Form 941: Employer's Guide to Quarterly Federal Tax Return

Every business knows the drill: Taxes don’t end with your annual filing.

Form 941, the employer’s quarterly federal tax return, is a regular checkpoint with the IRS. Each quarter, it’s your business’s way of reporting what you’ve collected and paying what you owe.

This guide will walk you through what Form 941 covers, who needs to file, and how to keep it accurate. We’ll also share how Mosey can help you manage state compliance.

What Is the Purpose of IRS Form 941?

Form 941 is for reporting the payroll taxes you collect from your employees. It tells the IRS how much you’ve withheld for federal income taxes, Social Security, and Medicare and what your business still owes from Social Security wages and Medicare contributions.

These taxes contribute to Social Security and Medicare benefits for employees. For employers, staying on top of Form 941 is essential to avoid penalties and keep the IRS in the loop.

Who Should File Form 941?

For most businesses, if you have employees and withhold taxes, you must file Form 941 quarterly. That said, there are a few exceptions:

• Seasonal Employers: If you only operate part of the year, you only need to file for quarters when you’re actually paying employees.
• Household Employers: If your employees work solely in your home, like a nanny or housekeeper, they are considered household employees. Report their wages on your personal tax return instead.
• Agricultural Employers: If you’re reporting for farmworkers, you’ll report payroll with Form 943.

What Are the Quarterly Deadlines?

Think of Form 941 deadlines as quarterly reminders to review and report your payroll taxes. Each quarter has its own due date:

• First Quarter: April 30
• Second Quarter: July 31
• Third Quarter: October 31
• Fourth Quarter: January 31

If a deadline lands on a weekend or holiday, the IRS accepts filings on the next business day. Staying current with these dates keeps your business’s tax obligations on track.

What Does Form 941 Cover?

Filing Form 941 means gathering a few key pieces of information:

• Number of Employees and Total Wages: Start with the basics, like how many employees you paid and their total wages, tips, and compensation.
• Federal Income Tax Withholding: This is what you’ve withheld from employees’ paychecks for federal income tax.
• Social Security and Medicare Contributions: Social Security and Medicare contributions include employee and employer shares, reported separately on Form 941. The IRS outlines the specific percentages for each quarter so you know what’s due.

Adjustments for Special Cases

Not every payroll scenario is straightforward. Sometimes, Form 941 includes adjustments:

• Group-Term Life Insurance: If your business provides group-term life insurance, it can impact taxable wages.
• Sick Pay: If employees receive sick pay covered by insurance, you may need to report adjustments.
• Tips: Employee-reported tips factor into Social Security and Medicare contributions and are part of some businesses’ tax picture.

Accuracy on Form 941 is essential for keeping your payroll records in sync with the IRS and maintaining your employees’ Social Security and Medicare records. Filing accurately each quarter avoids the risk of penalties and keeps your payroll compliance steady.

What Are the Quarterly Deadlines and Filing Options for Form 941?

Each Form 941 deadline is a checkpoint to review and report. Here’s a quick recap:

• First Quarter: April 30
• Second Quarter: July 31
• Third Quarter: October 31
• Fourth Quarter: January 31

Marking these in your calendar or using reminders keeps your quarterly filings timely. If you’ve made all your tax deposits on time, you might qualify for an extra 10 days, so it’s worth staying up to date on your payments.

Electronic vs. Mail Filing

When it comes to submitting Form 941, there are two main options:

• Electronic Filing (E-File): Many businesses prefer the speed and simplicity of e-filing. This method cuts down on paperwork, reduces errors, and allows you to track confirmations.
• Mail-In Option: Some businesses still prefer paper forms. If that’s you, the IRS provides designated mailing addresses based on your state and whether you’re including payment. Just be sure your form is postmarked by the due date.

Payment Submission With EFTPS

The Electronic Federal Tax Payment System (EFTPS) is a secure way to pay federal taxes online.

Once registered, businesses can schedule and track payments, which makes it easier to stay on top of quarterly obligations. It’s a convenient option for businesses wanting a streamlined approach to taxes.

How To Complete IRS Form 941

Need help getting everything in order? We’ve put together the steps you should follow to ensure you don’t miss a beat.

Preparation Checklist

Before starting Form 941, gather these essentials:

• Business Information: Your Employer Identification Number (EIN), business name, and contact information.
• Employee Wage Data: Have records of total wages, Social Security, and Medicare tax amounts on hand. Payroll software or records simplify this step.

Filling Out Form 941

Each section of Form 941 requires specific details. Here’s an overview:

Part 1: Taxable Wages and Tax Liability

• Lines 1-4: Report the number of employees, total wages, and the federal income tax withheld for the quarter.
• Lines 5A-5D: Calculate Social Security and Medicare taxes. The IRS provides specific rates to apply to wages and tips. Following these rates ensures the contributions are calculated correctly.

Part 2: Deposit Schedule and Tax Liability

• Indicate your deposit frequency, monthly or semiweekly. If you’re a semiweekly schedule depositor, complete Schedule B to report tax liabilities by date.

Parts 3 and 4: Additional Reporting

• Part 3: This part includes any adjustments, like COVID-19 relief credits, and notes if your business has closed or stopped paying wages.
• Part 4: This part authorizes a third-party designee (such as your tax preparer) to speak to the IRS on your behalf if needed.

Review and Submit

Double-check every section to ensure accuracy before submitting your form. Whether you file electronically or by mail, a careful review helps prevent mistakes and keeps your records in good standing with the IRS.

How To Avoid Common Form 941 Errors and Penalties

It can be easy to make mistakes, but what ultimately matters is that you catch them and correct them before submission. Consider the following:

Late Tax Filing and Payment Penalties

Meeting the deadline avoids penalties, and missing a tax due date can be costly. Generally, late filings incur a penalty of five percent of the unpaid tax per month, maxing out at 25%. Filing on time and ensuring all tax deposits are current helps your business sidestep these charges.

Correcting Mistakes With Schedule B and Schedule D

Form 941 errors are avoidable, but if they happen, certain schedules can help:

• Schedule B: For businesses on a semiweekly deposit schedule, Schedule B breaks down tax liabilities by date.
• Schedule D: For any discrepancies due to mergers or acquisitions, Schedule D helps clarify these changes with the IRS.

Reporting Adjustments Properly

Some adjustments, like sick pay, group-term life insurance, and tips, demand attention to detail. Group-term life insurance, for instance, can change your taxable wage calculations, impacting Social Security and Medicare contributions. Carefully reporting these adjustments avoids issues and keeps everything accurate.

Managing Form 941 each quarter might seem like one more thing to add to your to-do list, but it’s a straightforward way to keep your business compliant. By staying organized and filing on time, you’ll have a clear, consistent process that aligns your payroll records with IRS requirements.

What Are the Top Considerations for Small Businesses and Growing Teams?

Whether you’re running a small business or expanding into new locations, understanding your tax obligations is crucial for staying compliant.

Here are a few factors that small business owners and growing teams should consider when handling payroll taxes:

Semiweekly vs. Monthly Depositor Status

One of the first decisions to make is determining whether your business is a semiweekly or monthly depositor. This status depends on your total tax liability during a designated “lookback period,” which the IRS uses to determine your deposit schedule.

If your tax liability was $50,000 or less in the previous four quarters, you’re a monthly depositor. If it exceeds $50,000, you’re on a semiweekly deposit schedule.

Monthly depositors submit their tax payments by the 15th of the following month, while semiweekly depositors have stricter deadlines. If you’re a semiweekly depositor, you’ll file based on the day your wages are paid. Pay close attention to your deposit status to avoid late penalties and ensure you meet IRS requirements.

Tax Credits for Eligible Businesses

Small businesses that invest in research activities may qualify for tax credits on their Form 941 filings.

Specifically, the payroll tax credit for increasing research activities allows eligible businesses to claim a credit against Social Security tax. This credit is particularly useful for startups and small businesses focused on innovation.

If your business engages in qualifying research activities — whether in technology, healthcare, or another field — you may be able to reduce your payroll tax liability. Just remember that eligibility requirements are strict, and it’s wise to consult with a tax professional to confirm that your activities meet IRS guidelines for credit.

Seasonal Employers and Other Considerations

If you run a seasonal business that operates only part of the year, you may qualify for special filing arrangements. Seasonal employers only need to file Form 941 for quarters in which they pay wages.

If your business takes a break during certain months, this exception can reduce your administrative load and keep your filings focused on active payroll periods. For businesses with unique employment patterns, following these seasonal filing rules can simplify tax compliance without sacrificing accuracy.

How Does Mosey Support Payroll Tax Compliance and Automation?

When it comes to managing payroll tax compliance, Mosey offers a streamlined approach designed to help businesses stay on track, especially as they grow across multiple states.

Compliance Assistance

Mosey is dedicated to helping businesses stay on top of ever-changing tax compliance requirements. From payroll and registration to HR compliance, Mosey monitors regulations at the state and local levels, alerting you to new obligations as they arise.

Automated Tax Nexus Detection

A key part of managing payroll compliance is understanding the tax nexus — the connection between where your employees work and where your business owes taxes.

With Mosey, tax nexus detection is automated. That means as you hire employees in new locations or when employees move, Mosey’s compliance management platform automatically checks for tax obligations based on your employee data.

Centralized Login and Mail Digitization

Managing compliance often means handling numerous documents and notices from different agencies. Mosey includes a centralized login feature that gives your accounting and HR teams secure access to all compliance records.

Additionally, Mosey digitizes compliance mail, allowing you to access important notices and updates directly from your browser.

Master Compliance With Mosey

Whether your questions are about tax registration, compliance obligations, or multi-state payroll, Mosey organizes your state-by-state requirements to turn the complex task of compliance management into confidence so your team can file with ease.

Schedule a free consultation with Mosey to learn how our system can simplify and automate compliance management.

Read more from Mosey:

• Employer’s Guide to Workers Compensation for Remote and WFH Employees
• California IWC Wage Orders: What Is My Wage Order and Requirements?
• Introducing Automated Employee Handbooks
• Client Reporting States: 8 Steps To Maintain Compliance on a PEO
• Employee Handbook Acknowledgment: Importance and Best Practices
• AI in HR: How AI and Automation Tools Are Transforming HR