Form 940 vs. Form 941, Which Payroll Returns Does Your Business Need?

Many business owners think one payroll return covers it all. The IRS uses two returns for two different taxes, and each one has its own schedule.

Most employers file both returns because each covers a different tax

For most businesses with employees, the answer is both. The IRS guidance for employers describes Form 941 as a quarterly return and Form 940 as a yearly one.

Form 941 reports paycheck withholdings such as Social Security and Medicare. Form 940 covers federal unemployment tax, called FUTA.

	Form 941	Form 940
What it covers	Paycheck taxes plus Social Security and Medicare	Federal unemployment tax
Who pays	Workers and the employer	The employer
How often	Each quarter	Once a year

Due dates generally move to the next business day when they fall on a weekend or legal holiday.

What Form 941 reports every quarter

Form 941 is the quarterly report on money taken out of paychecks. It also covers the share of Social Security and Medicare that the business pays on its own.

Each return generally shows wages paid, tips workers reported, and federal income tax withheld. It also shows the worker and employer shares of Social Security and Medicare.

Getting each quarter right matters more than many owners expect. The IRS matches quarterly returns against annual W-2 forms to find gaps.

What Form 940 reports once a year

Form 940 covers a tax your business pays on its own.

Most employers also pay unemployment tax to their state. Paying state unemployment tax on time earns a credit that can lower your federal tax.

Late state payments can shrink that credit. Wages paid in a state that owes money to the federal unemployment fund can also raise the federal amount for that year.

The duty to file generally starts once payroll reaches certain IRS wage or time tests.

Payroll return due dates and how weekends change them

Form 941 is normally due April 30, July 31, October 31, and January 31. Each date covers the quarter that just ended.

Form 940 is normally due January 31 for the prior year.

When a due date falls on a Saturday, Sunday, or legal holiday, it generally moves to the next business day. It helps to check the calendar each year rather than assume the usual date.

Form 941 also keeps going in slow quarters. After the first return, a business generally files each quarter, even with no wages, unless an exception applies or it has filed a final return.

Filing the return is separate from paying the tax

A payroll return reports what the business owed. The payments, called deposits, are a separate duty and are often due well before the return.

Taxes on Form 941 are generally deposited on a monthly or semiweekly schedule. The IRS sets that schedule based on how much tax the business reported in an earlier period, not on how often it runs payroll.

FUTA follows its own pattern. It is generally deposited each quarter once the amount owed builds past a small limit, with smaller amounts carried forward.

Federal tax deposits generally need to be made electronically. A business can file each return on time and still fall behind if deposits are late or short.

Situations where a different form may apply

Some businesses follow a different path based on IRS status or type of workers. These are generally not choices an owner makes alone.

Some very small employers file Form 944 once a year instead of quarterly returns. This generally applies only when the IRS assigns it.

Seasonal employers may skip quarters with no wages, as long as their returns show seasonal status. Businesses that close or stop paying wages generally file a final return.

Household employers usually report through Schedule H on their personal tax return. Farm employers generally use Form 943 for farm wages instead of Form 941.

What can go wrong when the two returns get mixed up

Filing Form 941 on time each quarter generally does not take care of Form 940. Owners who learn this late may face notices for a return they did not know they owed.

Deposits that are late, short, or applied to the wrong tax can lead to IRS letters, penalties, and interest. Quarterly totals that do not match year-end W-2s can also bring questions from the IRS or the Social Security Administration.

A payroll provider can help, but the IRS generally still looks to the employer for what was filed and paid.

How EXCOL approaches Form 940 and Form 941 for growing businesses

EXCOL brings accounting experience dating back to 1994 to small and growing businesses. That experience shapes how the team looks at payroll returns, starting with what each business actually owes.

EXCOL payroll services include payroll administration, Form 941 reporting, and quarterly and annual payroll reporting. The team also supports payroll tax payments and the records behind them.

The work often begins with the question many owners bring, which is whether the business needs Form 940, Form 941, or both. From there, the team can help keep deposits, returns, and supporting records on their own calendars.

Worker classification is part of that review, since it affects who belongs on payroll. If a tax authority reaches out, EXCOL can help with that communication.

Owners can work with the team in English or Spanish. EXCOL aims to explain each payroll return in plain language so owners understand what was filed and why.

Why one bilingual accounting relationship helps with both payroll returns

Form 940 and Form 941 cover two taxes on two timelines, and most employers generally need both. Missed filings, late deposits, and mismatched records often start when payroll, bookkeeping, and tax work happen in separate places.

That is where EXCOL fits. One bilingual, year-round accounting relationship can connect bookkeeping, payroll, tax, and financial guidance so those records are easier to keep consistent.

If you are unsure which returns your business owes, or whether past ones were filed, EXCOL can review your payroll picture with you. That conversation is available in English or Spanish.

Frequently Asked Questions About Forms 940 and 941

Does a business with one part-time worker need to file Form 940?

It often does. The IRS tests look at wages paid and how many weeks someone worked, and part-time and temporary workers generally count.

An accountant can review your payroll history to see whether the tests were met.

Does payroll software file both returns automatically?

Many platforms can file both, but the setup matters. An accountant can review the setup and the records that were filed.

What should an owner do after missing a quarterly Form 941?

Acting quickly usually helps. An accountant can look at the payroll records for that quarter and help address the gap and any IRS notices.

How are mistakes on a filed return corrected?

Each form generally has its own correction process. An accountant can help decide which one fits the error and the year involved.

Can a business ask to file Form 944 instead of quarterly returns?

Requests generally go to the IRS during a set window early in the year. The change usually takes effect only after the IRS confirms it in writing.

Are Form 940 and Form 941 available in Spanish?

Yes, the IRS publishes Spanish versions of both forms. EXCOL can explain either return with you in English or Spanish.