Form 945 (2017) Filing Preparation Checklist
Form 945 is the Annual Return of Withheld Federal Income Tax used to report federal income tax withheld from nonpayroll sources. These sources include pensions, annuities, individual retirement accounts (IRAs), gambling winnings, military retirement, Indian gaming profits, certain government payments with voluntary withholding elections, dividends and other distributions by Alaska Native Corporations with voluntary withholding elections, and backup withholding on reportable payments.
For the 2017 tax year, filers must report all federal income tax withholding from these nonpayroll payments annually on a single Form 945. This form is distinct from other Employment Tax Forms such as Form 941, Form 943 (for agricultural employees), Form 944 (for small employers), Form CT-1 (for railroad retirement), Form W-3 (transmittal of wage and tax statements), and Form W-3SS (for American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands).
Filers reporting a total tax liability of $2,500 or more must reconcile their deposits against liabilities using either the monthly summary on Form 945 line 7 or by attaching Form 945-A, depending on their depositor schedule classification.
Filing Steps
Step 1: Complete Identification Information
Enter your legal business name exactly as registered with the IRS, your employer identification number (EIN), and your trade name if applicable. Verify that your address matches the one on your prior-year return. If your address has changed, please check the 'Address Change' box on the form. If you recently applied for an EIN and have not yet received it, write “Applied For” in the EIN field along with the date you submitted your application. All confidential information on Form 945, including your EIN and tax liability details, is protected under Internal Revenue Code section 6103.
Step 2: Report Federal Income Tax Withheld
On line 1, report all federal income tax that you withheld or were required to withhold from pensions (including distributions from tax-favored retirement plans such as section 401(k), section 403(b), and governmental section 457(b) plans), annuities, IRA distributions, military retirement, Indian gaming profits, and regular gambling withholding. Also include any voluntary withholding amounts on certain government payments and on dividends and other distributions by an Alaska Native Corporation. Do not include backup withholding on line 1, as backup withholding is reported separately on line 2. Ensure all amounts correspond to withholding documented on Forms 1099 or Form W-2G issued for the 2017 tax year. Payroll professionals should verify that amounts reported align with information returns filed for recipients.
Step 3: Report Backup Withholding
Enter all backup withholding amounts on line 2. This includes backup withholding on gambling winnings and backup withholding on other reportable payments. Backup withholding must be calculated only on reportable payments and properly documented through Forms 1099 or other required information returns issued for the 2017 tax year. Unlike payroll withholding, which is reported on Form 941 or Form 944, backup withholding is reported explicitly on Form 945.
Step 4: Calculate Total Taxes
Compute your total taxes on line 3 by adding line 1 and line 2 together. This line 3 total is critical for determining your filing requirements. If the total on line 3 is less than $2,500, you are not required to complete line 7 or attach Form 945-A. If line 3 is $2,500 or more, you must complete either line 7 (if you were a monthly schedule depositor for the entire year) or attach Form 945-A (if you were a semiweekly schedule depositor at any point during the year). This threshold differs from other Employment Tax Forms, such as Form 941, which is used for payroll taxes.
Step 5: Enter Total Deposits
On line 4, enter your total Form 945 deposits made during 2017. This amount includes any overpayment you applied from your 2016 Form 945 return and any overpayment you applied from Form 945-X (amended returns) filed during 2017 for prior tax years. All deposit amounts should reflect electronic funds transfers made throughout the year using the Electronic Federal Tax Payment System (EFTPS) or other approved electronic payment methods.
Step 6: Calculate Balance Due or Overpayment
Calculate the balance due on line 5 if line 3 exceeds line 4. If line 4 exceeds line 3, calculate the overpayment on line 6. Never make entries on both lines 5 and 6 simultaneously.
If you have a balance due, payment with Form 945 is permitted only under specific circumstances. You may make payment with Form 945 if your total taxes for the year (line 3) are less than $2,500 and you are paying in full with a timely filed return. Alternatively, monthly schedule depositors may make payment with Form 945 if making a payment in accordance with the Accuracy of Deposits Rule as described in section 11 of Publication 15 and other Employment Tax Publications. In all other situations, you must have made your deposits by electronic funds transfer throughout the year, and any remaining balance should be paid electronically.
If you deposited more than required and have an overpayment on line 6, you may elect to have the overpayment either refunded to you or applied to your following Form 945 return by checking the appropriate box. Check only one box. If you check neither box nor check both boxes, the IRS will generally apply the overpayment to your next return automatically.
Step 7: Complete Monthly Summary (If Required)
Complete line 7 only if you were a monthly schedule depositor for the entire 2017 year and your line 3 total is $2,500 or more. Line 7 is the Monthly Summary of Federal Tax Liability, which requires you to enter your actual tax liability for each month from January through December in entries A through L.
This represents when tax liabilities arose based on payment dates, not when deposits were made. Add all twelve monthly amounts and enter the total on line 7M. The amount on line 7M must exactly equal the amount reported on line 3 with no variance. Payroll professionals managing multiple Employment Tax Forms should ensure separate tracking for Form 945 liabilities versus Form 941, Form 943, or Form 944 liabilities.
Step 8: Attach Form 945-A (If Required)
If you were a semiweekly schedule depositor at any time during 2017, do not complete line 7. Instead, you must complete and attach Form 945-A (Annual Record of Federal Tax Liability) to reconcile your deposits. Form 945-A requires daily entries showing when tax liabilities arose throughout the year. The total on Form 945-A, line M, must match the total on Form 945, line 3, exactly. Also, complete Form 945-A instead of line 7 if you were a monthly schedule depositor who accumulated $100,000 or more in tax liability on any single day during 2017, as this converts you to a semiweekly schedule depositor for the remainder of the year.
Step 9: Make Overpayment Election
If line 6 indicates an overpayment, select one box to indicate whether you would like the overpayment applied to your following Form 945 return or refunded to you. Make your election carefully, as changing it later requires written correspondence with the IRS. If your overpayment is under one dollar, the IRS will send a refund or apply it to your next return only if you request it in writing.
Step 10: Complete Third-Party Designee Section
Complete the Third-Party Designee section only if you wish to authorize another person to discuss your 2017 Form 945 with the IRS. This person could be an employee, a paid tax preparer, or another individual. Enter the designee’s name, phone number, and a five-digit personal identification number (PIN) that the designee selects. By checking “Yes,” you authorize the IRS to contact your designee about questions regarding the processing of this return.
Your designee may provide missing information, call the IRS about return processing, and respond to specific IRS notices you share with them, but the designee is not authorized to bind you to additional tax liability or otherwise represent you before the IRS. This authorization automatically expires one year from the due date of Form 945, excluding extensions. Note that while you authorize discussion of return information, all confidential information remains protected under federal law.
Step 11: Sign and Date the Return
Sign and date Form 945 under penalties of perjury. Print your name and title clearly. An authorized person must sign the return: the individual owner for sole proprietorships, a president or vice president, or other duly authorized principal officer for corporations and LLCs treated as corporations, a responsible and duly authorized partner or member for partnerships and LLCs treated as partnerships, or the owner for single-member LLCs treated as disregarded entities.
All signatures must be legally-compliant signatures that meet IRS requirements. If a paid preparer completed your return, the preparer must also sign and date in the Paid Preparer Use Only section, enter their Preparer Tax Identification Number (PTIN), provide their complete address, and include the firm’s EIN if applicable. The self-employed checkbox must be checked if required.
Corporate officers may use alternative signature methods, including rubber stamps, mechanical devices, or computer software programs, following procedures outlined in Revenue Procedure 2005-39, ensuring signatures are processed securely and meet IRS standards.
Step 12: Submit Payment (If Applicable)
If making payment by check or money order, complete Form 945-V (Payment Voucher). Make your check or money order payable to “United States Treasury” and write your EIN, “Form 945,” and “2017” on the payment. Detach Form 945-V from the return and mail it together with your payment and Form 945 to the appropriate IRS address. Do not staple Form 945-V or your payment to Form 945 or to each other. If paying electronically, file your return using the without-a-payment address and do not submit Form 945-V.
Filing Deadlines and Addresses
For 2017, file Form 945 by January 31, 2018. However, if you made deposits on time in full payment of all taxes due for the year, you may file the return by February 12, 2018. The extended deadline applies only when all required deposits were made timely and in full throughout the year. Electronic filing is available and encouraged for faster processing and confirmation of receipt. Mail your return to the appropriate IRS address based on your legal residence or principal place of business location as specified in the Instructions for Form 945. Different mailing addresses apply depending on whether you are including payment; therefore, verify the correct address for your specific situation.
Key Requirements Summary
All filers must report federal income tax withholding from nonpayroll payments on a single annual Form 945. This form is separate from other Employment Tax Forms used for different purposes—do not report Form 945 liabilities on Form 941, Form 943, Form 944, or other employment tax returns. Similarly, state-specific forms such as Form OR-STT1 (for Oregon Statewide Transit Tax) and specialized forms like Form 730 (for wagering taxes), Form OQ, or other state employment tax documents serve different reporting purposes. They should not be confused with the requirements of Form 945.
Filers with line 3 totals less than $2,500 may skip line 7 and Form 945-A entirely. Monthly schedule depositors with line 3 totals of $2,500 or more must complete line 7 with monthly liability details. Semiweekly schedule depositors must attach Form 945-A regardless of the total tax amount. The monthly liability reconciliation on line 7M or Form 945-A, line M, must precisely match line 3 with no discrepancies to avoid processing delays.
Federal tax deposits must be made by electronic funds transfer throughout the year, and payments with the return are permitted only under specific, limited circumstances as outlined in step 6. Payroll professionals and tax practitioners should maintain accurate records and ensure that all confidential information is handled securely throughout the preparation and filing process, using legally compliant signatures and verified electronic filing methods when applicable.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
