Department of the Treasury Instructions for Form 941-M Internal Revenue Service

(Rev. March 2005)

Employer’s Monthly Federal Tax Return

Section references are to the Internal Revenue Code unless otherwise indicated.

What’s New Form W-2. By January 31, furnish Forms W-2 to employees

who worked for you during the previous year. If an employee

stops working for you before the end of the year, furnish Form Revised form and instructions. We revised Form 941-M and W-2 to the employee any time after employment ends but no the Instructions for Form 941-M to conform with the redesign of later than January 31 of the following year. However, if the Form 941 and the Instructions for Form 941. employee asks you for Form W-2, furnish the completed form

Social security wage base for 2005. Stop withholding social within 30 days after the request or the final wage payment,

security tax after an employee reaches $90,000 in taxable whichever is later. Send Copy A of all Forms W-2, Wage and

wages. (There is no limit on the amount of wages subject to Tax Statement, issued for the year with a Form W-3,

Medicare tax.) Transmittal of Wage and Tax Statements, filed on paper, or

reports filed on magnetic diskette, to the Social Security

Administration (SSA) by the last day of February. If you file

Forms W-2 electronically (not by magnetic diskette) file them General Instructions with SSA by the last day of March.

Purpose of form. Use Form 941-M to report monthly: (a) If you file a final return on Form 941-M, you are also income tax you withheld from wages, tips, distributions from required to furnish Form W-2 to your employees by the nonqualified pension plans (including nongovernmental CAUTION last day of the month in which the final Form 941-M is

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section 457(b) plans), supplemental unemployment due. File Copy A of Forms W-2 and Form W-3 with the Social compensation benefits, and third-party payments of sick pay; Security Administration by the last day of the month following and (b) social security and Medicare taxes. If you report just the month your final Form 941-M was due. See the Instructions one kind of tax, fill in only the lines that apply. for Forms W-2 and W-3 for details

This form is not for general public use and should only Penalties and interest. There are penalties for filing a return

be filed directly with an IRS compliance representative. late and paying or depositing taxes late, unless there is

CAUTION reasonable cause. If you file or pay late, attach an explanation !

to your return. There are also penalties for failure to: (a) furnish Who must file. File Form 941-M if you are required to report Forms W-2 to employees and file copies with the SSA and (b) income taxes withheld, social security taxes, and Medicare deposit taxes when required. (Do not attach an explanation of taxes on a monthly basis by an IRS compliance representative. why the return is late to Forms W-2 sent to the SSA.) In The IRS may require monthly returns on this form and addition, there are penalties for willful failure to file returns and payments of tax from any employer who has not complied with pay taxes when due and for filing false returns or submitting the requirements for the filing of returns or the paying or bad checks. Interest is charged on taxes paid late at the rate depositing of taxes reported on quarterly returns. Do not file set by law. See Pub. 15 (Circular E) for additional information. monthly returns unless you received written notification from the A trust fund recovery penalty may apply if income, social IRS to do so. A preaddressed return envelope and blank Form

941-M will be mailed to you before your first monthly return is security, and Medicare taxes that must be withheld are

due and for each month thereafter. If you no longer expect to CAUTION not withheld or are not paid. This penalty is the full

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pay amounts subject to tax reportable on Form 941-M, check amount of any unpaid trust fund tax. This penalty may apply to

the box on line 16 and enter the date that you last paid wages. you if these unpaid taxes cannot be immediately collected from

the employer or business. The trust fund recovery penalty may When to file. Form 941-M for any month is due by the 15th be imposed on all persons who are determined by the IRS to be day of the following month. If the due date for filing a return falls responsible for collecting, accounting for, and paying over these on a Saturday, Sunday, or legal holiday, you may file the return taxes, and who acted willfully in not doing so. on the next business day. A responsible person can be an officer or employee of a Where to file. File Form 941-M, with any payment due, using corporation, a partner or employee of a partnership, an the preaddressed envelope furnished to you. Keep a accountant, a volunteer director/trustee, or any employee of a duplicate Form 941-M for your records. sole proprietorship. A responsible person also may include one

Forms W-4. You are required to send to the IRS copies of any who signs checks for the business or otherwise has authority to

Forms W-4 received during the month from employees still cause the spending of business funds. Willfully means

employed by you at the end of the month claiming: (a) more voluntary, consciously, and intentionally.

than 10 withholding allowances or (b) exemption from income Related publications. Pub. 15 (Circular E) explains the rules tax withholding if their wages are expected to exceed $200 a for withholding, paying, depositing, and reporting federal week. For details, see section 9 of Pub. 15 (Circular E), income tax, social security and Medicare taxes, and federal Employer’s Tax Guide. Do not send any Forms W-4P or W-4S unemployment (FUTA) tax on wages. See Pub. 15-A, to the IRS. Employer’s Supplemental Tax Guide, for information on sick

pay paid by third-party payers. Pub. 51 (Circular A), Agricultural Form W-5. Each eligible employee wishing to receive any Employer’s Tax Guide, explains rules for employers of advance earned income credit (EIC) payments must give you a farmworkers. These publications are available by calling completed Form W-5, Earned Income Credit Advance Payment

Certificate. The employer’s requirement to notify certain 1-800-TAX-FORM (1-800-829-3676). See Pub. 15 (Circular E)

for additional methods of obtaining forms and publications. employees about the EIC can be met by giving each eligible

employee Notice 797, Possible Federal Tax Refund Due to the Reconciliation of Forms 941-M and W-3. Certain amounts

Earned Income Credit (EIC). See section 10 of Pub. 15 reported on the monthly Forms 941-M for the year should agree

(Circular E) and Pub. 596, Earned Income Credit (EIC), for with the Form W-2 totals reported on Form W-3. The amounts

more information. that should agree are: income tax withholding, social security

Cat. No. 39535W
wages, social security tips, Medicare wages and tips, and the Line 5c—Taxable Medicare wages and tips. Report all

advance earned income credit (EIC). wages and tips subject to Medicare tax. Also include any sick

pay and taxable fringe benefits subject to Medicare tax. See If the totals do not agree, the IRS may require you to explain section 5 in Pub. 15 (Circular E) for information on types of the differences and correct any errors. See section 12 of wages subject to Medicare tax. If none of the payments are Pub. 15 (Circular E) for details. subject to Medicare tax, enter “-0-.”

Include all tips that your employees reported during the

Specific Instructions month, even if you were not able to withhold the employee tax

(1.45%). Report the uncollected employee’s share of Medicare

tax on line 7c. Also see section 6 of Pub. 15 (Circular E).

Part 1: Answer these questions for this Line 7—Tax adjustments. See the Instructions for Form 941

for more information. month

Current period adjustments. In certain cases, amounts Line 1—Number of employees. For March, June, reported as social security and Medicare taxes on lines 5a–5c September, and December, report the number of employees must be adjusted to arrive at your correct tax liability. See you paid for the pay period that includes the 12th of the month. section 13 of Pub. 15 (Circular E) for information on the Leave line 1 blank for all other months. Do not include following adjustments: household employees, employees who received no pay during • Fractions-of-cents adjustment. the pay period, pensioners, or active members of the Armed • Adjustment for the employee share of social security and Forces. An entry of 250 or more on line 1 indicates that you

must file Forms W-2 electronically or on magnetic diskette. Call Medicare taxes withheld by a third-party sick pay payer.

• Adjustment for the uncollected employee share of social the SSA at 1-800-772-6270 or access the SSA website at

www.socialsecurity.gov/employer security and Medicare taxes on tips. for more information on

electronic or magnetic diskette filing of Forms W-2. • Adjustment for the employee share of social security and

Medicare taxes on group-term life insurance premiums paid for Line 2—Wages, tips, and other compensation. Enter former employees. amounts on line 2 that would also be included in box 1 of your

employees’ Form W-2. See the Instructions for Forms W-2 and Prior period adjustments. Use lines 7d–7g to correct W-3 for details. errors in taxes reported on an earlier return, including errors

If you get timely notice from your insurance carrier from a previous month of the current quarter. For example, if

concerning the amount of third-party sick pay that it paid to your you are correcting an error in social security and Medicare

employees, include the sick pay on line 2. taxes reported on your July 2005 Form 941-M and you found

the error in September 2005, report the adjustment using line Line 3—Total income tax withheld from wages, tips, and 7e of your September 2005 Form 941-M. other compensation. Enter the income tax that you withheld

(or were required to withhold) on wages, tips, taxable fringe If you report both an underpayment and an overpayment, benefits, sick pay, other compensation, and supplemental show only the net difference. unemployment compensation benefits. Also include here any

excise taxes that you were required to withhold on golden Explain any prior period adjustments on an attached Form

parachute payments (section 4999). 941c, Supporting Statement To Correct Information.

Line 4—If no wages, tips, or other compensation are Line 9—Advance earned income credit (EIC) payments subject to social security or Medicare tax. If no wages, tips, made to employees. Enter advance EIC payments made to or compensation on line 2 are subject to social security or employees. Your eligible employees may elect to receive part of Medicare tax, check the box on line 4. If this question does not the EIC as an advance payment. Eligible employees who have apply to you, leave the box blank. For more information about a qualifying child must give you a completed Form W-5 stating exempt wages, see section 15 of Pub. 15 (Circular E) and that they qualify for the EIC. Once the employee gives you a section 4 of Pub. 15-A, Employer’s Supplemental Tax Guide. signed and completed Form W-5, you must make the advance

Line 5a—Taxable social security wages. Enter the total EIC payments. Advance EIC payments are generally made

wages subject to social security taxes that you paid to your from withheld income tax and employee and employer social

employees during the month. Also include any sick pay and security and Medicare taxes. See section 10 of Pub. 15

taxable fringe benefits subject to social security taxes. Enter the (Circular E) and Pub. 596 for more information on advance EIC

amount before deductions. Do not include tips on this line. Stop payments and eligibility requirements.

reporting for any employee whose wages (including tips) reach If the amount of your advance EIC payments exceeds your $90,000 for 2005. However, continue to withhold income tax total taxes (line 8) for the month, you may claim a refund of the for the whole year on wages and tips even when the limit of overpayment or elect to have the credit applied to your return $90,000 is reached. See the Line 5c instructions for Medicare for the following month. Provide a statement with your return wages and tips. identifying the amount of excess payment(s) and the pay Line 5b—Taxable social security tips. Enter all tips that your period(s) in which it was paid. See section 10 of Pub. 15 employees reported during the month until tips and wages for (Circular E). an employee reach $90,000 in 2005. Do this even if you were

not able to withhold the employee tax (6.2%). Report the Line 12—Undeposited taxes due. You do not have to pay if

uncollected employee’s share of social security tax on line 7c. line 15 is under $1.

Also see section 6 of Pub. 15 (Circular E). If you fail to make deposits as required and instead pay An employee must report to you cash tips, including tips you the taxes with Form 941-M, you may be subject to a paid the employee for charge customers, totaling $20 or more CAUTION penalty.

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in a month by the 10th day of the next month. The employee

may use Form 4070, Employee’s Report of Tips to Employer, or Line 13—Overpayment. If you deposited more than the give you a written statement. correct amount for a month, you can have the overpayment

Do not include allocated tips on this line. Instead, report refunded (applies only to March, June, September, and

them on Form 8027, Employer’s Annual Information Return of December Forms 941-M) or applied to your next return. Show

Tip Income and Allocated Tips. Allocated tips are not reportable any amount applied in the Record of Federal Tax Liability and

on Form 941-M and are not subject to withholding of income, Deposits on your next return. If line 13 is under $1, we will send

social security, or Medicare tax. a refund or apply it to your next return only on written request

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specific person to contact—not the name of the firm who

prepared your tax return. The designee may choose any five

Part 2: Tell us about your deposit numbers as his or her PIN.

schedule for this month By checking “Yes,” you authorize IRS to call the person you

named (your designee) with any questions we may have while Special deposit account. Do not make deposits using the we process your return. You also authorize your designee to: Electronic Federal Tax Payment System (EFTPS) or Form • give us any information that is missing from your return, 8109, Federal Tax Deposit Coupon, and do not complete line • call us for information about processing your return, and 14, Record of Federal Tax Liability and Deposits, if you are • respond to certain IRS notices that you have shared with required to have a special deposit account under section your designee about math errors and return preparation. IRS 7512(b). If you have received, by hand delivery, Form 2481, will not send notices to your designee. Notice To Make Special Deposits of Taxes, you are required to

deposit in a separate bank account any taxes collected or You are not authorizing your designee to bind you to required by law to be collected. Your deposit must be made not anything (including additional tax liability) or to otherwise later than the end of the second banking day after any taxes represent you before the IRS. If you want to expand your were required to be collected from your employees. The taxes designee’s authorization, see Pub. 947, Practice Before the IRS deposited must be kept in the account until paid with any and Power of Attorney. employer tax that may be due. The account must be designated

as a special fund in trust for the United States, payable to the The authorization will automatically expire one year from the

“United States Treasury” by you as trustee. For the definition of due date for filing your Form 941-M. If you or your designee

the term “bank,” see Form 2481. want to terminate the authorization, write to the IRS office for

your locality using the “Without a payment” address under

Federal tax deposits. If you are not required to have a special Where Should You File on page 4 in the instructions for Form

deposit account, in general, you must deposit your tax liability at 941.

an authorized financial institution with Form 8109 or by using

EFTPS. For more information on the deposit rules and the

electronic deposit requirements, see section 11 of Pub. 15

(Circular E). Part 5: Sign here—

Line 14—Record of Federal Tax Liability and Deposits. If Who Must Sign the Form 941?

you are required to deposit taxes using the Federal Tax Deposit Form 941-M must be signed as follows.

System, complete both columns of the record. In the tax liability

column, include income tax withheld plus both the employer • Sole proprietorship— The individual who owns the

and employee shares of social security and Medicare taxes business.

minus advance EIC payment (if any) for each date of payment • Corporation (including an LLC treated as a (payday). Enter each deposit amount in the numbered entry corporation)— The president, vice president, or other space corresponding to the date of deposit. principal officer.

Line 14a—Total tax liability for the month. The amount of • Partnership (including an LLC treated as a partnership) this line must equal line 10 (Total taxes after adjustment for or unincorporated organization— A responsible and duly advance EIC). Otherwise, you may be subject to a penalty for authorized member or officer having knowledge of its affairs. failure to make deposits of taxes. • Single member limited liability company (LLC) treated as

a disregarded entity— The owner of the limited liability

company (LLC).

Part 3: Tell us about your business • Trust or estate— The fiduciary.

In Part 3, answer only those questions that apply to your

business. If a question does not apply, leave it blank and go to Form 941-M may also be signed by a duly authorized agent

Part 4. of the taxpayer if a valid power of attorney has been filed.

Line 16—If Your Business Has Closed . . .

If you go out of business or stop paying wages, you must file a Part 6: For Paid Preparers Only 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 (optional)

wages in the space provided. Complete Part 6 if you were paid to prepare Form 941-M and

are not an employee of the filing entity. Sign in the space Line 17—If You Are a Seasonal Employer . . . provided and give the filer a copy of the return in addition to the

If you hire employees seasonally—such as for summer or copy to be filed with the IRS. Do not complete Part 6 if you are

winter only—check the box on line 17. Checking the box tells filing the return as a reporting agent and have a valid Form

IRS not to expect Form 941-M from you every month because 8655, Reporting Agent Authorization, on file with the IRS. You

you have not paid wages regularly. However, you must check are not required to complete this section.

the box every time you file a Form 941-M. Also, be sure to

check the box in the upper right corner of page 1 of Form How to Order Forms and Publications 941-M that corresponds to the month reported. from the IRS

Call 1-800-829-3676. Part 4: May we contact your third-party

designee?

If you want to allow an employee, a paid tax preparer, or

another person to discuss your Form 941-M with the IRS, check Visit the IRS website at www.irs.gov.

the “Yes” box in Part 4. Then tell us the name, phone number,

and the five-digit personal identification number (PIN) of the

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requires the IRS to disclose or give the information shown on

your tax return to others as described in the Code. For Privacy Act and Paperwork Reduction example, we may disclose your tax information to the

Act Notice Department of Justice for civil and criminal litigation, and to

We ask for the information on Form 941-M to carry out the cities, states, and the District of Columbia for use in

administering their tax laws. We may also disclose this Internal Revenue laws of the United States. We need it to figure information to other countries under a tax treaty, to federal and and collect the right amount of tax. Subtitle C, Employment state agencies to enforce federal nontax criminal laws, or to Taxes, of the Internal Revenue Code imposes employment federal law enforcement and intelligence agencies to combat taxes on wages, including income tax withholding. Form 941-M terrorism. is used to determine the amount of the taxes that you owe.

Section 6011 requires you to provide the requested information The time needed to complete and file Form 941-M will vary

if the tax is applicable to you. Section 6109 requires you to depending on individual circumstances. The estimated average

provide your employer identification number (EIN). If you fail to time is: Recordkeeping, 14 hrs., 35 min.; Learning about the law

provide this information in a timely manner, you may be subject or the form, 1 hr., 0 min.; Preparing, copying, assembling, and

to penalties and interest. If you do not file this information, or sending the form to the IRS, 1 hr., 16 min. If you have

provide incomplete or fraudulent information, you may be comments concerning the accuracy of these time estimates or

subject to penalties and/or criminal prosecution. suggestions for making this form simpler, we would be happy to

hear from you. You can write to: Internal Revenue Service, Tax You are not required to provide the information requested on Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, a form that is subject to the Paperwork Reduction Act unless 1111 Constitution Ave. NW, IR-6406, Washington DC 20224. the form displays a valid OMB control number. Books or

records relating to a form or its instructions must be retained as Do not send Form 941-M to this address. Instead, use the

preaddressed envelope furnished to you. long as their contents may become material in the

administration of any Internal Revenue law.

Generally, tax returns and return information are confidential,

as required by section 6103. However, section 6103 allows or

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