One of the things every first time business owners need to know is filing tax. As long as they pay employees, quarterly filing of taxes is essential. This is where Form 941 comes in. Although not all business owners have to file form 941, it applies to most business owners.
As a result, it is essential to understand the basics of filing Form 941. This involves how to file, interpretation, and submission of the form. To guide many people who might want information on this, here is essential information on what Form 941 entails.
What is Form 941?
Also known as “Employer’s Quarterly Tax Form,” Employers use Form 941 to send in their workers' wages alongside the payroll taxes. With this form, the employer will report the number of employers they have and the amount withdrawn from each worker as payroll taxes. These amounts include Social Security taxes, Medicare tax, and income tax.
Employers can either send this form to the IRS using e-file software (IRS approved software) or paper mail. All income credits paid to employees must also be listed, where applicable.
Ideally, all employers should file Form 941 every quarter. Each year, make sure to file by the following due dates.
First-quarter: April 30
Second-quarter: July 31
Third-quarter: October 31
Fourth-quarter: January 31
For due dates that fall on weekends or holidays, the new due date will be postponed to the next business day. This submission date is essential to prevent penalties.
Who Should Fill Out Form 941?
All business owners that have employees must fill out this form. There are, however, some exceptions to this point. If you meet the following requirements, you are exempted from filling the form.
Employers with Filed 944: For employers with annual liability for withheld federal income, Social Security, and Medicare lower than a thousand dollars, they can file form 944. This will be a yearly filing, not quarterly.
Employers that Work Seasonally: If your employees do not work every time, there is no need to file Form 941 when your employees are not working. This is because you have no tax liability during this period. For employers in this category, it is crucial to spell out that you are a seasonal employer when filing Form 941.
You Work With Household Employees: If you have household employees, you do not have to indicate them on Form 941. The section provided for them is schedule H of Form 1040. This is a special section that takes care of household employment taxes.
You have Farm Workers: Farmworkers have special tax rules. These rules stand out from the average tax and withholding rules. As a result, Form 943 applies to them.
You Work With Independent Contractors: Technically, we do not classify independent contractors as employees. As a result, the employers need to file a 1099-MISC form to report everything paid to the contractors for the calendar year.
Guard against Errors When Filing Form 941
Humans are prone to mistakes. As a result, there is a tendency for errors when filling out form 941, just like every other tax form. For the first time business owners, it is essential to guard against common mistakes.
Should you discover an error on Form 941, the amendment is possible using Form 941-X. With Form 941-X, you can correct all forms of error, including over and under-reporting of taxes.
You can fix under-reporting of taxes using Form 941-X on a previous tax form provided it is within three years of the mistake. In addition to the Form 941-X, make sure to pay all taxes by the quarter's due date when you detect the error.
Business owners can find it pretty challenging to keep up with tax forms. It can even get overwhelming for small business owners. With this, be sure to get in touch with a pro to help you prepare and file your Form 941 alongside other taxes.
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