Form 941 is a quarterly tax form that tracks FICA tax payments made by employers throughout the year. FICA taxes include Social Security and Medicare taxes with employer rates of 6.2% and 1.45%, respectively. FICA taxes are typically due monthly or semiweekly, and Form 941 is due quarterly.
You can streamline the process of paying FICA taxes and filing Form 941 with an all-in-one payroll software like Gusto. It automatically calculates and pays FICA and payroll taxes throughout the year, saving you time, money, and compliance headaches. Start a free 30-day trial.
FICA Tax Rate & When to Pay
Employees and employers share the total tax burden of Social Security tax and Medicare tax 50/50. Half of the FICA tax amount owed is paid by the employer and the other half is withheld from an employee’s paycheck. Social Security is 12.4% and Medicare tax is 2.9%.
The two taxes that make up your employer FICA tax rate include:
- Social Security Tax (12.4% total) – 6.2% is withheld from employee paychecks and the remaining 6.2% is paid by the employer. The tax is paid on wages up to $132,900 for 2019.
- Medicare Tax (2.9% total) – Employees’ share of 1.45% is withheld from their paychecks while the employer pays the remaining 1.45%. There is no income cap on taxes.
As an employer, it is your responsibility to remit both the employee share and your share of FICA taxes on time. We discuss whether or not you have to pay monthly or semiweekly in the section below.
All payroll taxes that are paid by the employer as well as withheld from employee paychecks, including employer FICA taxes, are reported on Form 941 and filed quarterly. Let’s now take a look at who has to file Form 941, including when and how to file it.
Who Has to File Form 941
As an employer, you are required to withhold taxes from your employees’ paychecks. Generally, these taxes include income taxes, Social Security, and Medicare taxes. The IRS requires that you report these taxes quarterly on Form 941. The employer’s share of FICA taxes is reported on Form 941 along with the employee’s share.
You must use Form 941 to report the following:
- Wages you paid to your employees
- Tips your employees reported to you
- Federal income tax you withheld from employees’ paychecks
- Both employee and employer share of Social Security and Medicare taxes
However, if you only use independent contractors, you don’t have to file Form 941. To learn more about the benefits of independent contractors versus full-time employees, check out our guide on hiring employees and freelancers.
When to File FICA Form 941
The due date to file Form 941 is the same for all employers, regardless of whether you are a monthly or semiweekly depositor of FICA taxes. Form 941 is due on the last day of the month that follows the end of the quarter. If the due date falls on a weekend or holiday, the due date is the next business day. You will submit Form 941 four times per year.
Below you will find a summary table of the due dates for Form 941:
Due Dates for Form 941
(Jan 1 - Mar 31)
(Apr 1 - Jun 30)
(Jul 1-Sep 30)
(Oct 1 - Dec 31)
|*April 30 falls on a Sunday|
Where to Mail Form 941
Nowadays, the best way to file tax forms is to use e-file. This service, offered by the IRS, allows you to file your tax returns electronically for free. Filing your tax return electronically will ensure that it is received on time.
If you prefer to go the snail mail route, the state you live in will determine where your tax return is mailed. Refer to the table below for the address to mail your Form 941 return. Remember that information may change and it’s always best to verify the mailing address before sending anything.
Form 941 Mailing Address by State
|State||Without a payment||With a payment|
|CT, DE, DC, FL, IN, ME, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, VT, VA, WV||Department of the|
P.O. Box 804522
|GA, IL, KY, MI, TN, WI||Department of the|
Kansas City, MO
P.O. Box 806532
|AL, AK, AZ, AR, CA, CO, HI, ID, IA, KS, LA, MN, MS, MO, MT, NE, NV, NM, ND, OK, OR, SD, TX, UT, WA, WY||Department of the Treasury|
Internal Revenue Service Ogden, UT
|Internal Revenue Service|
P.O. Box 37941
|No legal residence or principal place of business in any state||Internal Revenue Service|
P.O. Box 409101
|Internal Revenue Service|
P.O. Box 37941
How to Complete Form 941 with Instructions
This form is two pages and requires you to provide basic company information and the details on the wages paid for each quarter, such as total wages, federal income tax withheld, and Social Security and Medicare taxes (employee plus employer). In addition, any payments made throughout the quarter must be included. You can download Form 941 and complete it for your business.
Below, you will find a snapshot of a sample Form 941 along with Form 941 instructions:
Follow these Form 941 instructions to complete the form in six steps:
1. Provide General Information & the Form 941 Reporting Period
In this section, you will provide general information about your business such as business name, tax ID, and mailing address. You will also indicate the quarter that you are filing the return for.
2. Complete Form 941 Part 1 Lines 1 Through 15
The next step is to complete the 15 lines of Form 941 Part 1:
- Line 1 – Enter the total number of employees who received wages, tips, or other compensation (like bonuses or commission) in the quarterly pay period
- Line 2 – Enter total wages, tips, and other compensation (like bonuses or commission) paid to employees
- Line 3 – Include federal income tax withheld from employee wages, tips, and other compensation (like bonuses or commission) for the quarter
- Line 4 – Select this checkbox if there are no wages, tips, or other compensation subject to Social Security and Medicare tax
- Lines 5 a and b – Enter the taxable Social Security wages on line 5a and taxable Social Security tips on line 5b, and multiply by the Social Security tax rate of 0.124
- Lines 5 c and d – Enter the taxable Medicare wages on line 5c and taxable Medicare tips on line 5d, and multiply by the Medicare tax rate of 0.029
- Line 5e – Add up lines 5a through 5d, Column 2, and enter the sum on this line
- Line 5f – Enter tax due on unreported tips (see IRS Publication 15 for more information)
- Lines 6-9 – Enter adjustments that apply (see IRS Publication 15 for more information)
- Line 10 – Add up lines 6 through 9 and enter the total on this line
- Line 11 – Enter Small Business Payroll Tax Credit (see IRS Publication 15 for more information)
- Line 12 – Subtract line 11 from line 10
- Line 13 – Enter the total payments you made for the quarter, including withheld income tax and employee and employer share of Social Security and Medicare taxes
- Line 14 – Calculate balance due, if any
- Line 15 – Calculate overpayment, if any
3. Complete Form 941 Part 2 Line 16
In this section, you must select the type of depositor you were for the quarter (monthly or semiweekly). Refer to our table below for more info. If you were a monthly depositor, you will enter the FUTA tax liability for each month. If you were a semiweekly depositor, you must complete Schedule B, which you can download here.
4. Complete Form 941 Part 3 Lines 17 & 18
If your business closed during the year or you let all of your employees go, you need to indicate the date you closed your business and/or stopped paying wages to employees. In addition, if you are a seasonal employer who does not have to file a quarterly 941 form, you need to indicate that information in this section as well.
5. Complete Form 941 Part 4
According to the Form 941 instructions, you can give your permission for the IRS to speak to someone about this form on your behalf. For example, you could put your CPA as a third-party designee. Be sure to include their complete name and telephone number. If you don’t want to designate anyone, you can select no.
6. Complete Form 941 Part 5
In this section you will sign and date Form 941 indicating that you agree with the information that has been included on this form, and that to your knowledge, it is accurate.
If you use a payroll program like Gusto, however, then filing and paying payroll taxes can be a breeze. Gusto manages all aspects of payroll, which includes completing payroll forms like Form 941 for you automatically.
How to Calculate Your FICA Taxes Owed
Employers and employees must contribute to Social Security and Medicare taxes. Currently, Social Security tax is 6.2% and Medicare tax is 1.45%. This means a total of 7.65% (6.2% + 1.45%) of wages is deducted from an employee’s paycheck, and the employer pays 7.65% of wages paid to employees.
Social Security FICA Tax Wage Limits
For Social Security, the employer and employee must each pay 6.2% of an employee’s wages up to a maximum salary of $132,900 for 2019. What this means is that once an employee has earned $132,900, no additional Social Security is deducted from their paycheck for the remainder of the year. Since your tax amount must match the employee’s, you would also have no additional Social Security liability for the remainder of the year.
Summary of Social Security Wage Limits for 2017 through 2019
Social Security FICA Tax Example
Let’s assume an employee earns $2,000 per pay period. The Social Security tax calculation would be as follows:
$2,000 x 0.062 = $124
In this example, you would deduct $124 from this employee’s gross pay for Social Security tax each pay period. Since the employer tax must equal the employee Social Security tax, your share as an employer would also be $124. Thus, the total Social Security tax payment that you would submit to the IRS for this employee (for this pay period) would be $248 ($124 employee share + $124 employer share).
Medicare FICA Tax Wage Limits
There is no wage cap when it comes to Medicare taxes. Employees and employers must each pay 1.45% of an employee’s wages. What this means is that regardless of the amount of wages an employee earns, Medicare taxes must be paid on the entire amount. Similar to Social Security taxes, the employer will have to match the employee’s share equally.
Medicare Tax Example
Using the same employee who earned $2,000 per pay period, let’s calculate the Medicare tax:
$2000 x 0.0145 = $29
In this example, you would deduct $29 from this employee’s gross pay for Medicare tax. Since the employer tax must equal what the employee Medicare tax is, your share as an employer would be $29. Thus, the total Medicare tax payment that you would submit to the IRS for this employee (for this pay period) would be $58 ($29 employee share + $29 employer share).
How to Determine Your FICA Tax Due Dates
FICA tax due dates are dependent on your “lookback period.” Depending on your total FICA tax liability during this period, you’ll either have to pay FICA taxes monthly or semiweekly. If you have less than $50,000 in tax liability during your most recent lookback period, you pay monthly, and if you had more than $50,000, you have to pay semiweekly.
The lookback period is defined as July 1 of the second preceding calendar year through June 30 of the preceding calendar year. For example, for 2019, the lookback period would be July 1, 2017, through June 30, 2018. Let’s walk through an example so that you can see how this works.
How to Determine Your FICA Tax Lookback Period
Let’s say today is January 1, 2019, and you need to determine when you are required to deposit your tax payments moving forward. You’ll either have to pay monthly for the previous month’s employer FICA taxes owed or semiweekly for FICA taxes owed the previous two weeks.
The three steps to determine your lookback period are:
1. Determine Your Lookback Period
For 2019, your lookback period would be July 1, 2017, through June 30, 2018.
2. Get Copies of Form 941 Filed
This should include Form 941 forms filed for the lookback period (July 1, 2017 through June 30, 2018). This would include the 941 tax forms filed for the following quarters:
- Quarter 3 2017 (July 1 – Sept 30, 2017)
- Quarter 4 2017 (Oct 1 – Dec 31, 2017)
- Quarter 1 2018 (Jan 1 – Mar 31, 2018)
- Quarter 2018 (Apr 1 – Jun 30, 2018)
3. Add Up the Tax Liability on Line 10 of Each Form 941
If your total tax liability for all four quarters is $50,000 or less, you must deposit your taxes on a monthly basis. Monthly taxes are due by the 15th day of the following month. On the other hand, if your total tax liability is more than $50,000, you must deposit your tax payments on a semiweekly basis. Semiweekly tax payment due dates are based on what day of the week your payday took place.
The exception to this is if your total taxes (on line 10) for the current quarter or the preceding quarter are less than $2,500. In this case, you do not have to make a deposit. Instead, you can send in your payment when you file your Form 941.
FICA Tax Lookback Period Example
Let’s say it is January 2019 and the total tax liability that you owe for the previous quarter came to $2,000. You do not have to make tax deposits for the first quarter of 2019 (January through March) as long as your taxes do not reach $100,000 within the quarter. If so, then you must follow the $100,000 next-day deposit rule.
This rule says that if you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and the following calendar year. For more information, see the $100,000 Next-Day Deposit section in IRS Publication 15.
If you are a new employer, then you are automatically considered a monthly depositor since your tax liability for the lookback period would be zero. Below is a summary table of each type of depositor, along with the due dates for tax payments:
Types of Depositors & Due Dates for FICA Tax Payments
|Monthly Depositor||Semiweekly Depositor|
|If you reported $50,000 or less in taxes during the lookback period, you must make monthly payments to the IRS.|
Payments are due by the 15th day of the following month.
|If you reported more than $50,000 of taxes during the lookback period, then you must make semiweekly payments to the IRS.|
Depending on what your employee payday is, your tax payments will be due as follows:
IMPORTANT NOTE: If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and the following calendar year. For more information, see the $100,000 Next-Day Deposit section in IRS Publication 15.
How to Make FICA Tax Payments
If you are a monthly or semiweekly depositor, then payments must be submitted electronically through the Electronic Filing Tax Payment System (EFTPS). Snail mail is not an option. The payments you submit should include income taxes withheld from all employee paychecks and both your portion and the employee’s portion of Social Security and Medicare taxes.
To use EFTPS, you will need a Federal Employer Identification Number (aka EIN or FEIN). You can apply for an EIN with the IRS here, or sign up for Gusto and they will handle it for you. To learn more about EIN numbers, you can read our article on employer identification numbers.
If you are not required to make payments during the quarter, you can mail a payment with your Form 941 or submit it through the EFTPS.
FICA Tax Penalties for Late Payments
If you don’t deposit your payments on time, you do not deposit payments when you are required to do so, or your deposit is for less than the required amount, you may have to pay a penalty of 2% to 15%. Below is a summary table taken from IRS Publication 15 of the penalties that you may be required to pay based on the number of days your payment is late.
Summary of Penalties for Late FICA Tax Payments
|Number of Days Late||Penalty|
|Deposits made 1-5 days late||2%|
|Deposits made 6-15 days late||5%|
|Deposits made 16 or more days late, but before 10 days from the first date of the first notice sent by the IRS requesting payment||10%|
|Amounts that should have been deposited but instead were paid directly to the IRS or paid with your Form 941||10%|
|Amounts still unpaid more than 10 days after the date of the first notice sent by the IRS requesting payment or the date you received the notice demanding payment (whichever is earlier)||15%|
|Penalties for late FICA tax payments are subject to a one-time charge but interest will accrue each day until the outstanding tax payments are made|
Form 941 Penalties for Late Filings
Failure to file Form 941 and/or make your tax payments by the due date will result in penalties and interest. In general, penalties are typically a one-time payment, but interest will continue to accrue until your tax payment is made.
If you don’t file Form 941 on time, you could be subject to the following penalties and interest:
Form 941 Penalties
Each month that the form has not been filed, a failure-to-file (FTF) penalty of 5% of the unpaid tax due with that return will be assessed. The maximum penalty is generally 25% of the tax due.
If you have a balance due that should have been paid with your return (e.g., outstanding employer FICA payments that you need to make), there is a failure-to-pay (FTP) penalty of 0.5% per month of the amount of tax. This penalty is assessed for each month that the payment is late. The maximum amount of the penalty is also 25% of the tax due.
If both penalties apply in any month, the FTF penalty is reduced by the amount of the FTP penalty. The penalties won’t be charged if you have a reasonable cause for failing to file or pay. If you receive a penalty notice, you can provide a written explanation of why you believe reasonable cause exists.
Form 941 Interest
In addition to any penalties, interest accrues from the due date of the tax on any unpaid balance. If income, Social Security, or Medicare taxes that must be withheld aren’t withheld or aren’t paid, you may be personally liable for the trust fund recovery penalty.
Keep in mind that even if you use a third-party payer, such as Gusto, that doesn’t relieve you of the responsibility to ensure tax returns are filed and all taxes are paid or deposited correctly and on time. However, most payroll services will reimburse you for any interest and penalties that you may incur if they are indeed at fault for filing and paying your taxes late.
For more information on penalties and interest, check out IRS Publication 15.
What State & Local Taxes in Addition to FICA Taxes Are
Our focus has been on your tax responsibility at the federal level. This is because Social Security and Medicare taxes are both mandated at the federal level. However, states and localities may have different income tax requirements. To learn more about your tax responsibility at the state level, consult your state tax website.
The Bottom Line
As you can see, there is a lot that goes into calculating and reporting on Social Security, Medicare, and federal income taxes for both you as an employer and your employees. While it might seem manageable to do this by hand if you’ve just got just a few employees, I don’t recommend that you do.
A better option is to use payroll software like Gusto to handle your payroll end-to-end. Not only does Gusto calculate payroll checks, it also automatically calculates, pays, and files all your payroll taxes and forms electronically. Try it free for 30 days.