What Is a 941 Form Used for?

Form 941 is an income tax reporting form that an employer must submit each quarter. There is a federal version of Form 941, and some states issue their own version of Form 941 as well. The employer records wages, tips and other compensation paid to employees, as well as the amount withheld from employees' paychecks for Social Security and Medicare. An employer usually does not have to send an additional payment to the IRS after filling out Form 941, since the employer should have been sending in the required payments throughout the quarter.

Exemptions

• Some types of employers are not required to file Form 941. There are special rules for an employer who hires domestic servants, or an employer who hires farm workers. A business owner who owns a seasonal business and does not employ workers during every quarter of the year, does not file Form 941 during quarters that the business is not in operation.

Tips

• The employer must report all tips that employees receive on Form 941. It is the employee's responsibility to correctly report tip income to the employer. According to the IRS, the employer does not report allocated tips on Form 941, and uses Form 8027 instead. An employer estimates tips that a tipped employee should receive based on business receipts, and must send in Form 8027 to estimate tip income if the employee reports a tip amount that seems too low.

Warning

• An employer has to report the number of employees the business employs on Form 941, not including exempt employees. If the business has more than 250 employees, the business cannot submit a paper form 941 and must use the Internet to submit Form 941 to the IRS.

Alternative

• Some employers can file IRS Form 944 once a year, instead of sending in Form 941 each quarter. According to the IRS, an employer can use Form 944 if the employer owes less than $1,000 in employment taxes for the full year. An employer can call or write to the IRS and ask to switch from filing Form 941 to Form 944. The employer must have approval from the IRS to file Form 944.

States

• An employer that has to file the Federal Form 941 usually has to file a state Form 941 as well.

  State rules for filing Form 941 are very similar to the rules for the federal form, although specific regulations for online filing and penalties for late payment may vary. Some states also issue a state version of Form 944 that a qualifying employer can file instead.