Form 941 Instructions 2023

What is Form 941?

Federal Form 941 is the Employer's Quarterly Federal Tax Return form used by employers to report wages paid to employees and federal payroll taxes. This form is filed quarterly to report:

• Total wages paid
• Federal income tax withheld
• Social Security and Medicare wages and taxes

Form 941 is filed by employers who pay wages subject to income tax withholding or Social Security and Medicare taxes. It is used to determine the employer's tax liability for the quarter.

Who can file Form 941?

Every employer who pays wages to employees that subject to income tax withholding or Social Security and Medicare taxes must file Form 941 with the IRS.

However, if the IRS has notified your business to file Form 944, then you are not required to file Form 941.

When is the Form 941 due date?

Form 941 needs to be filed quarterly. Below are the deadlines for filing Form 941 for each quarter.

Form 941 instructions - How to fill out?

• Enter your business name, EIN, and address.
• Check the quarter box for which you’re filing the return.

PART 1

Line 1: Enter the number of employees who received wages, tips, or other compensation during the pay period. Do not count these workers:

• Household employees
• Employees who did not receive pay for the period
• Farm employees
• Retirees receiving pensions
• Active members of the U.S. Armed Forces

Line 2: Enter the total wages, tips, and other compensation that would be reported in box 1 of your employees' Forms W-2. This includes:

• Regular wages
• Tips
• Sick pay paid by you or your agent
• Sick pay paid by a third party if they notified you and transferred tax liability to you.

Line 3: Enter the total wages, tips, and other compensation that would be reported in box 1 of your employees' Forms W-2. This includes:

If you're a third-party payer of sick pay, enter federal income tax withheld on third-party sick pay here.

Line 4: If none of the wages, tips, and other compensation on line 2 are subject to Social Security or Medicare tax, check the box on line 4. If they are subject to these taxes, leave the box blank.

Line 5a - Taxable social security wages: Enter the total wages, including qualified sick leave and family leave wages paid in the tax year, sick pay, and taxable fringe benefits subject to Social Security tax that you paid this quarter. Sick pay includes insurance company payments to employees which you were notified of.

Enter the amount before payroll deductions, excluding tips.

Line 5a(i) - Qualified sick leave wages: Enter the qualified taxable sick leave wages paid this quarter in 2023 for leave taken 3/31/20 – 3/31/21. These wages aren't subject to the employer's share of Social Security tax (6.2% rate).

Line 5a(ii) - Qualified family leave wages: Enter the qualified taxable family leave wages paid this quarter in 2023 for leave taken 3/31/20 – 3/31/21. These wages aren't subject to the employer's share of Social Security tax (6.2% rate).

Line 5b - Taxable Social Security tips: Enter all tips employees reported this quarter until the total tips and taxable wages, including wages on line 5a, sick leave wages on 5a(i), and family leave wages on 5a(ii), reach $160,200 per employee for the year.

Line 5c - Taxable Medicare wages & tips: Enter all wages, including qualified sick leave and family leave wages paid this quarter in 2023, tips, sick pay, and taxable fringe benefits subject to Medicare tax.

Line 5d - Wages & tips subject to Additional Medicare Tax: Enter all wages, including qualified sick leave and family leave wages paid this quarter in 2023, tips, sick pay, and taxable fringe benefits subject to Additional Medicare Tax withholding.

Line 5e - Total social security and Medicare taxes: Add the column 2 amounts on lines 5a–5d, and enter the result amount.

Line 5f. Section 3121(q) notice and demand—tax due on unreported tips: Enter the tax due from your Section 3121(q) Notice and Demand for unreported or underreported tips. The IRS issues this notice to advise employers of the amount of tips received by employees who failed to fully report tips.

Line 6 - Total taxes before adjustments: Add these values together:

• Federal income tax withheld (line 3)
• Total Social Security and Medicare taxes before adjustments (line 5e)
• Any tax due under Section 3121(q) Notice and Demand (line 5f) Enter the total on line 6.

Line 7 - Adjustment for rounding: Enter adjustments for fractions of cents (due to rounding) related to the employee share of Social Security and Medicare taxes withheld. The employee share amounts on lines 5a–5d may differ slightly from actual withholding due to rounding based on statutory rates. This adjustment can be positive or negative.

Line 8 - Current quarter's adjustment for sick pay:

• If a third-party payer of sick pay (not your agent) transferred the employer share of Social Security and Medicare taxes to you, enter a negative adjustment for the employee share they withheld and deposited.
• If you're the third-party payer and transferred the employer share to the employer, enter a negative adjustment for any employer share the employer must pay.

Include the sick pay on lines 5a, 5c, and 5d if the withholding threshold is met.

Line 9 - Current quarter's adjustments for tips and group-term life insurance:

• Enter a negative adjustment for any uncollected employee share of Social Security and Medicare taxes on tips.
• Enter a negative adjustment for any uncollected employee share of Social Security and Medicare taxes on group-term life insurance premiums paid for former employees.

Line 10 - Total taxes after adjustments: Add the amounts shown on lines 6–9 and enter the result.

Line 11a - Qualified small business payroll tax credit for increasing research activities: Enter the qualified small business payroll tax credit for increasing research activities from Form 8974, line 12 or line 17 if applicable.

Line 11b - Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021: Enter the nonrefundable portion of the credit for qualified sick and family leave wages paid in 2023 for leave taken 3/31/20 – 3/31/21. Calculate the nonrefundable portion using Worksheet 1, Step 2, line 2j.

Line 11d - Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021: Enter the nonrefundable portion of the credit for qualified sick and family leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. Calculate the nonrefundable portion using Worksheet 2, Step 2, line 2p.

Line 11g - Total nonrefundable credits: Add lines 11a, 11b, and 11d and enter the total.

Line 12 - Total taxes after adjustments and nonrefundable credits: Subtract line 11g from line 10 and enter the result on line 12. The amount can't be less than zero.

• If line 12 is under $2,500 or line 12 on the prior return was under $2,500, and you didn't incur a $100,000 next-day deposit obligation this quarter, you may pay with Form 941 or deposit the amount. To avoid a penalty, pay in full with a timely filed return or deposit the amount before the due date.
• If line 12 is $2,500 or more and line 12 on the prior return was $2,500 or more, or you incurred a $100,000 next-day deposit obligation this quarter, you must make required deposits according to your schedule.

Line 13a - Total deposits for this quarter: Enter your total tax deposits for this quarter, including:

• Any overpayment from a prior quarter that you applied to this return
• Any overpayment from Form 941-X, 944-X, etc., that you applied in the current quarter

Line 13c - Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021: Enter the refundable portion of the credit from Worksheet 1, Step 2, line 2k.

Line 13e - Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021: Enter the refundable portion of the credit from Worksheet 2, Step 2, line 2q.

Line 13g - Total deposits and refundable credits: Add lines 13a, 13c, and 13e and enter the total.

Line 14 - Balance due: If line 12 value is more than line 13g, enter the difference on line 14.

Line 15 - Overpayment: If line 13g is more than line 12, enter the difference on line 15.

PART 2

Line 16 - Tax liability for the quarter:

• If line 12 is under $2,500 or line 12 on the prior return was under $2,500, and you didn't have a $100,000 next-day deposit this quarter, check the first box and go to Part 3.
• If you reported $50,000 or less in taxes in the lookback period, you are a monthly schedule depositor unless the $100,000 next-day deposit rule applies. Check the second box and enter your monthly tax liabilities for when wages were paid, not deposits made. Add the monthly amounts and enter the total liability for the quarter.
• If you reported over $50,000 in taxes in the lookback period, you are a semiweekly schedule depositor. Check the third box.

PART 3

Line 17 - If your business has closed: If you close your business or stop paying wages, you need to file a final tax return. To let the IRS know this is your last return, simply check the box on line 17 and enter the date you stopped paying wages.

Line 18 - If you’re a seasonal employer: If you hire employees only during certain seasons, check the box on line 18.

This lets the IRS know that you won't be submitting four Forms 941 throughout the year because you don't pay wages regularly.

Line 19 - Qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2020, and before April 1, 2021: Enter the qualified health plan expenses allocable to qualified sick leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. This amount is also included in Step 2, line 2b of Worksheet 1.

Line 20 - Qualified health plan expenses allocable to qualified family leave wages for leave taken after March 31, 2020, and before April 1, 2021: Enter the qualified health plan costs associated with paid family leave taken for leave taken 3/31/21 – 9/30/21 for this quarter of 2023. This amount is also included in Step 2, line 2f of Worksheet 1.

Line 23 - Qualified sick leave wages for leave taken after March 31, 2021, and before October 1, 2021: Enter the qualified sick leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21, including any qualified sick leave wages that were above the social security wage base and any qualified sick leave wages excluded from the definition of employment under sections 3121(b)(1)–(22).

This amount is also included in Worksheet 2, Step 2, line 2a.

Line 24. Qualified health plan expenses allocable to qualified sick leave wages reported on line 23: Enter the qualified health plan expenses associated with qualified sick leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. This amount is also included in Worksheet 2, Step 2, line 2b.

Line 25 - Amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 23: Enter contributions to collectively bargained pension plans and apprenticeship programs that are linked to qualified sick leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. This amount is also included in Worksheet 2, Step 2, line 2c

Line 26. Qualified Family Leave Wages for Leave Taken After March 31, 2021, and Before October 1, 2021: Enter the qualified family leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21, including any qualified family leave wages that were above the social security wage base and any qualified family leave wages excluded from the definition of employment under sections 3121(b)(1)–(22). This amount is also included in Worksheet 2, Step 2, line 2g.

Line 27 - Qualified health plan expenses allocable to qualified family leave wages reported on line 26: Enter the qualified health plan expenses associated with qualified family leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. This amount is also included in Worksheet 2, Step 2, line 2h.

Line 28 - Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 26: Enter contributions to collectively bargained pension plans and apprenticeship programs that are linked to qualified family leave wages paid this quarter of 2023 for leave taken 3/31/21 – 9/30/21. This amount is also included in Worksheet 2, Step 2, line 2i.

PART 4: Third-party designee

If you want to assign a third-party designee to discuss your Form 941 with the IRS on your behalf, check the Yes box and enter their details. Else, you can check the No box.

PART 5: Sign

Sign Form 941, provide your name, title, and daytime phone number.

Form 941 penalty

Penalties may be imposed for failure to file, failure to pay taxes due, or late filing/payment of taxes. The penalties are calculated as a percentage of the tax amount due. Some common Form 941 penalties include:

How to file IRS Form 941?

IRS Form 941 can be filed electronically or by paper:

Form 941 E-filing

E-filing Form 941 is fast, accurate, and secure. Below are some of the benefits of e-filing:

• Automatic calculation of taxes and penalties
• Instant confirmation that the return is accepted
• Smooth and efficient e-filing experience

You can e-file using an IRS-authorized e-file service provider like TaxZerone.

Form 941 paper filing

If you’re choosing the traditional paper filing method, follow the steps below:

1. Download or order Form 941 from IRS.gov
2. Complete all required information on the form
3. Mail the completed Form 941 to the applicable IRS address below.

Where to send Form 941 - Mailing address

Source: IRS

How to e-file Form 941 using TaxZerone?

E-filing your Form 941 takes just 3 steps. To make it even faster, gather all the necessary information before you start. That way, you can zip through the filing process in no time.

1. Enter Form 941 information
   Provide all necessary details including employer and employment information, tax liabilities, federal income taxes, Social Security and Medicare taxes, and total deposits and payments made for the quarter.
2. Pay the balance due and sign Form 941
   Select your preferred payment method to clear any outstanding balance, e-sign the return, and carefully review all information on the form to confirm its accuracy.
3. Transmit the return to the IRS
   Securely transmit your completed Form 941 to the IRS and receive prompt notification once your return has been accepted.