Define 941 & 940 Returns

Software programs make payroll tax preparation less time consuming and tedious.

All employers, regardless of size, must act in accordance with federal tax regulations by filing payroll tax forms 940 and 941 in order to avoid IRS notices, penalties and interest.

Definition

Form 941 is a quarterly payroll tax return filed with the IRS to report income tax withheld and FICA withholding. It includes the following information: Number of employees, quarterly wages paid and tips received, social security and Medicare taxes, tax adjustments, advance earned income (EIC) payments and COBRA premium assistance payments.

Form 940 is an annual payroll tax return used to remit federal unemployment insurance calculated from the employee's first $7,000 of wages paid. It is paid completely by the employer and is not withheld from the employee's check.

When to Deposit

Form 941 is due the month after the quarter ends. If the quarter ends March 31, the due date is April 30; June 30 is due July 31; September 30 is due October 31 and December 31 is due January 31.

Form 940 is due January 31 or the next business day of the following year.

How to Deposit

Pay electronically with EFTPS (Electronic Federal Tax Payment System), which drafts the tax from the business bank account. Payment can also be deposited with an authorized banking institution.

References

• Inc.: Employment Taxes for Small Employers
• Inc.: Payroll Taxes
• Inc.: What Small Employers Need to Know About Employment Taxes
• Internal Revenue Service: 2009 Instructions for Form 940
• Internal Revenue Service: Instructions for Form 941

Resources

• Internal Revenue Service: Employment Taxes
• Electronic Federal Tax Payment System: Welcome to EFTPS Online