Instructions for Filling Out Form 945

This document offers a comprehensive guide on completing Form 945, an IRS form for reporting federal income tax withheld from nonpayroll payments in the United States. It covers filing requirements, completion instructions, penalties, depositing withheld taxes, and handling changes in business information.

In this article, we'll provide essential information on Form 945 and a step-by-step guide on how to fill it out, ensuring accuracy and compliance with IRS regulations.

What is Form 945?

Form 945 is an annual return used to report federal income tax withheld, or required to be withheld, from nonpayroll payments. These nonpayroll payments encompass pensions, annuities, IRA distributions, military retirement, Indian gaming profits, and gambling winnings. The primary purpose of Form 945 is to report the withheld federal income tax from these sources. Key components of the form include the taxpayer's identification number, total amount of federal income tax withheld, total amount of backup withholding, total taxes, total deposits, balance due or overpayment, and the monthly summary of federal tax liability.

Who Must File Form 945?

Form 945 must be filed by individuals or entities who withhold or are required to withhold federal income tax, including backup withholding, from nonpayroll payments. This ensures proper reporting of withheld taxes and compliance with IRS regulations.

Form 945 Tax Filing Deadlines and Due Dates

The due dates for Form 945 are as follows:

• Regular due date: January 31st of the year following the calendar year in which the taxes were withheld.
• If the regular due date falls on a weekend or legal holiday, the form is due on the next business day.
• If you made deposits on time in full payment of the taxes for the year, you may file the return by February 10th.

Form 945 Late Payment Penalty

For Form 945, a late payment penalty may be imposed if the full amount of tax due is not paid by the due date. The penalty is typically 0.5% of the unpaid tax for each month or part of a month the tax remains unpaid, up to a maximum of 25%. Additionally, if the tax is not paid within 10 days after receiving a notice and demand for payment, the penalty rate increases to 1% per month. It's crucial to pay the tax on time to avoid these penalties and maintain compliance with IRS regulations.

Step-by-Step Instructions for Form 945

Here are the step-by-step instructions for filling out Form 945:

1. Enter your Employer Identification Number (EIN) in the designated box at the top of the form.
2. Provide your name and address in the appropriate fields.
3. On line 1, enter the total amount of federal income tax withheld from nonpayroll payments during the calendar year.
4. On line 2, enter the total amount of backup withholding during the calendar year.
5. Add lines 1 and 2, and enter the result on line 3. This is the total amount of taxes you're reporting on Form 945.
6. On line 4, enter the total amount of deposits made for the calendar year, including any overpayment applied from a prior year.
7. Subtract line 4 from line 3, and enter the result on line 5. If the result is a positive number, this is the balance due. If the result is a negative number, this is the overpayment.
8. If you have a balance due on line 5, complete the payment voucher (Form 945-V) and submit it with your payment. If you have an overpayment on line 5, check the appropriate box to indicate whether you want the overpayment applied to your next return or refunded to you.
9. On line 6, provide a monthly summary of your federal tax liability. For each month, enter the total amount of taxes withheld or required to be withheld.
10. Sign and date the form in the designated area. The person who signs the form should be someone authorized to sign on behalf of the entity, such as an owner, officer, or authorized agent.
11. Provide the signer's title, phone number, and email address in the appropriate fields.
12. If you used a paid preparer to complete the form, the preparer should also sign and date the form, and provide their Preparer Tax Identification Number (PTIN), firm's name, address, and phone number.

Remember to review the form for accuracy and completeness before submitting it to the IRS.

How to Submit Form 945

To submit Form 945, complete the form accurately, ensuring all required information is provided, such as federal income tax withheld, backup withholding, total taxes, total deposits, balance due, overpayment, and monthly summary of federal tax liability. The form must be signed by an authorized person, such as a business owner, partner, member, officer, or fiduciary. Once completed, submit the form to the IRS by the specified due date to avoid penalties for late filing or payment.

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