How Do You Fill Out a 941 Tax Form?

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Prepare payroll tax form 941.
Prepare payroll tax form 941. (Image: A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com)

Internal Revenue Service Form 941 is used to report quarterly wages, quarterly payroll tax liability and quarterly payroll taxes paid. Regardless of the business’ fiscal year-end, Form 941 is prepared at the end of each calendar quarter: March 31, June 30, Sept. 30 and Dec. 31. Form 941 is due by the last day of the month following the end of the calendar quarter being reported. Any payments due are mailed with Form 941 and indicated on Form 941-V.

Complete the top section of the form which asks for the business name, address and employer identification number, or EIN. Check the box on the right side to indicate the appropriate calendar quarter being reported.

Enter the total number of employees who received wages during the quarter in Box 1. Even if an employee did not work the entire quarter, he still must be included in this total.

Enter the total wages, tips and other compensation paid to employees for the quarter in Box 2. The total federal income tax withheld from employees during the quarter is reported in Box 3. Check Box 4 if wages, tips and other compensation paid to employees during the quarter are not subject to Social Security or Medicare tax, then skip to Line 6. This is not common.

Enter the total taxable Social Security wages in Box 5a, Column A. For the calendar years 2009 and 2010, wages subject to Social Security tax are capped at $106,800. Multiply the wages by 0.124 and enter the result in Column B. If you paid tips subject to Social Security tax, enter the total in Box 5b, Column A. Multiply the tips by 0.124 and enter the result in Column B.

Enter the total taxable Medicare wages in Box 5c, Column A. Unlike Social Security tax, all wages are subject to the Medicare tax. Multiply the wages by 0.029 and enter the result in Column B. Add Column B of lines 5a, 5b and 5c and enter the result in Box 5d. Add Box 3 and Box 5d and enter the result in Box 6.

Determine rounding adjustments necessary, if any, to the quarter’s payroll tax. The IRS allows employers to adjust the total payroll tax so payments for the quarter are equal to the payroll tax calculated. Enter any rounding adjustments to the current quarter’s payroll taxes in boxes 7a through 7c. Entries made in boxes 7a through 7c should not be greater than $1. Entries can be negative. Calculate the total adjustments from boxes 7a through 7c and enter the result in Box 7d.

Add boxes 6 and 7d and enter the result in Box 8. Enter any Advance Earned Income Credit payments made to employees during the quarter in Box 9. Subtract Box 9 from Box 8 and enter the result in Box 10. Box 10 represents the total tax liability for the quarter.

Enter the total payments made for the quarter in Box 11. Include prior period overpayments, if applicable. Enter any COBRA premium assistance payments made in Box 12a. Enter the number of individuals the COBRA premium assistance payments apply to in Box 12b. Add boxes 11 and 12a and enter the result in Box 13.

Calculate the payment due by subtracting Box 13 from Box 10. If no payment is due, enter zero in Box 14. If the payments made during the quarter (Box 13), exceed the tax liability (Box 10), indicate the amount of overpayment in Box 15. In the case of an overpayment, indicate if you want the overpayment applied to the next quarter or if you want a refund of the overpayment mailed to you by checking the appropriate box.

Indicate the business name and EIN at the top of page 2. Complete Box 16 by indicating the state to which you make withholding tax payments. If you make withholding payments to more than one state, indicate “MU” for multiple states.

Check the appropriate box on Line 17 for the type of filer you are. If the total tax liability per Box 10 is less than $2,500, check the first box. No additional information is necessary. If you made monthly tax payments, enter the monthly liabilities in the second section of Line 17 and check the second box. Do not enter the total tax deposits for each month. Enter the total monthly liability. The sum of the monthly liabilities should equal Box 10 on page 1 of Form 941. If you made semiweekly tax deposits at any point during the quarter, check the third box and complete Form 941 Schedule B.

Complete Form 941, Schedule B by first filling in your business name and EIN. Indicate the calendar quarter and calendar year for which the form applies. For each of the three months in the quarter, indicate the tax liability at the end of each payroll period on the appropriate line. For example, if your payroll was paid on Jan. 7, and the total tax liability for that payroll was $4,250, you would enter $4,250 in Box 7 of the first month. Add the liabilities for each month and enter them in the respective boxes. Add the liabilities for each month and enter in the box labeled Total Tax Liability for the Quarter. This amount should equal the total tax liability per Box 10 on page 1 of Form 941.

Check Box 18 if your business stopped paying wages during the quarter or Box 19 if you are a seasonal employer. If you choose to permit a third party to discuss Form 941 with the IRS, indicate this in Part 4. You will have to designate the third party each quarter. Sign and date Form 941 in Part 5.

Complete Form 941-V if you are required to remit a payment with Form 941. Enter your business name, address, EIN, the amount you are paying and the tax quarter the payment applies to. Make the check payable to “United States Treasury” and write the business' EIN, “Form 941” and the calendar quarter that the payment applies to on the check.

Mail Form 941, Schedule B and Form 941-V to the appropriate address listed in the instructions for Form 941 page 4.

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