No Employees This Quarter? You Still May Need to File IRS Form 941
As an employer, you have plenty of obligations when it comes to filing taxes. Among these is the need to file IRS Form 941, the Employer’s Quarterly Federal Tax Return, on the last day of each month following the end of a quarter. Sticking to these deadlines — April 30, July 31, Oct. 31 and Jan. 31 — is essential for remaining in compliance and avoiding an inquiry from the Internal Revenue Service.
What is Form 941 and Who Has to Submit It?
Form 941 is a summary of the total taxes withheld during the previous quarter by anybody —business or individual — that compensates an employee or employees.
If you are an employer who pays wages to household employees or agricultural employees, you are exempt from this rule. Those who employ seasonal workers who don’t get paid during one or more quarters of the year are exempt as well.
All other employers are required to submit the form, regardless of whether they pay employees during a given quarter or not. This is a common misconception that is important to be aware of in order to remain compliant.
What the Form Contains
Form 941 requires a significant amount of information, including how many employees a business pays, what the total wages paid were for the quarter, as well as what the total withholding of taxes was for the quarter.
In order to fill the information out accurately, it’s necessary to gather all payroll records and other documentation for the quarter, including reports of any taxable tips that your employees indicated that they received. Once calculated, the employer must send in the form, the appropriate withholding and federal income tax, and 1.45 percent of all taxable wages for the Medicare tax payment. Social Security payments of 6.2 percent of each employee’s wages must also be submitted (up to $132,900 for tax year 2019). For those employees paid more than $200,000 per year, employers are also required to withhold the Additional Medicare Tax.
Penalties for Failure to File
The Form 941 must be submitted four times per year by the above-referenced dates, and employers who fail to do so face significant penalties of a percentage of whatever tax had been due for each month or portion of a month that is delayed. As you may imagine, this penalty can add up quickly. According to IRS Publication 15 (2020), these are the penalty rates for amounts not properly or timely deposited:
- 2% - Deposits made 1 to 5 days late.
- 5% - Deposits made 6 to 15 days late.
- 10% - Deposits made 16 or more days late, but before 10 days from the date of the first notice the IRS sent asking for the tax due.
- 10% - Amounts that should have been deposited, but instead were paid directly to the IRS, or paid with your tax return. (See “Payment with return” within Pub. 15 for an exception.)
- 15% - Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier.
At tax time, businesses need to reconcile the amount reported on the four Form 941s they submitted with the employee wages reported on the W-2 forms provided to employees so that they can fill out their own tax returns. The total of the Form 941s should be the same as the total on the W-2s, as well as on the Form W-3 that employers file with the IRS. Contact this office for assistance or any questions regarding your Form 941 requirements.
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At IAM Accounting LLC, we take pride in our diverse and experienced team of professionals, each dedicated to providing exceptional service in accounting, tax planning, payroll, and financial management. Our team members bring a wealth of knowledge from various financial backgrounds, working together to ensure that every client receives the personalized attention and expertise they deserve. From managing complex accounting operations to providing tax-saving strategies, we’re here to help you achieve your financial goals with precision and care.
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Ibrahim Mohammed
Founder & Tax StrategistIbrahim leads IAM Accounting LLC, offering expert tax strategies and financial guidance to help clients reduce tax liabilities and achieve their financial goals.
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ControllerJasleen is a highly skilled Controller with over five years of experience as a Chartered Accountant. She ensures accurate financial management and oversees accounting operations.
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Chartered Accountant & Tax PreparerSahil is a Chartered Accountant and tax preparer with expertise in tax compliance, financial reporting, and strategic tax planning, helping clients optimize their financial outcomes.
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Accounts AssociateAnkit brings a wealth of experience in finance and accounting, providing key support in day-to-day financial operations to ensure accuracy and compliance.
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Neha Sharma
Key Accounts ManagerNeha manages our most valued client relationships, with over four years of experience as a Chartered Accountant, ensuring that client needs are met efficiently and professionally.
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Michael Holsinger
Payroll Representative, ADP PartnerMichael is our dedicated payroll expert and ADP partner, managing payroll processes with precision and helping clients navigate payroll services seamlessly.