What Is IRS Form 945?

IRS Form 945 is used to report federal income tax withholdings for non-payroll payments. These are the payments reported on Forms 1099 (1099-R, 1099-MISC, 1099-NEC) and Form W-2G.  These types of payments can include:

• Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans), annuities, and IRA distributions;
• Military retirement;
• Gambling winnings;
• Indian gaming profits;
• Certain government payments on which the recipient elected voluntary income tax withholding;
• Payments for work done by contractors, freelancers, or vendors;
• Dividends and other distributions by an Alaska Native Corporation (ANC) on which the recipient elected voluntary income tax withholding; and
• Payments subject to backup withholding.

Who Uses Form 945?

The IRS requires your business to file Form 945 if you withhold or are required to withhold federal income tax (including backup withholding) from non-payroll payments. However, this form is not required in years in which you don’t have a liability to report. 

When do you pay?

There are two deposit schedules—monthly or semiweekly—for determining when a business must deposit any federal income taxes withheld. In 2021, if the total tax reported on your 2019 Form 945 was $50,000 or less, you are a monthly depositor. If it was more than $50,000 then you are a semiweekly depositor. (Typically, the IRS asks you to reference back two tax years—so for 2022, you’re likely going to be digging up your 2020 Form 945. Keep those old tax documents handy, you’ll need them!)

Please note: If you are a monthly depositor and accumulate $100,000 liability or more on any day during a calendar month, your deposit schedule changes on the next day to semiweekly for the rest of the year and the following year.    

Federal income tax deposits must be made by electronic funds transfer (EFT). EFT payments are made using the Electronic Federal Tax Payment System (EFTPS). You can also arrange for your financial institution to initiate a same day wire payment on your behalf. To enroll or learn more, visit the EFTPS website.   

Please note: Form 945 tax deposits should not be combined with Forms 941, 943, 944 or Form CT-1 deposits.  

How to Fill Out Form 945

You begin this form by entering your business’ name, Employer Identification Number (EIN), trade name (if applicable), and address.

Line A: Check this box if you are going out of business or ending operations and this is your final Form 945. Enter the date the final non-payroll payment was deposited. If you check this box, you will also need to attach a statement to the return naming the person keeping the payment records and the address where these records will be kept. 

Please note: If you sell or transfer the business during the year, you and the new owner must each file Form 945 in the year the transfer occurred. Report only the taxes you withheld and deposited. Also, changing from one form of business to another (if you convert from a SMLLC to an S corp, for example) is considered a transfer. 

Line 1. Federal Income Tax Withheld: Enter the amount of federal income tax that you withheld or were required to withhold from pensions, annuities, IRAs, gambling winnings, government payments, dividends, and any other distributions by an Alaska Native Corporation. 

Line 2. Backup Withholding: Enter the amount of any backup withholdings you withheld or were required to withhold. 

Line 3. Total Taxes: Add lines 1 and 2.  If this amount is $2,500 or more, this amount should be equal to the total liability reported on Form 945-A line M or line 7M of the Monthly Summary of Federal Tax Liability.   

Line 4. Total Deposits: Enter the total amount deposited for your Form 945 payments for the year, including any overpayments applied from completing Form 945-X and/or any overpayment applied from the prior year return.

Line 5. Balance Due: Subtract line 4 from line 3 to get your balance due.  If the balance is $1 or less, you don’t have to pay. Generally, you should only have a balance due if the total taxes for the year (line 3) are less than $2,500.  

 Line 6. Overpayment: If line 4 is more than line 3, this is your overpayment. You can have this amount refunded or applied to your next return by checking the appropriate box. If your overpayment amount is $1 or less, it will only be refunded or applied against the next return only if requested in writing. 

Please note: This overpayment could be applied to a past due account regardless of which box is selected.

Line 7. Monthly Summary of Federal Tax Liability: Complete line 7 only if you were a monthly scheduled depositor for the entire year and line 3 is $2,500 or more. 

Please note: The amounts reported on this line should not be a summary of payments made. It should be a summary of the monthly liability amounts. 

If you were a semiweekly depositor and/or you were a monthly depositor and your payment scheduled changed to semiweekly, you will report your liabilities on line 7 of Form 945-A instead. 

Third-Party Designee: If you want to allow an employee, paid tax preparer, or another person to discuss your Form 945 with the IRS you can check the Yes box and enter their name, phone number, and a five-digit personal identification number (PIN) here.  

A third-party designee can also provide the IRS with any missing information, call regarding the processing of the return, and respond to IRS notices you have shared with them. They cannot bind you to anything (including additional tax liability) or represent you before the IRS.

This authorization automatically expires after one year from the due date of this return. 

Who can sign Form 945?

The following persons may sign the return for each type of business entity.

• 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 duly authorized to sign.
• Partnership (including an LLC treated as a partnership) or unincorporated organization:A responsible and duly authorized partner, member, or officer having knowledge of its affairs.
• Single-member LLC treated as a disregarded entity for federal tax purposes:The owner of the LLC or a principal officer duly authorized to sign.
• Trust or estate:The fiduciary.

Form 945 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.

When is the IRS Form 945 Due?

Form 945 is due on January 31st unless that day falls on a federal holiday or weekend, in which case it will be due on the following normal business day. However, if your tax liability payments were made on time and in full, you may file by February 10th. 

If you file by mail, please make sure your filing is properly addressed, contains sufficient postage and is postmarked by the US Postal Service by the due date to be considered timely filed. If not, the return will be considered filed when it is actually received. 

Penalties for Late Filing

There are penalties for failing to file Form 945 or even filing and/or depositing tax payments due late unless there is reasonable cause and it is not due to willful neglect. The interest charged on late tax payments is calculated with a rate set by state law.  

Important tip: If you fail to withhold and pay taxes to the US Treasury that are required, a trust fund recovery penalty may apply. The penalty is 100% of the unpaid trust fund tax. If the unpaid tax can’t be collected from the business immediately, the penalty could be imposed on all persons the IRS determines is responsible for collecting and paying these amounts and willfully didn’t do so.  

Where Do You File?

Form 945 can be filed electronically via the IRS E-File Employment Tax Forms webpage. 

However, if you choose or are required to file by mail, the mailing address you’ll use depends on if you are including a payment with the form. You can mail the return to the address listed for your location below.

Mailing Addresses for Form 945: