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Easy Instructions on How To Complete the Form 941 (Employer’s Quarterly Federal Tax Return)

Updated on February 5, 2016

First and foremost – make sure you are using Form 941 for the correct year since tax rates are subject to change and these forms have some tax rates preprinted. Once that’s verified – let’s get started.

Part 1

Line 1: Enter the number of employees that received any type of compensation for the quarter being filed (this doesn’t include farm employees or active members of the Armed Forces).

Line 2: Enter the total amount of compensation paid during the quarter being filed.

Line 3: Enter the total amount of federal income tax withheld from the compensation reported on Line 2

Line 4: If none of the compensation reported on Line 2 are not subject to social security or Medicare tax, then check the box, skip Line 5a – 5f and begin Line 6. If the compensation reported on Line 2 are subject to social security or Medicare tax then continue to Line 5a.

Line 5a: Enter the total amount of taxable social security wages under Column 1, multiply by the preprinted tax rate and enter amount under Column 2.

Line 5b: Enter the total amount of taxable social security tips under Column 1, multiply by the preprinted tax rate and enter amount under Column 2.

Line 5c: Enter the total amount of taxable Medicare wages & tips under Column 1, multiply by the preprinted tax rate and enter amount under Column 2.

Line 5d: Enter the total amount of taxable wages & tips subject to Additional Medicare Tax withholding under Column 1, multiply by the preprinted tax rate and enter amount under Column 2.

Line 5e: Add up all the amounts from 5a Column 2, 5b Column 2, 5c Column 2, and 5d Column 2 and enter on Line 5e.

Line 5f: If you have any tax due on unreported tips, enter the amount on Line 5f. This amount would be on the Section 3121(q) Notice and Demand which lets the employer know the amount of tips that were underreported or weren’t reported at all to them by their employees.

Line 6: Add together the amounts on Line 3, Line 5e, and Line 5f and enter on Line 6.

Line 7: Enter current quarter’s adjustment for fractions of cents. For example, if you found that the amount withheld and deposited for social security and Medicare taxes during the filing quarter were $1.93 more than what was reported on Line 6, you would enter a positive $1.93 on Line 7. If you found it to be $1.93 less, then you would report a negative $1.93 (i.e. -$1.93).

Line 8: Enter current quarter’s adjustments for sick pay. If a third-party payor of sick pay withheld and paid the employee’s share of social security and Medicare taxes, you would enter the withheld amount on Line 8.

Line 9: Enter current quarter’s adjustments for tips and group-term life insurance. Total any uncollected employee share of social security and Medicare taxes on tips and group-term life insurance premiums paid for former employees.

Line 10: Add together amounts entered on Line 6, Line 7, Line 8 and Line 9 and enter on Line 10.

Line 11: Enter total deposits made for this filing quarter (deposits also include overpayments from prior Forms 941, 941-X, or Form 944-X).

Line 12 & Line 13: Subtract Line 11 from Line 10, if it results in a negative amount then enter amount on line 12. If it results in a positive amount, then enter amount on Line 13 and check whether you want the overpayment to be applied to your next return or a sent as a refund.

Part 2:

Line 14: Check the box that describes your deposit schedule if Line 10 is less than $2,500 or Line 10 on the prior 941 return was less than $2,500 and you did not incur a $100,000 next-day deposit obligation during the current quarter.

Part 3:

Line 15: If your business has closed or stop paying compensation then check the box and enter the last date compensation was paid.

Line 16: Check box on line 16 if you do not have consistent employees, but hire seasonally (i.e. only have employees for the summer or winter). This box notifies the IRS that you will not be submitting four Form 941s throughout the year but will only be submitting one to three Form 941s throughout the year that corresponds with your hiring season.

Part 4:

Check whether or whether or not a third party is allowed to discuss the return being filed with the IRS.

Part 5:

Sign and print your name, enter your title, signature date and best daytime phone number.

Make sure to complete your 941 Payment Voucher Form 941-V if you are sending a paper check rather than paying electronically.

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