How to File Your Payroll Taxes with Form 941

June 3, 2019
Stack of paper documents with handwritten tax time on a sticky note

Every quarter, you must file your business’s payroll tax activity with the IRS via Form 941. This is strictly an informational report. The easiest and quickest way to pay for your taxes will be via The Electronic Federal Tax Payment System. If you manage your payroll using a software or service like ours, you can seamlessly pull all the required information from there and knock out your Form 941 with ease. If you’re ready, let’s go through this quarterly process.

Step 1 – General Information

In the appropriate boxes, enter your Employer Identification Number (EIN), name, trade name (if necessary), and address. On the right side of the page, you’ll see a box entitled “Report for this Quarter of 20XX”. Check the quarter you’re reporting payroll taxes for.

Step 2 – Part 1

For line 1, specify the number the employees who were paid during the quarter. Next, enter the total amount of wages, tips and other compensation your employees received for the quarter on line 2. Then, put down the total amount of federal income tax withheld from your employees’ paychecks on line 3.

If none of your employees were subject to Social Security or Medicare tax, check the box on line 4 and skip down to line 6.

For line 5a, enter the total amount of wages subject to Social Security tax in column 1. As of 2017, the first $127,200 of an employee’s wage is subject to Social Security tax. Multiply the amount in column 1 by 0.124 (12.4%) – the rate for Social Security tax – and put down the result in column 2.

For line 5b, if your employees collected tips, follow the same process as line 5a.

Line 5c asks for the total amount of taxable Medicare wages and tips. Unlike Social Security tax, Medicare tax does not have a wage base, so the amount you entered on line 2 can go in column 1 of line 5c. Multiply this amount by 0.029 (2.9%), which is the rate for Medicare tax, and enter the sum in column 2.

If any of your employees are liable for Additional Medicare Tax, specify the total amount of taxable wages in column 1 of line 5d, then multiply the amount by 0.009 (0.9%) and input the result in column 2.

Add column 2 from lines 5a to 5d together and enter the sum on line 5e.

Don’t worry about line 5f if you did not receive Section 3121(q) Notice and Demand from the IRS. If so, retrieve the amount due from this document and put it down on line 5f.

To figure your total taxes before adjustments, add lines 3, 5e, and 5f together and enter the result on line 6.

Enter the adjustment for fractions of cents on line 7. Your employees’ share of Social Security and Medicare taxes presented in lines 5a to 5d may differ from the amounts actually withheld from their paychecks because of the rounding of Social Security and Medicare taxes based on statutory rates. For example, if you calculated $6,049.28 on line 6, but actually paid $6,049.26 in taxes, you would enter -.02 on line 7 to correct the amount.

On line 8, put down any Social Security or Medicare taxes withheld from sick pay by third-party payers. These payers are usually insurance companies.

On line 9, enter adjustments for any uncollected employee share of Social Security and Medicare taxes on tips and group-term life insurance premiums paid for former employees.

Add lines 6 through 9 together to get your total taxes after adjustments and enter the sum on line 10.

If you’re eligible for the Qualified Small Business Payroll Tax Credit for Increasing Research Activities, complete Form 8974, attach it to your Form 941 and enter the credit amount on line 11.

Subtract line 11 from line 10 and put down the result on line 12. This is your total taxes after adjustments and credits.

On line 13, enter your deposits for this quarter, including any overpayment from the previous quarter.

If line 12 is more than line 13, record the difference on line 14. This is the amount you owe.

If line 13 is more than line 12, enter the difference on line 15. You can choose to have your excess money applied to your next return or refunded to you.

Step 3 – Part 2

In this section, if you’re monthly depositor, you must provide your tax liability for each month in the quarter. If you’re a semimonthly depositor, complete and attach Schedule B (Form 941), which shows your tax liability on a semimonthly basis.

Step 4 – Part 3

If your business closed, you stopped paying wages, or you’re a seasonal employer and do not file returns on a quarterly basis, check and fill out the appropriate boxes. Otherwise, leave this section blank.

Step 5 – Part 4 and 5

You can elect a third party to speak to the IRS on your behalf regarding this form. Our dedicated accountants make excellent third-party designees, by the way. Enter his or her name and phone number and select a five-digit personal identification number.

After that, sign and date your form and send it off to the IRS. See the Form 941 instructions for specific addresses.

Try the online Rubik’s Cube simulator! Set up a random scramble then try to figure out the solution!

Every quarter, you must file your business’s payroll tax activity with the IRS via Form 941. This is strictly an informational report. The easiest and quickest way to pay for your taxes will be via The Electronic Federal Tax Payment System. If you manage your payroll using a software or service like ours, you can seamlessly pull all the required information from there and knock out your Form 941 with ease. If you’re ready, let’s go through this quarterly process.

Step 3 – Part 2

In this section, if you’re monthly depositor, you must provide your tax liability for each month in the quarter. If you’re a semimonthly depositor, complete and attach Schedule B (Form 941), which shows your tax liability on a semimonthly basis.

Step 4 – Part 3

If your business closed, you stopped paying wages, or you’re a seasonal employer and do not file returns on a quarterly basis, check and fill out the appropriate boxes. Otherwise, leave this section blank.

Step 5 – Part 4 and 5

You can elect a third party to speak to the IRS on your behalf regarding this form. Our dedicated accountants make excellent third-party designees, by the way. Enter his or her name and phone number and select a five-digit personal identification number.

After that, sign and date your form and send it off to the IRS. See the Form 941 instructions for specific addresses.

Work with the Experts

1-800Accountant is a virtual accounting firm merging the convenience of technology with live support from real professionals, making taxes easy and personable for individuals and small businesses. Focus on growing your bottom line while our team of accountants, certified public accountants, and enrolled agents perform the heavy lifting – tax advisory and preparation, payroll, bookkeeping, and audit defense. For professional, year-round services at an affordable price, get in touch with us and schedule your consultation with America’s leading small business accounting firm.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.