Employer's Monthly Federal Tax Return

PAGER/SGML
Page 1 of 4

Userid: ________
DTD INSTR04
Leadpct: 0% Pt. size: 9.5
Fileid: D:\Users\fh3bb\documents\epicfiles\I941M.sgm

Instructions for Form 941-M

❏ Draft
(Init. & date)

❏

Ok to Print

15:20 - 4-FEB-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Instructions for Form 941-M

Department of the Treasury
Internal Revenue Service

(Rev. January 2008)
Employer’s MONTHLY Federal Tax Return
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New
Social security wage base for 2008. Stop withholding
social security tax after an employee reaches $102,000 in
taxable wages. There is no limit on the amount of wages
subject to Medicare tax.

Reminders
Telephone help. If you have questions about completing
Form 941-M, call the IRS Business and Specialty Tax Line
toll free at 1-800-829-4933 on Monday through Friday from
7 a.m. to 10 p.m. local time (Alaska and Hawaii follow
Pacific time).

Purpose of form. Use Form 941-M to report monthly: (a)
federal income tax you withheld from wages, tips,
distributions from nonqualified pension plans (including
nongovernmental section 457(b) plans), supplemental
unemployment compensation benefits, and third-party
payments of sick pay; and (b) social security and Medicare
taxes. If you report just one kind of tax, complete only the
lines that apply.

!

If you file a final return on Form 941-M, you must
furnish Form W-2 to your employees by the last day
CAUTION of the month in which the final Form 941-M is due.
File Copy A of Forms W-2 and Form W-3 with the Social
Security Administration by the last day of the month
following the month your final Form 941-M was due. See the
Instructions for Forms W-2 and W-3 for details
Penalties and interest. There are penalties for filing a
return late and paying or depositing taxes late, unless there
is reasonable cause. There are also penalties for failure to:
(a) furnish Forms W-2 to employees and file copies with the
SSA and (b) deposit taxes when required. Do not attach an
explanation of why the return is late to Forms W-2 sent to
the SSA. In addition, there are penalties for willful failure to
file returns and pay taxes when due and for filing false
returns or submitting bad checks. Interest is charged on
taxes paid late at the rate set by law. See Pub. 15 (Circular
E) for additional information.

!

General Instructions

CAUTION

employees about the EIC can be met by giving each eligible
employee Notice 797, Possible Federal Tax Refund Due to
the Earned Income Credit (EIC). See section 10 of Pub. 15
(Circular E), Employer’s Tax Guide, and Pub. 596, Earned
Income Credit (EIC), for more information.
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 W-2 to the employee any time after
employment ends but no later than January 31 of the
following year. However, if the employee asks you for
Form W-2, furnish the completed form within 30 days after
the request or the final wage payment, whichever is later.
Send Copy A of all Forms W-2, Wage and Tax Statement,
issued for the year with a Form W-3, Transmittal of Wage
and Tax Statements, filed on paper, to the Social Security
Administration (SSA) by the last day of February. If you file
Forms W-2 electronically, file them with the SSA by the last
day of March.

Form 941-M is not for general public use and should
only be filed directly with an IRS compliance
representative.

Who must file. File Form 941-M if you must report federal
income tax withheld, social security taxes, and Medicare
taxes on a monthly basis with an IRS compliance
representative. The IRS may require monthly returns on
Form 941-M and payments of tax from any employer who
has not complied with the requirements for the filing of
returns or the paying or depositing of taxes reported on
quarterly or annual returns. Do not file monthly returns
unless you received written notification from the IRS to do
so. A preaddressed return envelope and blank Form 941-M
will be mailed to you before your first monthly return is due
and for each month thereafter. If you no longer expect to
pay amounts subject to tax reportable on Form 941-M,
check the box on line 16 and enter the date you last paid
wages.
When to file. Form 941-M for any month is due by the 15th
day of the following month. If the due date for filing a return
falls on a Saturday, Sunday, or legal holiday, you may file
the return on the next business day.
Where to file. File Form 941-M, with any payment due,
using the preaddressed envelope furnished to you. Keep a
duplicate Form 941-M for your records.
Form W-5. Each eligible employee wishing to receive any
advance earned income credit (EIC) payments must give
you a completed Form W-5, Earned Income Credit Advance
Payment Certificate. Your requirement to notify certain

A trust fund recovery penalty may apply if federal
income, social security, and Medicare taxes that
CAUTION must be withheld are not withheld or are not paid.
This penalty is the full amount of any unpaid trust fund tax.
This penalty may apply to you if these unpaid taxes cannot
be immediately collected from the employer or business.
The trust fund recovery penalty may be imposed on all
persons who are determined by the IRS to be responsible
for collecting, accounting for, and paying over these taxes,
and who acted willfully in not doing so.
A responsible person can be an officer or employee of
a corporation, a partner or employee of a partnership, an
accountant, a volunteer director/trustee, or any employee of
a sole proprietorship. A responsible person also may include
one who signs checks for the business or otherwise has
authority to cause the spending of business funds. Willfully
means voluntarily, consciously, and intentionally.
Related publications. Pub. 15 (Circular E) explains the
rules for withholding, paying, depositing, and reporting
federal income tax, social security and Medicare taxes, and
federal unemployment (FUTA) tax on wages. See Pub.
15-A, Employer’s Supplemental Tax Guide, for information
on sick pay paid by third-party payers. Pub. 51 (Circular A),

!

Cat. No. 39535W

Page 2 of 4

Instructions for Form 941-M

15:20 - 4-FEB-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Agricultural Employer’s Tax Guide, explains rules for
employers of farmworkers. These publications are available
on the IRS website at www.irs.gov or by calling
1-800-TAX-FORM (1-800-829-3676). See Pub. 15
(Circular E) for additional methods of obtaining forms and
publications.
Reconciliation of Forms 941-M and W-3. Certain
amounts reported on the monthly Forms 941-M for the year
should agree with the Form W-2 totals reported on Form
W-3. The following amounts are reconciled: federal
income tax withholding, social security wages, social
security tips, Medicare wages and tips, and advance earned
income credit (EIC) payments.

Line 5b — Taxable social security tips. Enter all tips your
employees reported during the month until tips and wages
for an employee reach $102,000 in 2008. Do this even if you
were not able to withhold the employee tax (6.2%). Report
the uncollected employee’s share of social security tax on
line 7c. Also see section 6 of Pub. 15 (Circular E).
An employee must report to you cash tips, including tips
you paid the employee for charge customers, totaling $20 or
more 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 give you a written statement.
Do not include allocated tips on this line. Instead, report
them on Form 8027, Employer’s Annual Information Return
of Tip Income and Allocated Tips. Allocated tips are not
reportable on Form 941-M and are not subject to withholding
of federal income, social security, or Medicare tax.
Line 5c — Taxable Medicare wages & tips. Report all
wages and tips subject to Medicare tax. Also include any
sick pay and taxable fringe benefits subject to Medicare tax.
See section 5 in Pub. 15 (Circular E) for information on
types of wages subject to Medicare tax. If none of the
payments are subject to Medicare tax, enter “-0-.”
Include all tips your employees reported during the
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).
Line 7 — TAX ADJUSTMENTS. Enter tax amounts on lines
7a through 7g that result from current or prior period
adjustments. Use a minus sign (if possible) to show an
adjustment that decreases the total taxes shown on line 6.
Otherwise, use parentheses. Do not enter an amount on
line 7f or line 7g unless the IRS has sent you a notice
instructing you to do so. See the Instructions for Form 941
for more information.
Current period adjustments. In certain cases, amounts
reported as social security and Medicare taxes on lines 5a,
5b, and 5c must be adjusted to arrive at your correct tax
liability. See section 13 of Pub. 15 (Circular E) for
information on the following adjustments:
• Fractions-of-cents adjustment.
• Adjustment for the employee share of social security and
Medicare taxes withheld by a third-party sick pay payer.
• Adjustment for the uncollected employee share of social
security and Medicare taxes on tips.
• Adjustment for the employee share of social security and
Medicare taxes on group-term life insurance premiums paid
for former employees.
Prior period adjustments. Use lines 7d through 7g to
correct errors in taxes reported on an earlier return,
including errors from a previous month of the current
quarter. For example, if you are correcting an error in social
security and Medicare taxes reported on your July 2008
Form 941-M and you found the error in September 2008,
report the adjustment using line 7e of your September 2008
Form 941-M.
If you report both an underpayment and an overpayment,
show only the net difference.
You must explain any prior period adjustments on an
attached Form 941c, Supporting Statement To Correct
Information.
Line 9 — Advance earned income credit (EIC) payments
made to employees. Enter advance EIC payments made
to employees. Your eligible employees may elect to receive
part of the EIC as an advance payment. Eligible employees
who have a qualifying child must give you a completed Form
W-5 stating they qualify for the EIC. Once the employee
gives you a signed and completed Form W-5, you must

If the amounts do not agree, the IRS may require you to
explain the differences and correct any errors. See
section 12 of Pub. 15 (Circular E) for details.

Specific Instructions
Part 1: Answer these questions for
this month
Line 1 — Number of employees. For March, June,
September, and December, report the number of employees
on your payroll for the pay period that includes the 12th of
the month. Leave line 1 blank for all other months. Do not
include household employees, employees in nonpay status
during the pay period, pensioners, or active members of the
Armed Forces. An entry of 250 or more on line 1 indicates
you must file Forms W-2 electronically. For more
information, call the SSA at 1-800-772-6270 or visit the
SSA’s Employer W-2 Filing Instructions and Information
webpage at www.socialsecurity.gov/employer.
Line 2 — Wages, tips, and other compensation. Enter
amounts on line 2 that would also be included in box 1 of
your employees’ Forms W-2. See the Instructions for Forms
W-2 and W-3 for details.
If you get timely notice from your insurance carrier
concerning the amount of third-party sick pay it paid to your
employees, include the sick pay on line 2.
Line 3 — Total income tax withheld from wages, tips,
and other compensation. Enter the federal income tax
you withheld (or were required to withhold) on wages, tips,
taxable fringe benefits, sick pay, other compensation, and
supplemental unemployment compensation benefits. Also
include here any excise taxes you were required to withhold
on golden parachute payments (section 4999).
Line 4 — If no wages, tips, and other compensation are
subject to social security or Medicare tax. If no wages,
tips, and other compensation on line 2 are subject to social
security or Medicare tax, check the box on line 4. If this
question does not apply to you, leave the box blank. For
more information about exempt wages, see section 15 of
Pub. 15 (Circular E) and section 4 of Pub. 15-A.
Line 5a — Taxable social security wages. Enter the total
wages subject to social security taxes you paid to your
employees during the month. Also include any sick pay and
taxable fringe benefits subject to social security taxes. Enter
the amount before deductions. Do not include tips on this
line. Stop reporting for any employee whose wages
(including tips) reach $102,000 for 2008. However, continue
to withhold income and Medicare taxes for the whole year
on wages and tips even when the limit of $102,000 is
reached. See the Line 5c instructions for Medicare wages
and tips.

-2-

Page 3 of 4

Instructions for Form 941-M

15:20 - 4-FEB-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

make the advance EIC payments. Advance EIC payments
are generally made from withheld federal income tax and
employee and employer social security and Medicare taxes.
See section 10 of Pub. 15 (Circular E) and Pub. 596 for
more information on advance EIC payments and eligibility
requirements.

and Medicare taxes minus advance EIC payment (if any) for
each date of payment (payday). Enter each deposit amount
in the numbered entry space corresponding to the date of
deposit.
Line 14a — Total tax liability for the month. The amount
of this line must equal line 10 (total taxes after adjustment
for advance EIC). Otherwise, you may be subject to a
penalty for failure to make deposits of taxes.

If the amount of your advance EIC payments exceeds
your total taxes (line 8) for the month, you may claim a
refund of the overpayment or elect to have the credit applied
to your return for the following month. Provide a statement
with your return identifying the amount of excess payment(s)
and the pay period(s) in which it was paid. See section 10 of
Pub. 15 (Circular E).

Part 3: Tell us about your business
In Part 3, answer only those questions that apply to your
business. If a question does not apply, leave it blank and go
to Part 4.

Line 12 — Balance due. If line 10 is more than line 11,
write the difference in line 12. Otherwise, see Line 13 —
Overpayment below. You do not have to pay if line 12 is
under $1.

!

CAUTION

Line 16—If your business has closed . . .
If you go out of business or stop paying wages, you must file
a final return. To tell the IRS a particular Form 941-M is your
final return, check the box on line 16 and enter the date you
last paid wages in the space provided.

If you fail to make deposits as required and instead
pay the taxes with Form 941-M, you may be subject
to a penalty.

Line 13 — Overpayment. If line 11 is more than line 10,
write the difference in line 13. Never make an entry in both
lines 12 and 13.

Line 17—If you are a seasonal employer . .
If you hire employees seasonally — such as for summer or
winter only — check the box on line 17. Checking the box
tells the IRS not to expect Form 941-M from you every
month because you have not paid wages regularly.
However, you must check 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 941-M that corresponds to
the month reported.

If you deposited more than the correct amount for a
month, you can have the overpayment refunded (applies
only to March, June, September, and December Forms
941-M) or applied to your next return. Show any amount
applied in the Record of Federal Tax Liability and Deposits
on your next return.
If line 13 is under $1, we will send a refund or apply it to
your next return only on written request.

Part 4: May we speak with your
third-party designee?

Part 2: Tell us about your tax liability
and deposits for this month

If you want to allow an employee, a paid tax preparer, or
another person to discuss your Form 941-M with the IRS,
check the “Yes” box in Part 4. Then tell us the name, phone
number, and five-digit personal identification number (PIN)
of the specific person to speak with — not the name of the
firm who prepared your tax return. The designee may
choose any five numbers as his or her PIN.

Special deposit account. Do not make deposits using the
Electronic Federal Tax Payment System (EFTPS) or Form
8109, Federal Tax Deposit Coupon, and do not complete
line 14, Record of Federal Tax Liability and Deposits, if you
are required to have a special deposit account under section
7512(b). If you have received, by hand delivery, Form 2481,
Notice To Make Special Deposits of Taxes, you must
deposit in a separate bank account any taxes collected or
required by law to be collected. Your deposit must be made
not later than the end of the second banking day after any
taxes were required to be collected from your employees.
The taxes deposited must be kept in the account until paid
with any employer tax that may be due. The account must
be designated as a special fund in trust for the United
States, payable to the “United States Treasury” by you as
trustee. For the definition of the term “bank,” see Form 2481.

By checking “Yes,” you authorize the IRS to talk to the
person you named (your designee) about any questions we
may have while we process your return. You also authorize
your designee to:

• give us any information that is missing from your return,
• call us for information about processing your return, and
• respond to certain IRS notices you have shared with your

designee about math errors and return preparation. The IRS
will not send notices to your designee.
You are not authorizing your designee to bind you to
anything (including additional tax liability) or to otherwise
represent you before the IRS. If you want to expand your
designee’s authorization, see Pub. 947, Practice Before the
IRS and Power of Attorney.

Federal tax deposits. If you are not required to have a
special deposit account, in general, you must deposit your
tax liability at 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).

The authorization will automatically expire 1 year from the
due date for filing your Form 941-M. If you or your designee
want to terminate the authorization, write to the IRS office
for your locality using the “Without a payment” address
under Where Should You File on page 4 in the Instructions
for Form 941.

Line 14 — Record of Federal Tax Liability and Deposits.
If you must deposit taxes using the Federal Tax Deposit
System, complete both columns of the record. In the tax
liability column, include federal income tax withheld plus
both the employer and employee shares of social security

-3-

Page 4 of 4

Instructions for Form 941-M

15:20 - 4-FEB-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Part 5: Sign here

Privacy Act and Paperwork Reduction
Act Notice

Complete all information in Part 5 and sign Form 941-M as
follows.
• Sole proprietorship — The individual who owns the
business.
• Corporation (including a limited liability company
(LLC) treated as a corporation) — The president, vice
president, or other principal officer.
• Partnership (including an LLC treated as a
partnership) or unincorporated organization — A
responsible and duly authorized member or officer having
knowledge of its affairs.
• Single member LLC treated as a disregarded entity —
The owner of the LLC.
• Trust or estate — The fiduciary.
Form 941-M may also be signed by a duly authorized
agent of the taxpayer if a valid power of attorney has been
filed.

We ask for the information on Form 941-M to carry out the
Internal Revenue laws of the United States. We need it to
figure and collect the right amount of tax. Subtitle C,
Employment Taxes, of the Internal Revenue Code imposes
employment taxes on wages, including income tax
withholding. Form 941-M is used to determine the amount of
the taxes you owe. Section 6011 requires you to provide the
requested information if the tax is applicable to you. Section
6109 requires you to provide your employer identification
number (EIN). If you fail to provide this information in a
timely manner, you may be subject to penalties and interest.
If you do not file this information, or provide incomplete or
fraudulent information, you may be subject to penalties and/
or criminal prosecution.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as 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 requires the IRS to disclose or give the
information shown on your tax return to others as described
in the Code. For example, we may disclose your tax
information to the Department of Justice for civil and criminal
litigation, and to cities, states, and the District of Columbia
for use in administering their tax laws. We may also disclose
this information to other countries under a tax treaty, to
federal and state agencies to enforce federal nontax criminal
laws, or to federal law enforcement and intelligence
agencies to combat terrorism.
The time needed to complete and file Form 941-M will
vary depending on individual circumstances. The estimated
average time is: Recordkeeping, 14 hrs., 35 min.; Learning
about the law or the form, 1 hr., 0 min.; Preparing, copying,
assembling, and sending the form to the IRS, 1 hr., 16 min.
If you have comments concerning the accuracy of these
time estimates or suggestions for making Form 941-M
simpler, we would be happy to hear from you. You can write
to: Internal Revenue Service, Tax Products Coordinating
Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave.
NW, IR-6526, Washington, DC 20224.
Do not send Form 941-M to this address. Instead, use
the preaddressed envelope furnished to you.

Part 6: For PAID preparers only
(optional)
You may 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 provided and give the filer a copy of the return in
addition to the copy to be filed with the IRS. Do not complete
Part 6 if you are filing the return as a reporting agent and
have a valid Form 8655, Reporting Agent Authorization, on
file with the IRS.

How to Order Forms and Publications
from the IRS
Call 1-800-829-3676.

Visit the IRS website at www.irs.gov.

-4-