Generally, businesses use the IRS fillable Form 941 to report wages, tips, and federal and state income taxes withheld from employees. Form 941 is updated annually. It is one of several tax forms businesses use. 941 Form is made up of five parts plus a payment voucher. It is not only a tax report; it also includes additional Medicare tax.
The most complex section of Form 941 involves calculating taxable Medicare and Social Security wages. It includes line items for qualified sick leave wages and COBRA premium credit. The form is usually sent via mail. However, businesses can also file the 941 Form electronically through the Electronic Federal Tax Payment System (EFTPS) or by mail. If the form is mailed, it should be sent with a check made out to U.S. Treasury. Late tax payments can result in penalties. These range from 2 percent to 15 percent.
How To File Form 941?
Often referred to as the Employer’s Quarterly Federal Tax Return, Form 941 is a tax form used by businesses to report taxes. It is required if a business pays wages and withheld federal income tax. The form is broken into five parts and requires input from the business.
- The first section of the form requires basic business information. The employer’s info box is where you’ll find the firm’s name, signatory name, and trade name. It also contains relevant information. The information contained in the info box will be useful when completing the rest of the form.
- The second section requires the business name, number of employees, federal income tax withheld from the employee wages, and tips. The most complicated section of the form involves calculating taxable Social Security and Medicare wages.
- The third section asks questions about the business. It includes information about the health plan, whether the business closed for the year, and if the business stopped paying wages. The questions may only be necessary for some businesses. The most important section of the form is the last section. It contains information about employee wages and tips, including “ordinary” sick pay and taxable tips.
- The fourth section of the form requires information about how many employees the business has. This is important because most businesses must file Form 941 on a quarterly basis. Some states allow electronic filing of Form 941. It is not required to file Form 941 if the business has no employees. However, it is a good idea to file Form 941.
- The fifth section requires input for total taxes, including federal income tax withheld from the employee wages, Medicare tax, and social security tax. Using this information to file an interest-free adjustment is also possible.