Definition: Federal form 941, also called a quarterly federal tax return, is an IRS return that employers use to report their FICA taxes paid and owed for the period. The IRS uses this form to calculate the amount of employer tax payments made during the year as well as the amount of taxes due at the end of the year. The form 941 must be filed by each employer no later than one month following the end of each quarter.
What is Form-941 Used For?
The form 941 can be used as a quarterly payroll summary because it lists each employee along with his or her social security number and total annual wages for the period.
FICA taxes include social security and medicare taxes. These taxes are split 50/50 between the employer and the employee. Both have to pay approximately 6.2 percent of wages for the social security portion as well as 1.45 percent for the medicare portion. These taxes total to approximately a 15.3 percent take on quarterly wages. FICA tax laws are always changing and so are the rates, but these are the basics of how it works.
Example
The employee portion of the tax is withheld from their paychecks by the employer and remitted to the IRS each quarter, sometimes sooner depending on the company. The employer’s portion of the taxes are also remitted with the employee’s portion.
The form 941 is acts as a payroll summary for the period. It shows the number of employees who worked during the quarter, the total wages paid to these employees, the amount of employee withholdings, the total employer payments, and the amount due at the end of the period.
Traditionally, a bookkeeper is in charge of filling quarterly returns and other payroll returns like the 941, but payroll service companies like Paychex and ADP have become more popular in recent years with all the changes to withholding laws and healthcare requirements.
