The IRS Form 941 is a quarterly tax return form that has to be submitted by employers. If employees work for you, the IRS Form 941 has to be filed with details of the taxes that were withheld from their pay checks. You also need to contribute an equal amount as the employer, which is not deducted from the employee’s paycheck.
The Employers Quarterly Employment Tax Return is a calculation of the amount you owe and the deposits made already during that quarter. While the deposits can be made monthly, the deadline for filling the IRS Form 941 and payment will be the last day of the month that follows the quarter.
For instance, the 1st quarterly payment should be made on or before April 30th. If you are a large business, the deposit must be made by January 31st. Failure to make the deposit include penalties and interest.
Withholding money from employees’ pay checks is a legal obligation. Paying that amount along with the employer’s contribution is used for social security and Medicare. Avoiding the IRS payment will incur penalties and legal issues even if you are a very small business or a start up with any number of employees. The exceptions are for those who hire household and farm employees. However they have separate tax forms to be filled as well – not the IRS Form 941 though.
The IRS Form 941 is not used to report non-payroll payments such as annuities, pensions and other awards. The deductions that should be reported for the quarter are payroll taxes, sick pay, group-term life insurance, tips and COBRA premium assistance payments. Note that if an employee receives more than 20% of his pay as tips that must be reported otherwise a letter from the IRS may be sent to the employee or you.
If you find the paperwork tedious and cumbersome, especially if you have a large number of employees, there are plenty of payroll outsourcing companies who offer such services. They will calculate the withholding, pay checks and submit the IRS Form 941 payments.
However, the form is just two pages and will become easy to fill after one or two trials. The individual employee’s details and social security numbers are reported in W2/W3 forms and not in the IRS Form 941.
The IRS only requires the number of employees and the total amount you paid them that quarter. The Form 941 reflects the overall group deductions made for social security and Medicare tax. Add your contribution along with it, deduct any deposits made and file online. It would be a worthwhile experience to do it yourself.
Filing it online (also called E-File) by the employer would require a PIN. There are clear instructions on the steps to be followed at the IRS official website, irs.gov. Talk to your bank about making recurring payments to the IRS. They might have an easier system to make the quarterly transfers and the first month’s deposit.