Form 945 (2023) Checklist
Purpose
Form 945 reports federal income tax withheld from non-payroll payments, including pensions, annuities, IRAs, gambling winnings, backup withholding, and military retirement for calendar year 2023. This Annual Return of Withheld Federal Income Tax is filed with the Internal Revenue Service to report nonpayroll taxes from various income sources.
Payment with Return Rules: According to the 2023 instructions, filers with a total annual tax liability of $2,500 or less may remit payment with their return. Additionally, monthly schedule depositors making payment under the Accuracy of Deposits Rule may also pay with Form 945, even if the amount is $2,500 or more. All other filers must use Electronic funds transfer deposits per Publication 15 (Employer’s Tax Guide) deposit rules through the Electronic Federal Tax Payment System.
Compliance Steps
1. EIN Verification
Verify Employer Identification Number (EIN) entry on the Form 945 header. The EIN must exactly match the number assigned by the IRS. If you haven’t received your EIN by the filing due date, write “Applied For” and the date you applied per the 2023 instructions. Apply for an EIN using Form SS-4 or online at IRS.gov/EIN. Do not use your Social Security number on forms requesting an EIN.
2. Federal Income Tax Withheld
Complete line 1 (federal income tax withheld from pensions, annuities, IRAs, gambling winnings, Indian gaming profits, etc.) with total amounts reported on Form 1099-R, Form 1099-MISC, Form 1099-NEC, Form W-2G, and other applicable documents for calendar year 2023. This includes regular gambling withholding; backup withholding on gambling winnings is reported separately on line 2. Also include voluntary withholding on certain government payments, Armed Forces retirement pay, and dividends from an Alaska Native Corporation.
3. Backup Withholding
Enter backup withholding amounts on line 2. Backup withholding applies when a payee fails to furnish a correct taxpayer identification number or when the IRS has issued a notice to backup withhold, as per the 2023 rules outlined in Publication 15-A. Include backup withholding on gambling winnings and payments subject to section 6050W(e) requirements. For more information on backup withholding, see Publication 1281.
4. Total Taxes Calculation
Calculate line 3 (Total taxes) by adding lines 1 and 2. This represents your total tax liability for 2023. Under 2023 instructions, if line 3 equals $2,500 or more, it must match line 7M (monthly liability total) or Form 945-A line M. If line 3 is less than $2,500, you are not required to complete line 7 or Form 945-A.
5. Total Deposits
Enter total federal tax deposits made during 2023 on line 4. This includes any overpayment applied from your 2022 return and any overpayment applied from Form 945-X (amended 2023 return) filed in 2023. The amount must reflect all deposits made during the calendar year for Form 945 taxes through the Electronic Federal Tax Payment System or other approved methods.
6. Balance Due or Overpayment
Calculate line 5 (Balance due) if line 3 exceeds line 4. You don’t have to pay if line 5 is under $1. Calculate line 6 (Overpayment) if line 4 exceeds line 3. Never make entries on both lines 5 and 6. For overpayments, select one option to either apply to the next return or request a refund. If you have questions about overpayment procedures, consult your tax professionals or the IRS.
7. Monthly Liability Breakdown
Complete the monthly liability breakdown (lines 7A–7L) only if you were a monthly schedule depositor for the entire year and line 3 is $2,500 or more. This is a summary of your monthly tax liability, not a summary of monthly deposits. Sum all months on line 7M; this total must equal line 3. Report liabilities on Form 945-A instead if either applies: you were a semiweekly schedule depositor during any part of 2023, or you were a monthly schedule depositor and during any month accumulated nonpayroll taxes of $100,000 or more.
8. Payment Voucher Preparation
Prepare Form 945-V (Payment Voucher) if making a payment with Form 945. Per 2023 rules, payment with Form 945 is permitted only if total taxes (line 3) are less than $2,500 and you’re paying in full with a timely filed return, OR you’re a monthly schedule depositor making payment under the Accuracy of Deposits Rule (see section 11 of Publication 15 for details). Make your check or money order payable to “United States Treasury.” Enter your Employer Identification Number, “Form 945,” and “2023” on your payment. Don’t staple Form 945-V or your payment to the return. This ensures proper processing by the Internal Revenue Service.
9. Signature Requirements
Sign and date Form 945. The taxpayer or authorized officer must sign under penalties of perjury as required by Section 6109 of the Internal Revenue Code and the Paperwork Reduction Act. The form displays a valid OMB control number (1545-1430). If using paid preparers or tax professionals, the preparer must sign, date, and provide their Preparer Tax Identification Number (PTIN). Preparers can apply for a PTIN using Form W-12 or by completing the application online. Include preparer firm name, EIN, and phone number in the Paid Preparer Use Only section.
10. Address and Account Information
Verify the address on Form 945 matches your current mailing address. Check the “Address is different from prior return” box if your 2023 address differs from your 2022 address. You can also manage your account information through your IRS Business Tax Account online portal for easier tracking of deposits and correspondence.
11. Final Return Designation
Complete line A (final payment date) only if this is the final Form 945 being filed because you’ve gone out of business. Attach a statement showing the name of the person keeping payment records and the address where records will be kept. This is separate from final returns for Form 941, Form 944, or Form 940/940-PR (FUTA tax returns).
12. Assembly and Filing
Assemble your return: Form 945, Form 945-V (if applicable), and payment (if applicable). Mail per 2023 instructions to the appropriate Internal Revenue Service address based on your location. Consider electronic filing through the IRS e-file system using approved tax software for faster processing. Paper filing is also accepted, but takes longer to process.
2023 Year-Specific Updates
Payment Voucher Requirement: Form 945-V must accompany any payment made with Form 945, as per the 2023 instructions, to ensure proper crediting by financial institutions and the Internal Revenue Service.
$2,500 Threshold Enforcement: 2023 filers with a line 3 balance under $2,500 are not required to complete a monthly liability breakdown. This threshold differs from the $5,000 threshold applicable to certain payment card transactions and third-party network transactions reported on Form 1099-K for online marketplaces under Section 6050W(e).
Electronic Deposit Mandate: Under 2023 Publication 15 deposit rules, all filers not meeting payment-with-return exceptions must deposit using Electronic Federal Tax Payment System (EFTPS) or same-day wire. The Tax Deposit Coupon is no longer accepted. Payments made outside the two permitted scenarios may trigger deposit penalties and interest charges.
Form 945-X Cross-Reference: The instruction for Line 4 in 2023 explicitly includes overpayments applied from Form 945-X (amended return). Use Form 843 to request abatement of assessed penalties or interest; don’t request abatement on Form 945 or Form 945-X. For correction of administrative errors, file Form 945-X separately.
Special Payment Considerations: Report compensation paid to H-2A visa holders subject to backup withholding on Form 945. Distributions from governmental section 457(b) plans that are treated as wages should be reported on Form 941 or Form 944, not Form 945. Military retirement and Armed Forces retirement pay withholding are properly reported on Form 945.
State Filing Requirements: Some states require separate reporting. California employers may need to file Form 592 (FTB Form 592), Form 592-V, and Form 592-B with the Franchise Tax Board. Consult FTB Publication 1023S and FTB Publication 1017 for California-specific requirements. State requirements vary by jurisdiction and taxable years.
Legislative Updates: See Notice 2023-74, Fact Sheet 2023-27, and Executive Order 14247 for recent changes. The American Rescue Plan Act made changes affecting qualified sick and family leave wages. See Publication 947 for additional third-party designee information.
Filing Deadline: File IRS Form 945 by January 31, 2024. However, if you made deposits on time in full payment of taxes for the year, you may file by February 12, 2024. The IRS provides Enhanced Content resources and guidance on draft instructions throughout the year at IRS.gov/Form945. For additional guidance, consult Title 26 of the Internal Revenue Code, Section 3402 (withholding requirements), and contact the Department of Justice Tax Division for complex legal questions regarding federal tax obligations.
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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.
