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For business owners who have employees, managing payroll tax responsibilities is a critical and potentially daunting task. At the heart of this process is IRS Form 941, which is the name for the Employer’s Quarterly Federal Tax Return. Employers use this document to accurately report and pay payroll taxes each quarter, including federal income taxes, Social Security taxes, and Medicare taxes.
Filing this tax return accurately and on time—most likely four times a year—is necessary to stay compliant with the IRS and avoid costly penalties. Learn more about Form 941, including which businesses need to file it, what to report, and when to send it.
What is IRS Form 941?
IRS Form 941, the Employer’s Quarterly Federal Tax Return, is a tax form employers use to report federal income taxes withheld from their employees’ wages, as well as Social Security and Medicare taxes (both the employer’s and employees’ shares).
The form reconciles your total tax liability for the quarter with employment tax deposits you’ve already paid to the IRS, determining if you have a balance due or an overpayment.
The payroll taxes reported on Form 941 are:
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Federal income tax. The amount you withhold from your employees’ pay based on their Form W-4, which is filled out by employees to determine how much federal income tax will be withheld from their paychecks.
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Federal Insurance Contributions Act (FICA) tax. Social Security and Medicare taxes are also known as FICA taxes. These are split between the employee and the employer.
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Additional Medicare tax. If an employee’s wages and other compensation exceeds $200,000 a year, employers must withhold an additional Medicare tax of 0.9% for that additional amount.
The requirement to file Form 941 is tied to paying employee wages that are subject to federal income tax withholding or FICA taxes. If a business doesn’t pay such wages, it does not file Form 941.
The following types of employer wouldn’t typically need to file Form 941:
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Businesses that work only with independent contractors. If a business engages only independent contractors and has no W-2 employees, it does not withhold income taxes or pay FICA. These workers are considered self-employed and are responsible for their own taxes. The business reports these payments on Form 1099-NEC, not Form 941.
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Businesses with no employees, only owners. A sole proprietor with no employees does not file Form 941. In a sole proprietorship, the owner is not an employee. Rather, they pay self-employment tax on their personal tax return (Schedule SE). Partners in a general partnership are not considered employees and do not receive wages. Instead, they take guaranteed payments or draws and pay self-employment tax.
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State and local governments. Many state and local government employees are not subject to Social Security if they are covered by a qualifying public retirement plan (a FICA-replacement plan).
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Certain religious organizations. Churches and qualified church-controlled organizations can, for religious reasons, elect to be exempt from paying the employer’s share of FICA taxes. In this case, their employees become responsible for paying their own self-employment taxes.
Although those specific business types may be exempt, if your business does pay employee wages, filing Form 941 quarterly is the standard. However, the IRS lists a few specific exceptions:
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Certain small businesses. The IRS may instruct small employers with an annual employment tax liability of $1,000 or less to file Form 944, Employers Annual Federal Tax Return, instead. You use this form only if the IRS notifies you.
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Seasonal employers. If you hire only employees for certain parts of the year, you can check a box on Form 941 indicating that you are a seasonal employer. You must file in the fiscal quarters when you pay wages, but you don’t have to file in the months you don’t have any employees on payroll.
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Household employees. If you employ household workers, like a caregiver or cleaning professional, report their wages and employment taxes on Form 1040, Schedule H, which is filed with your personal income tax return.
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Agricultural employers. Employers who pay farm workers report their wages and employment taxes annually on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees.
What information is reported on IRS Form 941?
- Part 1: Wages and taxes paid
- Part 2: Deposit schedule and tax liability
- Part 3: Business information
- Part 4: Third-party designee
- Part 5: Signature
IRS Form 941 is divided into five parts, along with an intro section where you provide your employer identification number (EIN), your name, business name and address, and which quarter the report is for. You will need your detailed payroll records for the quarter to complete this form, which asks for the following:
Part 1: Wages and taxes paid
This part requires you to report your total wages paid to employees, the federal income tax withheld from those wages, and the taxable Social Security and Medicare wages. You’ll use these wage figures to calculate and report your total FICA tax—both employer and employee shares—and the additional Medicare tax withheld to reconcile your total tax liability with your total deposits.
Wage-based limits, which are the maximum amount of an employee’s annual wages that are subject to payroll taxes, are critical for this calculation. You report only up to the limit for Social Security taxes.
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Social security wage base. You must withhold 6.2% for employee wages and pay a matching 6.2% as their employer. This tax stops for both you and the employee once that employee’s total wages for the year exceed the annual Social Security wage base limit ($176,100 for 2025). You are no longer responsible for withholding or paying Social Security tax on any wages paid to that employee for the rest of the calendar year.
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Medicare tax. You must withhold 1.45% from employee wages and pay a matching 1.45% as the employer. There is no wage base limit for Medicare; this tax applies to all of an employee’s wages.
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Additional Medicare tax. You must withhold a separate 0.9% from employee wages only after those wages exceed $200,000 in the calendar year. There is no employer match for the additional Medicare tax.
You can also claim certain non-refundable payroll tax credits, such as the qualified small business payroll tax credit for increasing research and development activities, also known as the R&D credit.
There are also adjustments that can be made beyond credits that affect your tax calculation. For example, group term life insurance over $50,000 is a non-cash benefit that’s still subject to Social Security and FICA taxes. Similarly, third-party sick pay requires an adjustment because the employer may need to pay the employer’s share of FICA even though an insurer paid the wages.
Part 2: Deposit schedule and tax liability
In this section, you must report the specific dates you paid your employees. The IRS doesn’t just want to know your quarterly total; it needs to know when you ran payroll, since that’s when your tax obligation was created. This is officially known as the date your payroll tax liability was incurred.
How you report those dates depends on whether you are a monthly or semiweekly schedule depositor. Your status is determined by the total amount of employee taxes you reported during a specific 12-month lookback period. This period is the four quarters ending on June 30 of the prior year.
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Monthly depositor. You are a monthly depositor if you reported $50,000 or less in taxes during the lookback period. You will report your total tax liability for each of the three months in the quarter. New employers with no lookback period typically start as monthly depositors.
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Semiweekly depositor. You are a semiweekly depositor if you reported more than $50,000 in taxes during the lookback period. You must attach Schedule B (Form 941) to report your tax liability on a day-by-day basis.
Part 3: Business information
This part asks two yes-or-no questions that tell the IRS about the status of your business. The first question asks if your business closed during that quarter. This refers to permanently going out of business or stopping the payment of all employee wages. If you check this box, you tell the IRS this is your final Form 941. You would do this if you decide to legally dissolve your business entity such as an LLC, or if your business files for bankruptcy.
The second question asks if you are a seasonal employer. This is for businesses that operate and pay wages only during certain times of the year. Answering yes here tells the IRS you are not permanently closed, but that it shouldn’t expect a form from you for quarters when you have no employees.
Part 4: Third-party designee
You can optionally check a box here to enable the IRS to discuss this specific tax return with your employees or the people they paid to prepare and file their own taxes. This can help resolve any issues or discrepancies with the paperwork more quickly.
Part 5: Signature
The form must be completed, signed, and dated by an authorized person, such as the business owner, a corporate officer, such as the president or vice president, or a partner. If you use a paid preparer like a payroll processing service or an accountant to prepare the form, they must also sign it and provide their contact information.
When is IRS Form 941 due?
Form 941 is a quarterly federal tax return, meaning it’s due four times a year. The due date is the last day of the month that follows the end of the quarter. However, if the due date falls on a Saturday, Sunday, or a legal holiday, the deadline moves to the next business day.
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First quarter (January 1 to March 31). Form due April 30.
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Second quarter (April 1 to June 30). Form due July 31.
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Third quarter (July 1 to September 30). Form due October 31.
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Fourth quarter (October 1 to December 31). Form due January 31.
If you send your employment tax deposits on time and in full for the quarter, you get an automatic, 10-day extension to file the form, per the IRS.
What happens if you file IRS Form 941 late or not at all?
The IRS assesses financial penalties for skipping out on filing Form 941 or failing to pay and deposit what’s owed. These errors generally fall into three categories:
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Failure to file. If you don’t file Form 941 by the due date, the penalty is 5% of the unpaid tax for each month the return is late, capped at 25%. If your return is more than 60 days late, the minimum penalty is $510 (for 2025 returns) or 100% of the tax due, whichever is less.
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Failure to pay. If you file on time but don’t pay the full amount due, this penalty is 0.5% of the unpaid tax for each month, also capped at 25%. If both the failure to file and failure to pay penalties apply in the same month, the failure to file penalty is reduced by the amount of the failure to pay penalty.
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Failure to deposit. This penalty applies if you don’t deposit your payroll taxes on time per your monthly or semi-weekly schedule, in the right amount, or in the right way. This penalty ranges from 2% to 15% of the unpaid deposit, depending on how late you are.
These penalties, plus interest, can add up quickly. Interest starts accruing from the original due date of the tax and continues until the balance is paid in full. The IRS calculates interest in two main ways:
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Quarterly. The interest rate for underpayments is the federal short-term rate plus three percentage points. For 2025, this rate is 7%.
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Compounded daily. Interest is also calculated each day on the total outstanding balance, which includes any interest that’s already accrued. This interest-on-interest effect is what causes the total amount owed to grow quickly.
How to file IRS Form 941
There are two methods for filing Form 941:
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Electronic filing. This method is faster, more secure, and helps reduce errors. You can e-file through approved payroll software or have a tax professional e-file on your behalf.
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Mail a paper form. You also have the option of sending a physical copy of Form 941. The mailing address for your form depends on your state and whether you’re including a payment with the return. The IRS provides a Where to File chart in the Instructions for Form 941.
Note that filing Form 941 is separate from making your payroll tax payments. Most employers must deposit their payroll taxes electronically using the Electronic Federal Tax Payment System (EFTPS) according to their deposit schedule.
How to correct a mistake on IRS Form 941
If you discover an error on a previously filed form, you need to file a separate form to correct it. It’s known as Form 941-X, which is the Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. A separate 941-X must be filed for each quarter you need to correct. On this form, you report the amounts you previously reported, the amounts you should have reported, and the difference. This form is used to correct both underpayments and overpayments.
Common errors made on Form 941 include:
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Calculation errors. Simple math mistakes in calculating total Social Security and Medicare taxes.
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Forgetting the wage base limit. This common error results in an overpayment of Social Security taxes. It happens when you continue to calculate and withhold the tax on an employee’s wages after they’ve passed the annual wage base limit.
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Misclassifying workers. If the IRS or Department of Labor determines you have incorrectly classified employees as independent contractors, and therefore not reported and paid payroll taxes on their wages, you will be subject to all back payroll taxes (including the employee’s share), plus any interest and penalties.
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Incorrect deposit schedule. If you are a semiweekly depositor but follow a monthly schedule, your deposits will be considered late, even if you pay the full monthly amount. This doesn’t necessarily mean your total quarterly tax calculation is wrong, but that you didn’t pay it on time. This will trigger the failure to deposit penalty.
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Missing additional Medicare tax. Forgetting to withhold additional Medicare tax on employee wages over $200,000.
Using reputable payroll software or a certified public accountant and keeping meticulous payroll records are the best ways to avoid these common errors.
IRS Form 941 FAQ
What is a 941 form for?
The 941 form is the Employer’s Quarterly Federal Tax Return. It allows employers to report income taxes and FICA taxes, which are Social Security and Medicare, that were withheld from employee paychecks or paid by the employer during a specific three-month period.
Who fills out a 941 form?
Any employer who pays employees wages that are subject to federal income tax withholding, Social Security, or Medicare tax must fill out Form 941. The business owner, an in-house payroll manager, or an external accountant or paid preparer typically handles this.
What happens if I don’t file form 941?
If you don’t file Form 941, the IRS can assess penalties for both failure to file and failure to pay any tax due. These penalties accumulate with interest over time, and they can become a significant financial burden on a business.
