Form 945, Annual Return of Withheld Federal Income Tax, is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.
Any business that withholds or is required to withhold federal income tax from payments made other than their payroll must file Form 945. Businesses must only submit Form 945 if they have a non-payroll tax liability during the tax year.
Note: If no non-payroll payments were made during the tax year, then you are not required to file Form 945.
What information is required to complete Form 945?
Keep the following information ready to streamline your Form 945 filing process:
Your name, address, and EIN (Employer Identification Number)
The total amount of federal income taxes withheld from non-payroll payments
Backup withholding
Total deposits made for the year 2024
Balance due or overpayment, if any
Complete Form 945-A (applicable for semiweekly depositors)
Form 945 is used to report federal income tax withheld from nonpayroll payments. These nonpayroll payments 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 reported on the 1099 Forms (1099-R, 1099-MISC, or 1099-NEC)
Military Retirement
Gambling winnings reported on Form W-2G
Indian gaming profits
Certain government payments on which the recipient elected voluntary income tax withholding
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.
However, there are a few exceptions. Do not use Form 945 to report federal income tax withholding from wages or federal income tax withheld on distributions to participants from nonqualified pension plans (including nongovernmental section 457(b) plans). If you withhold such taxes, report them on Form 941 or Form 944.
When is the due date to file Form 945 for 2024?
For the 2024 tax year, Form 945 is due by January 31, 2025. If you made deposits on time in full payment of the taxes due for the year, you may file the return by February 10, 2025.
Note: If the Form 945 due date falls on any Federal holiday or weekend, the next business day will be the due date.
Is compensation paid to H-2A workers required to be reported on Form 945?
If an H-2A visa worker fails to provide you with a TIN, the employee is subject to backup withholding. You must report the wages and backup withholding on Form 1099-MISC. Additionally, you are also required to report the backup withholding on Form 945, line 2.
Who must attach 945-A with Form 945?
If you are a semiweekly schedule depositor or accumulate a tax liability of $100,000 or more on any given day of a calendar month, use Form 945-A to report your federal tax liability (based on the dates payments were made or wages were paid) and attach it with Form 945.
Note: The total from line M on Form 945-A must match the amount on line 3 of Form 945.
Add Form 945-A at No Additional Cost Using TaxBandits!
Your filing includes Form 945-A at no extra cost when you file Form 945 online using TaxBandits.
What are the late filing and payment penalty for Form 945?
There are penalties and interest accrued for late filing and payment of deposits if you can’t prove that you had a reasonable cause. Accordingly, the IRS will impose an initial penalty of 5% on the unpaid tax for each month your return is late. This will be increased up to 25%.
IRS Update:
If you get a penalty notice from the IRS, you should respond by providing an explanation of why the form was filed late.
How can you file Form 945 for 2024?
Form 945 can be filed electronically through TaxBandits, an IRS-authorized e-file provider. TaxBandits offers a comprehensive solution for filing your 945 returns on time. You can also make backup withholding payments to the IRS electronically using the EFTPS online payment solution.
