Comprehensive Review of Form 941 for Columbus Business Owners

Introduction: Comprehensive Review of Form 941 for Columbus, OH Business Owners

In this article, we provide an overview of Form 941 – the Employer’s Quarterly Federal Tax Return – specifically addressing Columbus, Ohio area business owners. If you own a business in Columbus and you have employees, here’s what you need to know. 

What is Form 941?

Form 941, titled “Employer’s Quarterly Federal Tax Return” by the Internal Revenue Service, is the tax return used by employers to report the wages paid to employees and the withholding taxes withheld by the business. Thus, if you own a business in Columbus, Ohio or elsewhere and have employees, you have a requirement to prepare and file Form 941 with the Internal Revenue Service.  For example, when you are an employee of a company and are to receive gross wages of $1,000, when pay day comes, you do not receive $1,000 but rather a lesser amount of money.  This is because you have had social security, Medicare, federal withholding tax and state withholding tax withheld from your paycheck. The amounts of social security, Medicare and federal withholding tax withheld from your paycheck (and other employees paycheck’s) is what is reported on Form 941 by your employer.  On the other hand, if you are the employer, Form 941 is the tax return whereby you report the wages paid to employees and the applicable federal taxes that are withheld from the employees paychecks. 

What is Reported on Form 941?

Form 941 reports the following: The total wages paid to employees during the applicable quarter; the total amount of federal income tax withheld from employees; total wages paid to employees subject to social security tax; and total wages paid to employees subject to Medicare tax.  Form 941 also applies the applicable percentage of withholding for social security and Medicare tax to help calculate the social security and Medicare taxes.  Wages are subject to social security tax in the amount of 12.4% up to the maximum amount for the current year and Medicare tax of 2.9%.

When is Form 941 Filed?

Form 941 is filed quarterly with the Internal Revenue Service. For any given year, January through March is the first quarter and the 941 is due on or before April 30^th, April through June is the 2^nd quarter and the 941 return is due on or before July 31^st, July through September is the 3^rd quarter and the 941 return is due on or before October 31^st and October through December is the 4^th quarter and the 941 is due on or before January 31^st of the following year.

How Are the Employment Taxes Associated With Form 941 Paid?

The employment taxes are paid in what is commonly referred to as Federal Tax Deposits.  The employer must make the Federal Tax Deposits based upon a look back period and how much withholding tax was due over that look back period.  With very low withholding tax, you may be able to pay the tax when you file the Form 941.  Other amounts of withholding tax require the employer to make the federal tax deposit on or before the 15^th of the following month.  For example, for the month of March, the federal tax deposit would be due on or before April 15^th of you are required to make monthly deposits.  Other employers with larger payroll and thus withholding may need to make the tax deposit within a number of days of paying the payroll to employees.  

What Other Tax Forms Are Associated With Form 941?

The W-2 that each employee receives and the W-3, which is a compilation of the W-2s are forms derived from the same figures reported on Form 941.  Further, you could consider Form 940, which is for unemployment taxes a return that is associated or related to Form 941 as all of these forms related to wages paid to employees.  

Can My Business Be Penalized For Failing to File Form 941 or Pay 941 Taxes?

Yes and Yes!  There are stiff penalties for failing to make the federal tax deposits and for failing to pay the 941 taxes in a timely manner. The IRS considers 941 employment taxes to be a trust fund tax meaning the employer withholds an employee’s federal withholding and is holding these funds in trust to pay over to the federal government.  Thus, 941 tax liabilities are taken very seriously by the Internal Revenue Service and collection action will be pursued such as the filing of federal tax liens, bank levies and even the seizure of assets if necessary to collect on the 941 tax. Furthermore, a portion of the tax, called the “Trust Fund” can be assessed to individuals within the company who were responsible for withholding the tax and had the power or authority to see the tax was paid to the government. The trust fund amount can be assessed to multiple individuals and is a joint and several liability meaning the government can collect the full amount of the outstanding trust fund from one individual even when multiple individuals have been assessed the trust fund.  

Learn More & Get Assistance

Are you a business owner in the Columbus, Ohio area? Do you have questions about your tax liabilities and responsibilities? If you have questions related to your 941 tax matters, or any other matter, or need representation regarding a 941 tax debt please contact The McGuire Law Firm to speak with a tax attorney.