Accounting Articles > Federal Payroll Tax:

What is a 941 Quarterly Withholding Form?

The federal 941 form is the primary federal employment tax form. Form 941 is generally filed quarterly, along with the other State of Illinois payroll withholding and unemployment tax returns. They are due one month after the end of every quarter. An example would be since the first quarter ends on March 31st, the 941 form is due no later than April 30th.

The 941 quarterly withholding tax return collects three different and distinct types of federal taxes. First is the federal withholding tax that goes into your eventual income tax. Second is the Social Security Tax which has two sides. The personal portion, which is withheld from payroll and the business portion which simply doubles the amount owed. Third is the Medicare Tax, which also has two sides and works the same as Social Security.

Exactly when the 941 taxes must be deposited can be tricky. The rule of thumb, is to deposit your payroll taxes within three working days of the date of whenever you pass out the payroll checks. If you do that, then you should, unless in extreme instances when you owe over $100,000 in payroll tax deposits, never face a penalty for late deposits. This is a rule of thumb.

The actual IRS rules are much more technical, and are based upon a look-back period of the preceding four quarterly 941 forms. If over that look-back period you deposited a total of $50,000 or less, then you are a monthly depositor. If in that period, you deposited over $50,000, then you are a semi-weekly depositor. Deposits must always be made within 3 working days of the last payroll check distribution dates in that monthly or semi-weekly period.

The liabilities for the tax or who is responsible for getting the money to the government is split between the corporation and the business owner or corporate officer in charge of taxes. The employer portions of the Social Security and Medicare are solely a business liability. If the corporation goes bankrupt, then that portion of the 941 tax liability is generally discharged.

But the employee side of the withholding tax cannot be discharged. This includes the Federal withholding for income tax that was withheld from the employee's checks, and the Social Security and Medicare. These monies were not the property of the corporation. The owner or responsible corporate officer is the trustee for the government. Their job is to get the money to the government. If they don't do this, then they will be held personally liable for any amount owed. The only way out of this is to pay it, complete a payment plan, or to file an offer & compromise.

If you are asking these questions in the first place, then you obviously need a new accountant. Call one of our payroll specialists today. The Standard Accounting Services section of this website may have what you need. We will prepare your 941s starting at $175 per quarter, amend a 941 starting at $350, represent you in an audit, or negotiate a payment plan. These returns are not easy to complete properly. Don't try to do this yourself. Call or e-mail us today.