Instructions for Form 941 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Part 1:Answer these questions for this quarter.
1. Number of employees who received wages, tips, or other compensation this quarter
Tell us the number of employees on your payroll for the pay period including March 12, June 12, September 12, or December
12 for the quarter
indicated at the top of the return. Do not include:
If you enter “250” or more on line 1, you must file Forms W-2 electronically. Note: The Social Security Administration will not
accept magnetic submissions after December 31, 2006. For details, call the SSA at 1-800-772-6270 or visit SSA's Employer Reporting
Instructions and
Information website at
www.socialsecurity.gov/employer.
2. Wages, tips, and other compensation
Enter amounts on line 2 that would also be included in box 1 of your employees' Forms W-2. Include sick pay paid by a third
party if you were given
timely notice of the payments and transferred liability for the employees' taxes. See the Instructions for Forms W-2 and W-3
for details.
If you are a third-party payer of sick pay, do not include sick pay that you paid to policyholders' employees here if you
gave the policyholders
timely notice of the payments.
3. Total income tax withheld from wages, tips, and other compensation
Enter the federal income tax you withheld (or were required to withhold) from your employees on this quarter's wages, tips,
taxable fringe
benefits, and supplemental unemployment compensation benefits. Do not include any income tax withheld by a third-party payer
of sick pay even if you
reported it on Form W-2. You will reconcile this difference on Form W-3. Also include here any excise taxes you were required
to withhold on golden
parachute payments (section 4999).
If you are a third-party payer of sick pay, enter the federal income tax you withheld (or were required to withhold) on third-party
sick pay here.
4. If no wages, tips, and other compensation on line 2 are subject to social security or Medicare tax . . .
If no wages, tips, and other compensation on line 2 are subject to social security or Medicare tax, check the box on line
4. If this question does
not apply to you, leave the box blank. For more information about exempt wages, see section 15 of Pub. 15 (Circular E) and
section 4 of Pub. 15-A,
Employer's Supplemental Tax Guide.
If you are a government employer, wages you pay are not automatically exempt from social security and Medicare taxes. Your
employees may be covered
by law or by a voluntary Section 218 Agreement with SSA. For more information, see Pub. 963, Federal-State Reference Guide.
5. Taxable social security and Medicare wages and tips
5a. Taxable social security wages.
Report the total wages, sick pay, or fringe benefits subject to social security taxes you paid to your employees during
the quarter. For this
purpose, sick pay includes payments made by an insurance company to your employees for which you received timely notice from
the insurance company.
See Section 6 in Pub. 15-A for more information about sick pay reporting.
Enter the amount before deductions. Do not include tips on this line. For information on types of wages subject to social security
taxes, see section 5 of Pub. 15 (Circular E).
The rate of social security tax on taxable wages is 6.2 percent (.062) each for the employer and employee or 12.4
percent (.124) for both. Stop
paying social security tax on and reporting an employee's wages on line 5a when the employee's taxable wages (including tips)
reach $97,500 during
2007. However, continue to withhold income and Medicare taxes for the whole year on wages and tips even when the social security
wage base of $97,500
has been reached.
line 5a
|
(column 1)
|
x.124 |
|
line 5a
|
(column 2)
|
5b. Taxable social security tips.
Enter all tips your employees reported to you during the quarter until the total of the tips and wages for an employee
reach $97,500 in 2007. Do
this even if you were unable to withhold the employee tax of 6.2%.
An employee must report cash tips to you, including tips you paid the employee for charge customers, totaling $20
or more in a month by the 10th of
the next month. Employees may use Form 4070, Employee's Report of Tips to Employer, or submit a written statement or electronic
tip record.
Do not include allocated tips on this line. Instead, report them on Form 8027, Employer's Annual Information Return
of Tip Income and Allocated
Tips. Allocated tips are not reportable on Form 941 and are not subject to withholding of federal income, social security,
or Medicare taxes.
line 5b
|
(column 1)
|
x .124 |
|
line 5b
|
(column 2)
|
5c. Taxable Medicare wages and tips.
Report all wages, tips, sick pay, and taxable fringe benefits that are subject to Medicare tax. Unlike social security
wages, there is no limit on
the amount of wages subject to Medicare tax.
Include all tips your employees reported during the quarter, even if you were unable to withhold the employee tax
of 1.45%.
line 5c
|
(column 1)
|
x .029 |
|
line 5c
|
(column 2)
|
For more information, see section 6 of Pub. 15
(Circular E).
5d. Total social security and Medicare taxes.
Add the social security tax, social security tips tax, and Medicare tax.
line 5a
|
(column 2)
|
line 5b
|
(column 2)
|
+line 5c |
(column 2) |
line 5d
|
|
6. Total taxes before adjustments
Add the total federal income tax withheld from wages, tips, and other compensation and total social security and Medicare
taxes before adjustments.
Enter tax amounts on lines 7a-7g that result from current or prior period adjustments. Use a minus sign (if possible) to show an
adjustment that decreases the total taxes shown on line 6. Do not enter an amount on line 7f or line 7g unless the IRS has sent you a
notice instructing you to do so.
Current period adjustments.
In certain cases, you must adjust the amounts you reported as social security and Medicare taxes in column 2 of lines
5a, 5b, and 5c to figure your
correct tax liability for this quarter's Form 941. See section 13 of Pub. 15 (Circular E). Do not attach Form 941c or an equivalent
statement for current period adjustments.
If you need to adjust any amount previously reported on lines 7a-7c, use line 7e to report the adjustment and attach
Form 941c or an
equivalent statement with an explanation.
7a. Current quarter's fractions of cents.
Enter adjustments for fractions of cents (due to rounding) relating to the employee share of social security and Medicare
taxes withheld. The
employee share (one-half) of amounts shown in column 2 of lines 5a-5c may differ slightly from amounts actually withheld from
employees'
paychecks due to the rounding of social security and Medicare taxes based on statutory rates.
7b. Current quarter's sick pay.
Enter the adjustment for the employee share of social security and Medicare taxes that were withheld by your third-party
sick pay payer.
7c. Current quarter's adjustments for tips and group-term life insurance.
Enter adjustments for:
-
any uncollected employee share of social security and Medicare taxes on tips and
-
the uncollected employee share of social security and Medicare taxes on group-term life insurance premiums paid for former
employees.
Prior period adjustments.
Use lines 7d-7g to adjust amounts reported on previous returns. If you need to report both an increase and a decrease for the same
line, show only the difference.
Adjustments you report here change your tax liability and your tax deposits. You will have to take these adjustments
into account on line 15 as Tax
liability: Month 1; Month 2; Month 3 or on Schedule B (Form 941). You must explain any prior period adjustments that you make on Form 941c,
Supporting Statement to Correct Information, or in an equivalent statement.
Form 941c is not an amended return but is a statement providing the necessary information and certifications for adjustments shown on
lines 7d-7g. Do not file Form 941c separately from Form 941. See also section 13 of Pub. 15 (Circular E).
7d. Current year's income tax withholding.
Enter adjustments for the current year's federal income tax withholding. For example, if you made a mistake when withholding federal
income tax from wages that were paid in earlier quarters of the same calendar year, adjust it here. However, see the CAUTION below for
adjustment of a prior year's “ administrative error” also shown on line 7d.
You cannot adjust or claim a refund or credit for any overpayment of federal income tax that you withheld or deducted
from your employees in a
previous year because employees use the amount shown on Form W-2 as a credit when they file their income tax returns.
Do not adjust federal income tax withholding for quarters in previous years unless you do it to correct an administrative
error. An
administrative error happened if the amount you entered on Form 941 was not the same amount you actually withheld. For example,
when the total amount
of federal income tax actually withheld was not reported correctly on Form 941 because of a mathematical or transposition
error, the difference is an
administrative error. The administrative error adjustment corrects the amounts reported on the Form 941 to agree with the
amount actually withheld
from the employee. Remember to attach an explanation for the adjustment.
7e. Prior quarters' social security and Medicare taxes.
Enter adjustments for prior quarters' social security and Medicare taxes. For example, if you made a mistake when
reporting social security and
Medicare taxes on previously filed Forms 941, adjust it here. If you need to report both an underpayment and an overpayment,
show only the net
difference.
If you are adjusting an employee's social security wages, social security tips, or Medicare wages and tips for a prior year,
you must also file
Form W-2c, Corrected Wage and Tax Statement, and Form W-3c, Transmittal of Corrected Wage and Tax Statements.
7f. Special additions to federal income tax.
This line is reserved for employers with special circumstances. Use this line only if the IRS has sent you a notice instructing you to
do so. You must attach Form 941c explaining the tax increase.
7g. Special additions to social security and Medicare.
This line is reserved for employers with special circumstances. Use this line only if the IRS has sent you a notice instructing you to
do so. You must attach Form 941c explaining the tax increase.
7h. TOTAL ADJUSTMENTS.
Combine all adjustments shown on lines 7a through 7g and enter the result here.
8. Total Taxes After Adjustments
Combine the amounts shown on lines 6 and 7h and enter the result here.
9. Advance Earned Income Credit (EIC) Payments Made to Employees
Enter the amount of the advance earned income credit (EIC) payments that you made to your employees. Eligible employees may
choose to receive part
of the EIC as an advance payment. Those who expect to have a qualifying child must give you a completed Form W-5 stating they
expect to qualify for
the EIC. Once the employee gives you a signed and completed Form W-5 you must make the advance EIC payments starting with
the employee's next wage
payment. Advance EIC payments are generally made from withheld federal income tax and employee and employer social security
and Medicare taxes. See
section 10 of Pub. 15 (Circular E) and Pub. 596, Earned Income Credit.
If the amount of your advance EIC payments is more than your total taxes after adjustments (line 8) for the quarter, you may
claim a refund of the
overpayment or elect to have the credit applied to your return for the next quarter. Attach a statement to your Form 941 identifying
the amount of
excess payments and the pay periods in which you paid it. See section 10 of Pub. 15 (Circular E).
10. Total Taxes After Adjustment for Advance EIC
Calculate your total taxes as shown below.
-
If line 10 is less than $2,500, you may pay the full amount with a timely filed return because you were not required to deposit.
See section 11 of Pub. 15 (Circular E) for information and rules about federal tax deposits.
-
If line 10 is $2,500 or more, you must deposit your tax liabilities by using the Electronic Federal Tax Payment System
(EFTPS) or at an authorized financial institution with Form 8109. The amount shown on line 10 must equal the “Total liability for
quarter” shown on Form 941, line 15 or the “Total liability for the quarter” shown on Schedule B
(Form 941).
If you are a semiweekly depositor, you must complete Schedule B (Form 941). If you fail to complete and submit Schedule B
(Form 941), IRS will assert deposit penalties based on available information.
11. Total Deposits for This Quarter
Enter your deposits for this quarter, including any deposits that you were required to make to cover prior period liabilities
resulting from
adjustments shown on line 7. Also include in the amount shown any overpayment from a previous period that you applied to this
return.
If line 10 is more than line 11, write the difference in line 12. Otherwise, see Overpayment below.
You do not have to pay if line 12 is under $1. Gen- erally, you should have a balance due only if your total taxes after adjustment for
advance EIC for the quarter (line 10) are less than $2,500. (However, see section 11 of Pub. 15 (Circular E) for information
about payments made under
the accuracy of deposits rule.)
You may pay the amount shown on line 12 using EFTPS, or a check, money order, or credit card. Do not use a credit card to pay taxes that
were required to be deposited. For more information on paying your taxes with a credit card, visit the IRS website at
www.irs.gov and type “e-pay” in the Search box.
If you pay by EFTPS or credit card, file your return using the “Without a payment” address on page 4 under Where should you file?
and do not file Form 941-V, Payment Voucher.
If line 10 is $2,500 or more and you have deposited all taxes when due, line 12 (“Balance due”) should be zero.
If you do not deposit as required and, instead, pay the taxes with Form 941, you may be subject to a penalty.
If line 11 is more than line 10, write the difference in line 13.
Never make an entry in both lines 12 and 13.
If you deposited more than the correct amount for a quarter, you can choose to have the IRS either refund the overpayment
or apply it to your next
return. Check the appropriate box in line 13. If you do not check either box, we will automatically refund the overpayment.
We may apply your
overpayment to any past due tax account that is shown in our records under your EIN.
If line 13 is under $1, we will send a refund or apply it to your next return only if you ask us in writing to do so.
You must fill out both pages of Form 941 and sign it on the second page. Failure to do so may delay processing of your return.
Part 2:Tell us about your deposit schedule and tax liability for this quarter.
In the spaces provided, write the two-letter U.S. Postal Service abbreviation for the bank branch in the state where you deposit
your taxes using
Form 8109 or initiate EFTPS transfers. IRS uses the state shown to determine banking days for purposes of deposit due dates.
Official state holidays
for the state shown are not counted as banking days. If you deposit in multiple states, enter “MU” in the spaces provided.
When you deposit in multiple states, IRS cannot determine what portion of your liability was affected by a state holiday and
may propose a deposit
penalty for one or more of the states where you made deposits. If you receive a notice and your deposit due date was extended
because of a state bank
holiday, respond to the notice citing the state holiday and applicable deposit amount.
-
If line 10 is less than $2,500, check the appropriate box in line 15 and go to Part 3.
-
If you reported $50,000 or less in taxes during the lookback period (see below), you are a monthly schedule depositor unless the
$100,000 Next-Day Deposit Rule discussed in section 11 of Pub. 15 (Circular E) applies. Check the appropriate box on line 15 and fill out
your tax liability for each month in the quarter.
+Month 1
|
|
+Month 2
|
|
+Month 3 |
|
|
Total tax liability for quarter
|
|
Note that your total tax liability for the quarter must equal your total taxes shown on line 10. If it does not, your tax
deposits and payments may
not be counted as timely.
You are a monthly schedule depositor for the calendar year if the amount of your Form 941 taxes reported for the lookback period is
$50,000 or less. The lookback period is the four consecutive quarters ending on June 30 of the prior year. For 2007, the lookback period
begins July 1, 2005, and ends June 30, 2006. For details on the deposit rules, see section 11 of Pub. 15 (Circular E).
This is a summary of your monthly tax liability, not a summary of deposits you made. If you do not properly report your liabilities when
required or if you are a semiweekly schedule depositor and report your liabilities on line 15 instead of on Schedule B (Form
941), you may be assessed
an “averaged” failure-to-deposit (FTD) penalty. See Deposit Penalties in section 11 of Pub. 15 (Circular E) for more information.
-
If you reported more than $50,000 of taxes for the lookback period (see above), you are a semiweekly schedule depositor. Check
the appropriate box on line 15.
You must complete Schedule B (Form 941) and submit it with your Form 941. Do not use Schedule B
(Form 941) if you are a monthly schedule depositor.
Reporting adjustments on line 15.
If your tax liability for any month is negative (for example, if you are adjusting an overreported liability in a
prior period), do not enter a
negative amount for the month. Instead, enter zero for the month and subtract that negative amount from your tax liability
for the next month.
Pine Co. discovered on February 6, 2007, that it overreported social security tax on a prior quarter return by $2,500. Its
Form 941 taxes for the
first quarter of 2007 were:
|
January=
|
|
$2,000
|
|
February=
|
|
$2,000
|
|
March=
|
|
$2,000
|
|
|
|
|
|
Pine Co. reports liabilities on line 15 as follows:
Month 1=
|
$2,000
|
|
Month 2=
|
0
|
|
Month 3=
|
+$1,500 |
|
Total
|
$3,500
|
|
The prior period adjustment ($2,500) offsets the $2,000 liability for February and the excess $500 must be used to offset
March liabilities. Since
the error was not discovered until February, it does not affect January liabilities reported in Month 1 of line 15.
Using the above example, if the overreported social security tax on a prior quarter return had been $10,000, Pine Co. could
carry the excess
negative adjustment of $6,000 ($10,000 - $2,000 - $2,000) to the next quarter. Pine Co. would only report $4,000 of the adjustment
on line
7e because line 10 must equal the total shown in line 15. See Form 941c for reporting requirements and information on the
option of filing a claim for
refund of overpaid employment taxes.
Part 3:Tell us about your business.
In Part 3, answer only those questions that apply to your business. If the questions do not apply, leave them blank and go
to Part 4.
16.If Your Business Has Closed . . .
If you go out of business or stop paying wages, you must file a final return. To tell IRS that a particular Form 941 is your final
return, check the box on line 16 and enter the date you last paid wages in the space provided. For additional filing requirements,
see If your
business has closed... on page 2.
17.If You Are a Seasonal Employer . . .
If you hire employees seasonally—such as for summer or winter only—check the box on line 17. Checking the box tells IRS not
to expect
four Forms 941 from you throughout the year because you have not paid wages regularly.
IRS will mail you two forms once a year after March 1. Generally, we will not ask about unfiled returns if you file at least
one return showing tax
due each year. However, you must check the box every time you file a Form 941.
Also, when you fill out Form 941, be sure to check the box on the top of the form that corresponds to the quarter reported.
Part 4:May we speak with your third-party designee?
If you want to allow an employee, a paid tax preparer, or another person to discuss your Form 941 with the IRS, check the
“Yes” box in Part 4.
Then tell us the name and the five-digit personal identification number (PIN) of the specific person to speak with—not the
name of the firm who
prepared your tax return. The designee may choose any five numbers as his or her PIN.
By checking “Yes,” you authorize the IRS to talk to the person you named (your designee) about any questions we may have while we process your
return. You also authorize your designee to:
-
give us any information that is missing from your return,
-
call us for information about processing your return, and
-
respond to certain IRS notices that you have shared with your designee about math errors and return preparation. IRS will
not
send notices to your designee.
You are not authorizing your designee to bind you to anything (including additional tax liability) or to otherwise represent you before
the IRS. If you want to expand your designee's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.
The authorization will automatically expire 1 year from the due date (without regard to extensions) for filing your Form 941. If you or
your designee want to terminate the authorization, write to the IRS office for your locality using the “Without a payment” address under
Where Should You File on page 4.
Part 5:Sign here— Who Must Sign the Form 941?
Form 941 must be signed as follows.
•Sole proprietorship—
The individual who owns the business.
•Corporation (including an LLC treated as a corporation)—
The president, vice president, or other principal officer.
•Partnership (including an LLC treated as a partnership) or unincorporated organization—
A responsible and duly authorized member or officer having knowledge of its affairs.
•Single member limited liability company (LLC) treated as a disregarded entity—
The owner of the limited liability company (LLC).
•Trust or estate—
The fiduciary.
Form 941 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.
Alternative signature method.
Corporate officers or duly authorized agents may sign Form 941 by rubber stamp, mechanical device, or computer software
program. For details and
required documentation, see Rev. Proc. 2005-39. You can find Rev. Proc. 2005-39 on page 82 of Internal Revenue Bulletin 2005-28
at
http://www.unclefed.com/Tax-Bulls/2005/irb05-28.html.
Part 6:For Paid Preparers Only (optional)
You may complete Part 6 if you were paid to prepare Form 941 and are not an employee of the filing entity. Sign in the space
provided and give the
filer a copy of the return in addition to the copy to be filed with the IRS. Do not complete Part 6 if you are filing the
return as a reporting agent
and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS.
How to Order Forms and Publications from the IRS
Call 1-800-829-3676.
Visit the IRS website at
www.irs.gov.
Other IRS Products You May Need
Previous | Index
2006 Instructions Main | 2006 Tax Help Archives | Tax Help Archives Main | Home
|
|
|