Employer's Quarterly 941 Federal Tax Return

FICA Tax Rate and Wage Base

The FICA tax rate for employees is 6.2% in 2018 and the employer rate is 6.2%.  The 2018 wage base is $128,700. The Medicare tax rate (for both the employer and the employee) is 1.45%; all wages are subject to the tax.

Household Employers

Report FICA and Medicare taxes and income tax withholding on wages paid to household employees on your individual income tax return. FICA taxes for household employees are no longer reported on the quarterly Form 942 unless you are a sole proprietor and file Form 941 for other business employees.

Purpose of Form

File Form 941 to report:

  1. (1) quarterly income tax withheld from wages, tips, supplemental unemployment compensation benefits, and third party payments of sick pay, and
  2. (2) quarterly employer and employee social security and Medicare taxes.

Who Must File

Employers who withhold income tax, social security tax, or Medicare tax on wages must file Form 941 quarterly. Seasonal employers are not required to file for quarters when they regularly have no tax liability because no wages were paid.

If you sell or transfer your business, both you and the new owner must file a return for the quarter in which the change took place. Neither should report wages paid by the other.

The last return on Form 941 for any employer who either goes out of business or otherwise ceases to pay wages should be marked “final return.” An employer who has only temporarily ceased to pay wages, including an employer engaged in seasonal activities, must continue to file returns.

Penalties and Interest

Avoid penalties and interest by making tax deposits when due, filing a correct return, and paying the proper amount of tax when due. The law provides penalties for late deposits and late filing unless you show reasonable cause for the delay. If you do file late, attach an explanation to the return. There are also penalties for wilful failure to pay tax, keep records, make returns, and filing false or fraudulent returns.

When to File

Quarterly tax returns on Form 941 must be filed on or before the last day of the month following the close of the calendar quarter to which it relates. If the employer has made timely deposits throughout the quarter, Form 941 may be delayed until the 10th day of the second month after the end of the quarter.

Where to File

How to Deposit

Effective January 1, 2011, business may no longer use Form 8109 (Federal Tax Deposit Coupon).  Instead, businesses should register with the Electronic Federal Tax Payment System or EFTPS to make federal tax deposits.