If you’re a first-time business owner — or even if you’re not — you might not know that you need to file quarterly taxes if you pay employees. To do this, the IRS requires you to file Form 941. While filing this tax form doesn’t apply to every business owner, it applies to most. So it’s essential to understand the Form 941 instructions so you know how to file, interpret, and submit the form.
To guide you, here’s a rundown of everything you need to know regarding Form 941.
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What is Form 941?
Employers use Form 941, also known as the “Employer’s Quarterly Tax Form,” to report employee wages and payroll taxes. The form requires employers to report how many employees they have, and the amounts withheld from each employee’s pay, including federal income tax, Social Security tax, and Medicare tax.
So where do you mail Form 941? To file the 941 tax form, you can choose to send it to the IRS via paper mail or e-file using IRS-approved software. If applicable, business owners must also list any advances on earned income credits that are paid out to employees.
When is Form 941 required to be filled out?
Form 941 is a quarterly form, meaning employers are required to file it on a quarterly basis. You must file Form 941 by the following due dates for each quarter:
- First quarter: April 30
- Second quarter: July 31
- Third quarter: October 31
- Fourth quarter: January 31
If the quarterly due dates fall on a weekend or a holiday, the form is due the next business day. To avoid penalties, submit the form and tax payments by the quarterly due dates.
Who is required to fill out the form?
As a general rule, any business owner with employees must fill out Form 941. However, there are a few exceptions. You’re exempt from filling out the form if:
You file a 944. If you’re an employer whose annual liability for withheld federal income tax, Medicare, and Social Security is less than $1,000, then you should file Form 944, annually, not quarterly.
You are a seasonal employer. If your employees work on a seasonal basis, you don’t need to file Form 941 in quarters when employees aren’t working (i.e., in quarters when you have no tax liability). If this applies to you, however, you will need to indicate that you’re a seasonal employer when you do file your Form 941.
You have household employees. While household employees don’t need to be accounted for on Form 941, they must be filed within Schedule H of Form 1040. This section is reserved specifically for household employment taxes.
You have farm employees. Since farm employees have distinct rules for taxes, which are different from the typical tax and withholding rules, they are required to fill out Form 943 instead of Form 941.
You pay independent contractors. Independent contractors are technically not employees. For this reason, you should file a 1099-MISC form to report what you paid your contractors that calendar year.
What happens if Form 941 is filled out incorrectly?
As with any tax form, there’s potential for error when you’re filling out Form 941, particularly if it’s your first time filing business taxes. In the event you realize your Form 941 has errors, you can amend them using Form 941-X. Form 941-X can be used to correct both underreported and overreported taxes.
If you have underreported taxes on a previous Form 941, the IRS allows you to fix those errors with Form 941-X, as long as it’s within a three-year period of the date you filed incorrectly. Along with the Form 941-X, you’ll need to pay taxes by the due date for the quarter when you discovered the error.
Square is here to help.
Keeping up with quarterly tax forms can feel like a full-time job for small business owners, but not to worry, we’re here to help. Square Payroll prepares and files your Form 941, and applicable state forms, electronically. And once we’ve submitted your quarterly 941, you can easily download, save, and print each filing, so you have it for your records.