Formatting Form 941 And Making Tax Deposits

 This is the third post in the Employment Tax Law series.  This series is dedicated to presenting individuals, sole proprietorships, and small to large businesses with a basic understanding of employment taxes, including the risks and responsibilities associated with those taxes.    

It is important that taxpayers make sure the correct Employer Identification Number (E.I.N.) is used for each Form 941. Using the incorrect E.I.N. can result in the assessment of penalties and further delays in the processing of the taxpayer’s return.

Should a taxpayer change addresses or names, notify the IRS immediately to avoid any issues with the processing of their returns. Please review Pub. 1635, Understanding Your E.I.N., to see if an application for a new E.I.N. is needed.

Make sure to check the appropriate box for the pertinent quarter. This will ensure the IRS properly accounts for the taxes withheld in each quarter. Seems like a basic rule, but this ministerial mistake trips up many taxpayers.

As for formatting, this is another potential trap for taxpayers, please be sure to complete the entries on the form as follows, to ensure accurate scanning and processing:

a. Use 12 point, Courier font (if possible), for all typed entries.b. Omit dollar signs and decimal points. Commas are optional. Report dollars to the left of pre-printed decimal points and cents to the right.c. Leave BLANK any data field (save for lines 1, 2, and 10) with a value of zero.d. Enter negative amounts using a minus sign (if possible), otherwise use parentheses.e. Place your Name and E.I.N. on all pages and attachments, stapling multiple page returns with a staple in the upper left-hand corner.

The frequency of a taxpayer’s deposits/payments is dependent on their total obligations during the lookback period. The lookback period is defined as four consecutive quarters of the prior year, with the final period ending on June 30. For example, the lookback period for 2009 started on July 1, 2007 and ended on June 30, 2008.Taxpayers that reported total taxes of $50,000.00 or less, for the most recent lookback period, are considered monthly depositors. Monthly depositors should make deposits for payments made during the previous month by the 15^th day of the following month. Taxpayers that reported more than $50,000.00 for the most recent lookback period are considered semiweekly depositors. Also, if you are a semiweekly depositor, you must complete and submit a Schedule B (Form 941) with each quarter’s Form 941.The deposit schedule for semi-weekly depositors is a bit more complicated. The general rule is that if the payday falls on a Wednesday, Thursday, and/or Friday, then the deposit should be made the following Wednesday. If the payday falls on a Saturday, Sunday, Monday, and/or Tuesday, then deposit the taxes by the following Friday. For more details on the deposit rules, see Section 11 of Publication 15.