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Payroll Taxes

Federal IRS Form 941 Instructions, Employer’s Quarterly Federal Tax Return and E-File (Electronic Filing)

May 20th, 2016

What is IRS Form 941 for small business payroll?

Form 941 is used to report taxes for businesses that have employees, and any employers who withhold income taxes, social security tax, or Medicare tax from employee’s paychecks or who must pay the employer’s portion of social security or Medicare tax

Why is IRS Form 941 required for small business payroll?

IRS Form 941 is required by the IRS for every business to report its wage expenses and employee payroll taxes every quarter. Form 941 is very important for the IRS to determine if a business has withheld and paid the correct employee payroll taxes and if the employee tax deposits have been made on time. It is the basis for the IRS to calculate penalty and interest when applicable.

Regardless of the size of the company, the same employee payroll tax return form 941 is due by the end of month after the quarter has ended. Paycheck Manager is a small business payroll software that helps you track, report, and file employee payroll tax deposits, as well as help you file your form 941.

Key IRS Form 941 Deadliness To Remember

  • Deadline for filing 941 form is 4/30, 7/31, 10/31, and 1/31 for the 4 quarters.
  • If employee payroll tax deposits have already been made in full and on time, then the Form 941 filing deadline is automatically extended by 10 days.
  • If the Form 941 filing deadline due date falls on Saturday, Sunday, or a legal holiday, the IRS 941 deadline is extended to the next business day.

Paycheck Manager’s small business payroll software helps you meet these 941 filing deadlines.

Helpful Hint: Differences between Form 941 vs scheduled employee tax deposits.

It is important to understand filing employee payroll return form 941 and depositing employee payroll taxes are two separate tasks and may have different deadlines. If your small business is defined by the IRS as a “monthly depositor” then you need to make employee tax deposits monthly. Otherwise, you would be late by the time you prepare and file the employee payroll tax return 941 at the end of the quarter.

To avoid any penalties, we recommend using Paycheck Manager’s small business payroll software to help you track and meet employee payroll tax deposits and form 941 deadlines.

Why should I e-file Form 941?

Even though IRS Form 941 can be filed with a paper form, e-filing Form 941 is fast and accurate, and the IRS receipt is confirmed electronically.

The Signature PIN is often the most confusing requirement for many businesses that are interested in e-filing Form 941. Here are some steps to either get a PIN or bypass the PIN to e-file Form 941:

  1. A successful e-fil submission of Form 941 to the IRS requires a signature PIN. A business can apply for a 10-digit PIN from the IRS.
  2. You can apply for a 10-digit PIN at our sister website, for free.  It will take about 2 weeks to receive a letter from the IRS with a 10-digit PIN.
  3. The business can authorize its payroll or payroll tax e-file service provider and file under their Reporting Agent PIN (5-digit). CPAs, bookkeepers, or payroll professionals often apply for their own reporting agent PIN. The reporting agent will need a signed form 8655 authorization from each of the businesses to submit Form 941s for them.
  4. Tax practitioners can also use a form 8879-EMP authorization to file form 941 for its clients.
  5. If a business prepares a form 8453-EMP, scan a copy of the PDF, and attach it to the 941 e-file, then a PIN is not required.

Since we have been an IRS authorized e-file service provider for 16 years, Paycheck Manager can help your small business payroll to e-file your Form 941.

More Helpful Hints: Common Form 941 misconceptions.

Since we have been processing and e-filing form 941s to the IRS for 16 years, we noticed a few common misconceptions, even among very experienced preparers. Here are some more form 941 tips that will help you e-file your form 941 correctly.

  • In part 2, line 14 of form 941, the preparer is required to enter either monthly or semi-weekly employee payroll tax liabilities. Often, the preparer will enter the actual amounts of employee payroll tax payments by month (monthly depositor) or by every payday (semi-weekly depositor on Schedule B). Generally the amounts deposited are the same as the tax liability, but it causes 941 e-file errors when the deposit amounts are different from the tax liabilities. Users need to enter “Tax liabilities” instead of the actual “Tax deposits”.
  • The “fraction of cents” adjustment in Form 941 line 7 is used to accommodate possible rounding errors for minor differences between taxes calculated from the total sum and the taxes calculated from individual employee paychecks. Do not use fraction of cents to adjust errors mentioned above.
  • The actual employee payroll tax amount paid to the IRS (total deposits) is entered in line 11 of form 941 as a lump sum then used to calculate the balance on the form. In reality, no matter what the balance is shown on the form, the IRS will reconcile the amount with the actual money in the company account anyway. It means you can enter any deposit amount, but the money needs to be there. If you did not enter and the form shows a balance due, as long as the money has been paid on time, there will be no penalty or interest calculations.
  • IRS Form 944 is the equivalent of 4 quarterly form 941s. If the 941 payroll taxes for your company are less than $1,000 for the full year, you can call the IRS 1-800-829-4933 to request to file a form 944 (once a year) instead of 4 quarterly form 941s. If and only when you receive a written notice from the IRS that you can then file form 944 at the end of the year. Otherwise, you still need to file form 941s.
  • You must deposit employee payroll taxes electronically. If the quarterly total is less than $2,500 and you have chosen to e-file, you will have the option to pay and file form 941 at the same time (end of the quarter). Otherwise, you need to make the deposits per your company employee payroll tax deposit schedule (monthly, semi-weekly or next banking day) through the IRS website. The IRS supposedly does not accept paper checks and could fine you for doing so.

We are here to help. If you have any questions about IRS Form 941, please contact our support. Paycheck Manager is one of the best small business payroll software, helping you manage employer payroll and employee payroll taxes.

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