Form 941 Instructions & FICA Tax Rate [+ Mailing Address]

Cody Cromwell
Written by
Last update:

FICA Tax Rate & When to Pay

Who Has to File Form 941

Form 941 – is a business tax return filed by employers to report the amount of income tax withheld from employees on Forms W-2 and Social Security and Medicare Tax withheld. It isn’t a form you must file for yourself, even if you are a sole proprietorship. If you were a no liability entity, such as a sole proprietorship, in which you could not file a return for yourself and claim personal exemptions for yourself or your spouse or dependents, if any, you would still file an information return, Form 1065, – U.S. Return of Partnership Income,” not a Form 941.

The IRS must screen all returns received to make sure all required information is provided. Any incomplete, incorrect, or improper information received will be sent back to the filer in most cases. Returns with missing or incomplete information will be processed automatically and finances (including refunds) will be held back for 30 days and the taxpayers name will be entered on the Federal Reserve System (FRS) Entity List. Once the returns are corrected the money will be released (within 30 days). If for some reason the correction is not made, the taxpayer will be contacted using the contact information on file with the IRS. More information about the FRS Entity List can be found at the FRS website.

When to File FICA Form 941

The Federal Insurance Contributions Act (FICA) has been requiring workers to contribute to Social Security since 1936. Each year, a social security tax (Social Security tax) is withheld from your salary and submitted to the Inland Revenue Service (IRS). The IRS notifies the social security Administration (SSA) about the amount of tax to be paid. However, if your income exceeds a specific threshold, then you may be required to pay both income tax and social security tax.

Form 941 is an IRS form and is used to report both income and social security taxes, details of your employment tax liability and other information. It is required in each quarter of the tax year. The IRS usually gets the information from you by October 15.

When to file your Form 941 for the previous year is not applicable to your payroll and has no effect on your tax liability. You should only file a form 941 if you are required to do so by law.

Due Dates for Form 941

There are two forms you might have to file with your Form 941. You must fill out and submit the Form 941 by the due date.

The Form 941 and Form 941-X are the forms you will need to file your employer and employee tax return each year.

You must submit the Form 941 and Form 941-X to the IRS and Social Security Administration accurately, on a timely basis, and in the correct format. If you don’t submit them on a timely basis or in the correct format, you will receive an automatic 5% penalty, and you may also incur the possibility of being audited, losing your tax refund, and having to pay back taxes.

For example, if you submit your Form 941 on September 15, and the IRS receives it on September 30, you will receive a penalty of 5% of 100% of the tax due that you failed to pay by September 30. So your penalty could be as much as 5% of the entire tax due.

As another example, if you file your Form 941 on time when you are required to file on paper, but you fax it in instead, you will be penalized for that 5% penalty on the entire tax due.

Where to Mail Form 941

Form 941 Mailing Address by State

Every person or business that pays Federal Insurance Contributions Act (FICA) taxes must use a Form 941 to make their payments to the Internal Revenue Service (IRS). This includes Social Security and Medicare taxes, Federal Unemployment Tax, and Railroad Retirement Tax. Each state requires a separate mailing address. Please review the information below to determine your correct mailing address as it may be different.

FICA Taxes is the tax that all citizens have to pay to support Social Security and Medicare systems. FICA taxes are taken from your paychecks and deposited into the Social Security Administration (SSA) and the Federal Medicare Administration (FMA).

Based on the address of the payer used on the Form 941, the FICA taxes are deposited into:

For FICA tax purposes use the provider’s address for the individual as reported on the Form W-2.

For FICA tax purposes use the payer’s address for the business as reported on the Form 1099-MISC.

The mailing address for FICA tax purposes is different for businesses and individuals.

Form 941 businesses use the address of the principal office or principal place of business.

Individuals use the taxpayer’s address as stated on the Form 1040. The mailing address is the same address that would send a form for 1040 tax return.

How to Complete Form 941 with Instructions

Completing the form 941 should not be ignored. Form 941 has been designed to make it easy for you to file your tax return.

If you need help filing your Form 941, follow these step by step instructions along with a Form 941 tax calculation to make your tax preparation become easier.

Where do you file Form 941?

When filing your Form 941, it is essential to use the correct address. Use the same address in the instructions as on your Form 941. If you are unsure whether the address that you are using is correct, you should contact the Internal Revenue Service.

Form 941 Mailing Address

The IRS will mail your Form 941 to the address that you provide for the filing.

Form 941 Filing Instructions

Instructions on filing Form 941 fall into two parts. The portion titled “How to Complete Form 941” includes the following information.

Do not remove or otherwise destroy the Form 941 or any information,

Label, notation, or other identifying mark placed upon it by the.

Internal Revenue Service after your signature.

Before filing, check to ensure the form is complete. If you find that

There Is Any Mistake You Should Correct It and Make Any Necessary

Changes before filing. The instructions on how to correct

Mistakes will be given near the middle of the form 941.

Provide General Information & the Form 941 Reporting Period

The Federal Insurance Contributions Act (FICA) tax is a tax that is imposed on your gross wages, as well as on your regular income, dividend, interest, and other forms of income. Two of the forms related to FICA tax are Form 941 and 943. If a business is required to pay taxes under the FICA tax in 2011, the business will file Form 941 with the United States Tax Service.

The estimated payroll taxes on the form are the first casualty of business financial distress because it triggers a payment deadline and may require an automated response to the U.S. government in order to avoid penalties.

Filed Under

You work hard for your money, the president, and your country. when it comes time to pay the fruits of your labor, the newtoad fascist bureaucracy of the us tax service expects you to check off a box that says –wage withholding” on your form 941.

Complete Form 941 Part 1 Lines 1 Through 15

(and Line 16 for Social Security Tax)

Line 1 is the tax identification number (TIN). Generally, this is your employer identification number (EIN). You can check whether you already have an EIN by visiting the IRS website.

Line 2 Short Form

If your employer is a sole proprietor, meaning that it is just you running the business, the employer should have filed that form and you can enter “01” in the corresponding box.

Line 3 Short Form

If you own a S corporation, you’ll enter “02”.

Line 5 Form

If the business is a C corporation, you’ll put “03”.

Line 6 Form

If the business is a partnership, LLC or LLP, you’ll put “04”.

Line 7 Short Form

If you do not have a TIN, you can put “99” here.

Line 8 Short Form

If your employer is a nonresident alien, you’ll put “99”.

Complete Form 941 Part 2 Line 16

Social Security and Medicare tax are collectively called FICA tax. Form SS-4 shows that you…re reporting FICA taxes on wages you earned from your employer …but pay with Form 941.

To complete line 16 showing the amount you paid in Social Security and Medicare taxes, follow these steps:

■ December 31st for the previous calendar year.

■ Employer’s name, address, and EIN;.

■ Your name, address, tax period, and amount paid;.

■ Your Social Security Number (SSN) and Your ZIP Code;

■ Your employer’s federal ID number (EIN), city and state, and ZIP code.

Use the format listed in this publication, including hyphens. For example, 00-0009-12.

■ Payroll period. Enter the short name and abbreviation shown in the left column. You can use abbreviations that are common to your company, such as operating and payroll periods for a company that uses the standard calendar year. On line 01, identify the payroll period that relates to the wages you report on this form …in other words, the period when you received or incurred the wages on which the tax is based.

Complete Form 941 Part 3 Lines 17 & 18

Line 17 …Enter social security and Medicare taxes, cost of services, and State unemployment insurance that have not been withheld or deducted from employee wages or other compensation.

Line 18 …Enter employee social security and Medicare taxes withheld, State unemployment insurance taxes, and other federal, state and local income taxes withheld from employee wages or other compensation.

Complete Form 941 Part 4

This guide will summarize the important points for filing Form 941. Filing the correct Form 941 is a crucial step to record and remit payroll tax to the IRS.

Filing Form 941 (Paper versions before 1998) is a Four-Step Process: 1) Enter all numbers, 2) Make all calculations, 3) Sign and print your name for each box & 4) Mail the form to the IRS.

Enter all numbers.

To begin, check the U.S. office address. Find the column that corresponds with the relevant filing year or number of months. If it is a part-year return, enter the address where the entire calendar year was spent. If it is an employee’s entire home address, write the address in the space provided.

Next, enter the address of the employer. Write the employer’s address in the space provided, or, if filing as a

St

Part-year return, write the address where the entire calendar year was spent.

Then enter the qualifying number. If you are not familiar with how to determine this number, see How To Determine The Correct Qualifying Number of Employees E file Plan, employers must file a Form 8952. Note: The total number of employees must be one and one

Half

Percent of the total number of employees for the preceding tax year.

Complete Form 941 Part 5

Instructions:

Block 8

The block 8 Instructions for Form 941 asks for your class, rate, and other Tax Rate information.

Generally speaking, the Correct Class Tax Rate is the same as the Federal AGI Tax Rate. (The tax rates for 2018 and 2019 are found on Page 2 of the current Form W-4).

So the best way to calculate the correct Class Tax Rate is to take your 2017 Federal AGI and divide it by the Tax Rate.

The result is what your Correct Class Tax Rate should be. (If this is your first time filing Form 941, you can use the Tax Rate from the current Form W-4. If you changed your Form W-4 for 2017, use the rate found on Page 2 of the 2018 Form W-4 for 2018 and 2019).

If you are self-employed, calculate your Tax Rate in Block 8 as follows:

To calculate your self-employed tax rate, divide the amount on line 37 by the amount on line 39 for the number of employees on your 2017 Schedule C. ‖ The result is your Self-Employment Tax Rate.

For more information about Class Rate rates, read this article .

How to Calculate Your FICA Taxes Owed

The process of procuring the Volunteer Tax-Exempt Organization (VTEO) tax status is not a simple one and requires the completion of various tax returns, which can be difficult for a new organization. The IRS requires that a VTEO assists in certain activities including, but not limited to, public education, community service projects, fundraising, or health-related activities. VTEOs can be in the form of a 501 (c)(3), (c)(4), or (c)(5) organization, which are all nonprofit under the Internal Revenue Service code.

There are a few different tax codes, which a VTE is allowed to use as long as certain rules and regulations are met. Defining an organization as an exempt organization allows VTEOs to also be exempt from paying taxes on the amounts designated by the Tax Exempt Status. The amount designated is generally a percentage or a fixed amount that is placed in a VTEO’s donation account, which is designated to volunteer time.

Here’s the basic mathematical formula to calculate your estimated FICA taxes owed by the VTEO on the amounts designated. Remember, this is out of your own pocket, so do not let the IRS get too angry with you.

To calculate the FICA Taxes owed on amounts designated by a VTEO, use the following formula:

Social Security FICA Tax Wage Limits

FICA (Federal Insurance Contributions Act) is the Social Security tax that you pay from every paycheck. The amount that is taken out is 6.2% and is taken straight from your paycheck, but there is another FICA tax that is taken out that is in addition to the 6.2%. This additional FICA tax is 1.45%.

The FICA tax is calculated based on your gross salary. Therefore, it does not matter if you are paid a set amount each week, whether that amount has been raised or lowered, or whether you are paid monthly or biweekly. It also does not matter if you are paid 10 times a month, once per month or twice a year.

Your gross salary is calculated by finding your total income (the number of paychecks you receive in a month multiplied by the amount of money in each paycheck) and adding the amount that you were paid during overtime and bonus pay.

The 6.2% is then subtracted from that amount to find your gross pay.

There is a limit to how high this gross salary can be. This is based on your filing status and the number of dependents that you have.

Single FICA Wages and Income

$ 0 – $ 27,920 ($ 32,040 for married filing jointly).

Medicare FICA Tax Wage Limits

While the federal and state tax rate for 2018 remains the same as the previous year, income thresholds are slightly higher.

As before, the employer matches employee’s payments. There are many differences between employee and employer shares of the FICA tax, including the fact that there is no employee FICA tax. The employer share of the Social Security tax is withheld from each employee’s pay and is matched by the employer as well. And the Medicare tax rate remains at a flat of 2.9%.

This application form provides the Employer Identification Number (EIN) for both the employee and the employer. The last four digits of the employee’s Social Security number match the last four digits of the employee’s Form W-2. The employer’s 10-digits of the Employer Identification Number (EIN) match the number in Box 7 on Form W-2. FICA taxes are withheld from your pay because you are an employee. Since there are no self-employed individuals in either the US or Canada, the IRS has no need for the self-employment tax.

How to Determine Your FICA Tax Due Dates

FICA (Federal Insurance Contributions Act) stands for the Federal Insurance Contributions Act, which is the way we pay Social Security and Medicare taxes in the United States. Any employer paying you wages and having him or herself pay the tax should submit a Form 941.

Given the tax rates can be confusing, here’s how you can determine what FICA tax is due for you.

How to Determine Your FICA Tax Lookback Period

For the purposes of the federal income tax, the Social Security Administration (SSA) defines your FICA tax lookback period as the period of time in which you paid social security and Medicare taxes during the year (generally prior to when you file your tax return).

This lookback period will be used to determine how much social security and Medicare taxes you owe for the period from January 1 of the tax year through December 31 of the tax year. The social security and Medicare taxes paid during the lookback period will be added to the amount you already paid, to the extent the total tax paid during those entire 4 quarters exceeds your total taxes otherwise due for the year minus any portion waived.

Once you have calculated your FICA tax for that period, you file Form 941 to the IRS on or before the 15th day of the 4th month after the end of the quarter. So, use the tax and lookback period in Quarters 1, 4, and the first 3 months of Quarters 2, 3, and 6. You should use the lookback periods in Quarters 2, 3, and 6 for the first 3 quarters of the tax year and those in the last quarter and the first quarter of the next tax year.

FICA Tax Lookback Period Example

Types of Depositors & Due Dates for FICA Tax Payments

Under the Federal Insurance Contributions Act (FICA), the Federal Insurance Contributions Act (FICA) tax has to be withheld from the earnings of certain employees. Employers are required to withhold the appropriate amount of tax and give the appropriate documentation to the employees (or payees) if they wish to receive tax refund (rebates) for any FICA tax that has been paid on their behalf, or when the FICA tax was not withheld for the employee at all.

While the form is formally referred to as Form 941, it is also commonly referred to as the social security form, since the proper information is provided regarding a person’s dependents and their Social Security numbers (SSNs). Each Form 941 is prescribed on the Form W-2, since tax information must be provided.

But, the Form 941 does not show all the data provided on the W-2; it only requests the following information:

  • Usual place of work
  • Taxable compensation
  • Income tax withheld
  • Employee tax identification number
  • Deferments and deposits
  • Social security number of other employees

How to Make FICA Tax Payments

You might have been wondering what’s FICA tax and how to pay it. Well, FICA tax is the Federal Insurance Contributions Act tax, otherwise known as the social security and Medicare tax that everyone is required to pay. This tax is the main social security and Medicare source and is taken out of every paycheck of everyone who makes something over a minimum set of income.

The FICA tax rate for 2015 is 6.2% and is paid on your yearly income. FICA tax is made up of social security and Medicare tax of 1.45% and is paid by both employee and employer on an individual basis. The FICA tax is paid through a Form 941 tax return and must be filed on time.

As a tax payer and a registered voter, you need to pay your FICA tax. With FICA tax being taken out of your check every month, you have no excuse not to pay your taxes.

There are different ways of how to make FICA tax payments to the IRS.

FICA Tax Penalties for Late Payments

In general, if you fail to meet a FICA tax deadline, you will be charged a penalty based on your delinquent payment status for the previous year.

In the case of a Reporting Gap, you’ll be charged the highest tax rate for the highest and lowest months and for the employment taxes due for the period after the period shown on your return.

Starting in 2016, employers can charge penalties on past-due FICA tax and interest (but not penalties on past-due income tax) if the worker doesn’t demonstrate they are actively seeking employment within the time limit.

The penalties double if they’re paid late. You can check out the full penalties here.

Wage Withholding Statements (.pdf)

Whether you’re required to file a form W-4 or an Amended W-4, you may also receive a ‘Wage Withholding Statement’. This is a W-2 form, showing the specific amount of FICA tax that was withheld from each of the employee’s wages during the year. It's very important that you review it carefully.

Form 941 Penalties for Late Filings

Form 941 is updated on the first of every month. If you file it after this deadline, you can expect to receive an IRS letter with your tax form along with some fines.

After you receive the Form 941, you have to make sure that it includes all of the required information. It’s also important to note that if you don’t submit the form in accordance with the IRS instructions, penalties will either be withheld or included on your tax return.

If you are facing an IRS problem, you can also contact the IRS using a toll-free number.

The most common form 941 penalty is a 10% penalty and is applied to your Form 941 balance and payroll tax liabilities. If you’re having trouble paying it, a penalty will be automatically applied if you don’t pay in full by the due date.

If you are unable to file your return, the penalties are added to your file. In general, the regular contribution will not be required.

If you are late each time, interest and late filing fees will be added to your account for each month that you are late.

The penalties are applied for each month that the return is late. For instance, if you are 25 days late, one day will be added to your late filing penalty.

Form 941 Penalties

Form 941 Interest

What State & Local Taxes in Addition to FICA Taxes Are

Reported on Form 941?

Form 941 is the form that employers in the United States must file with the IRS if they are in one of the states or territories where they are required to pay a portion of State and Local Taxes into a trust fund. At the very least, they are required to collect a 0.50% tax on gross pay to these funds.

Just because if you are required to pay these taxes does not mean that you can’t deduct the State and Local Taxes on your Schedule A, Itemized Deductions.

Form 941 is required by employers in the US that fall into one of the following categories:

Employees that are subject to State and Local Taxes.

There are a few states that have a gross receipts tax on the employer. In general, the employer is required to collect and remit 0.50% of the gross pay to the taxing authorities on behalf of their employee.

Employers that are required to collect state and local taxes do not necessarily have to file a 941 return. Still they are required to collect 0.50% of the gross pay in lieu of the taxes and take it from the employee’s paycheck.

For employees who are not subject to State and Local Taxes, employers are not required to collect on behalf of the employee. Further, the employee is not required to waive their right to deduct these taxes elsewhere.

The Bottom Line