What Are 941 Taxes?

by Cam Merritt; Updated September 26, 2017

Federal law requires employers to withhold federal income taxes, Social Security taxes and Medicare taxes from their workers' paychecks, and to pay Social Security and Medicare taxes of their own. Most employers use Internal Revenue Service Form 941 to report how much they've withheld, which is why these taxes are sometimes called "941 taxes."

Quarterly Returns

Form 941 is also called the "Employer's Quarterly Federal Tax Return." An employer files a 941 for each calendar quarter; the return is always due one month after the end of the quarter. So, for the quarter January through March, the return is due April 30; for April through June, it's due July 31; for July through September, it's due October 31; and the return for October through December is due on January 31. Employers can file on paper or electronically.

Form 941

On Form 941, the employer lists the number of workers who received pay during the quarter, the total amount of federal income taxes withheld from their pay, and the combined amount of Social Security and Medicare taxes due -- both the employees' share and the employer's share. The form allows some adjustments for such things as sick pay reimbursed by a third party. Finally, the employer lists how much 941 tax money it deposited with the IRS during the quarter.

Deposits

Employers can't wait until they file the return to send the quarter's 941 tax money to the IRS. Employers must make regular deposits throughout the year. Depending on how much they pay in wages, they must deposit 941 taxes with the IRS either once a month or every two weeks. However, if an employer's outstanding 941 taxes reach $100,000, that employer must deposit it by the next business day, regardless of its normal deposit schedule. If an employer ends up depositing too much over the quarter, as determined on Form 941, the employer can request a refund or have the overpayment applied to the next quarter's return. If it underpays, it has to make up the difference when it files its 941; penalties and interest may apply.

Considerations

Despite the "tax return" in the name of the form, Form 941 is not used to report and pay an employer's own federal income tax obligations. The employer files a separate annual return for that, such as Form 1120 for a corporation. Form 941 also isn't used to report federal unemployment tax, or FUTA; employers use Form 940 for FUTA taxes. Finally, employers with only a small 941 tax liability -- $1,000 or less in a year as of 2011 -- may be able to skip a lot of the paperwork and file a single annual return, Form 944.

About the Author

Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.