to the number of employees who received wages during this time, wages, tips, and other compensation, total taxes before adjustments, and more.

Part 2: Deposit Schedule and Tax Liability

Part 2 requires you to provide information about your deposit schedule and tax liability for a specific quarter. There are four separate fields where you need to enter tax liability for each of the four months that belong to the given quarter.

Part 3: Your Business Details

Part 3 features questions about your business. There are two major questions you should answer:

• Whether your business has ceased operations or stopped paying wages, you’ll need to provide the final date wages were paid.
• Whether you are a seasonal employer, which exempts you from filing taxes every quarter.

Besides these, you also need to fill out some blanks referring to health plan expenses and sick leave wages.

Part 4: Your Third-Party Designee

In this section, you can either agree or disagree with allowing someone to discuss your Form 941 with the IRS on your behalf, for example, your employee or a tax preparer. If you agree to this, you will need to provide their phone number and choose a 5-number personal identification number for that individual to use when talking to the IRS.

Part 5: Signing

The final part requires your confirmation regarding the credibility of all the details you previously stated in the form. You should place your signature in this section once you have examined all the details and verified that they are correct.

6 Mistakes to Avoid When Filing a 941 Form

It’s not uncommon for employers to file faulty forms and face repercussions. Yet, you can avoid such mistakes with the right advice and Form 941 instructions.

Let's see what the most common mistakes when filing Form 941 are:

#1. Missing Deadlines

Missing deadlines is a standard mistake employers make, and as previously mentioned, they may face penalties due to this. To prevent such issues, they must stay up to date with each quarterly date set for tax filing.

#2. Inaccurate Employee Information

It doesn't matter what piece of information you’ve entered incorrectly—doing so will cause payroll errors and require you to make amendments. Therefore, you can double-check your employees’ data before filing the form to make everything go smoothly. If you are unsure about some details, you can examine employees' official documents and records.

#3. Miscalculating Wages

All the decimals, percentages, and cents can cause confusion in your calculations. This can lead to missed employee bills and paychecks. To prevent this, you can develop a payroll calendar, track and check activities, and automate the calculation process.

#4. Forgetting to Put a Date and Sign the Form

Even if you manage to get all the information right, you should spend some extra time checking minor details of your form. A detail often missed is placing your signature and date on your form; without this, the IRS will consider your form incomplete.

#5. Assigning Wrong Status to Employees

Another mistake employers could make is misclassifying their employees and submitting the wrong forms for them. For example, they can accidentally send Form 941 to non-employees instead of regular employees in their company (in which case they should file Form 1099-NEC).

Similarly, this frequently happens with the W-2 form, which later requires W-2 and 1099 reconciliation. The solution to this is obvious—you must be watchful when classifying and assigning specific forms to your employees.

#6. Reporting Advances at Inadequate Time

Another example of faulty taxing is requesting an advance credit payment and reporting it using Form 941 before receiving it. It all comes down to waiting for your credit to arrive; to avoid oversight, only report the advance credit payment you received through Form 941.

Make the Invoicing Process Easy With Paystub.org

To maintain accurate recordkeeping and avoid mistakes when filing Form 941, employers need to calculate employees' wages and tax withholdings correctly, as well as create accurate pay stubs. Yet, it might be pretty difficult to do all this manually.

The ultimate solution for this is to use the all-around Paystub.org tool. Our fast pay stub generator will automatically create fully customized pay slips for each employee in minutes once the necessary details are entered into the software. Plus, there’s also a built-in calculator that ensures perfect accuracy when calculating employees’ salaries and tax withholdings.

Final Thoughts

Form 941 is a quarterly tax reporting document employers use to file employee taxes. Such forms encompass the number of employees and total paid wages, federal taxes, adjustments regarding sick days, tips, and Medicare and Social Security withholdings.

All employers obliged to send this form can do so electronically or via mail while staying compliant and meeting all the deadlines to avoid penalties. In fact, they can prevent most inaccuracies by using tools such as the Paystub.org generator to create pay slips and calculate the payment amounts correctly.

Form 941 FAQ

#1. Do you have to file Form 941 if you don’t have payroll?

Yes, you have to file Form 941 if you don’t have payroll. This will help you prevent any penalties for unreported taxes.

#2. Can I amend a filed Form 941?

Yes, you can amend a filed Form 941 using Form 941-X, which is a correction form. However, you should file and send it separately, not with the incorrect one.

#3. What if I don’t have any employees for the quarter?

If you have no employees or wages for the quarter, you still generally need to file a Form 941 tax return unless you’re a seasonal employer, in which case you should check the "seasonal employer" box. Other exceptions also include agricultural employers, who should file Form 943 annually, and household employers, who are supposed to use Schedule H with their tax returns.

#4. Where to mail Form 941?

You can mail Form 941 to one of the specific Department of Treasury or IRS mail addresses, depending on your business or organization’s location and entity.