Form 945 (2021) Tax Year Checklist
Purpose of Form 945
Form 945, the Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from non-payroll payments for the 2021 tax year. The Internal Revenue Service requires this form for reporting withholding from pensions, annuities, IRAs, military retirement, gambling winnings, Indian gaming profits, certain government payments with voluntary withholding, Alaska Native Corporation distributions with elected withholding, and backup withholding. This employment tax return is separate from Form 941 and Form 944, which report federal income tax withheld from wages.
Essential Filing Steps
Step 1: Verify Your Employer Identification Number
Confirm your Employer Identification Number (EIN) on line 1 of IRS Form 945. The EIN must match the number used on information returns, such as Form 1099, Form 1099-NEC, Form 1099-MISC, and Form W-2G, where federal income tax withholding is reported. If your EIN application via Form SS-4 was pending at the filing deadline, enter “Applied For” and the application date. Never substitute a Social Security Number or individual account number for an EIN. Filing with incorrect identification may result in penalties and administrative errors.
Step 2: Report Federal Income Tax Withheld
Report all federal income tax withheld from pensions, annuities, IRAs, military retirement funds, retirement pay, gambling winnings (regular withholding), Indian gaming profits, and voluntary withholding on certain government payments and Alaska Native Corporation distributions on line 1. Include only 2021 withholding; do not combine amounts from prior taxable years. Backup withholding on gambling winnings goes on line 2, not line 1. Do not report wage withholding that belongs on Form 941, Form 944, or other employment tax returns. Consult Publication 15 (Employer’s Tax Guide) and Publication 15-A for detailed withholding guidance.
Step 3: Enter Backup Withholding Amounts
Enter backup withholding amounts withheld under Section 3402 on line 2. Backup withholding applies when payees fail to provide valid Taxpayer Identification Numbers or when the Internal Revenue Service notifies you to begin backup withholding during 2021. This includes backup withholding on gambling winnings and other nonpayroll payments. Financial institutions frequently deal with backup withholding on interest and dividend payments. Report these amounts on the appropriate information returns, including the Form 1099 series.
Step 4: Calculate Total Tax Liability
Add lines 1 and 2 to determine total taxes on line 3. If your tax liability is less than $2,500, you may pay the full amount with Form 945 using Form 945-V and are not required to make federal tax deposits during the year. If line 3 shows $2,500 or more, this amount must equal the total reported on line 7M (monthly schedule depositors) or Form 945-A (semiweekly schedule depositors). This threshold determines your deposit obligations and reporting requirements.
Step 5: Record Federal Tax Deposits
Enter all federal tax deposits made through electronic funds transfer during 2021 on line 4, including any overpayment applied from prior years or Form 945-X. All deposits must be made electronically using the Electronic Federal Tax Payment System (EFTPS) or through same-day wire arrangements with financial institutions. The IRS no longer accepts IRS Form 8109 (Tax Deposit Coupon) for paper filing of deposits. Do not combine nonpayroll taxes from Form 945 with deposits for other employment tax returns when making deposits or determining schedules.
Step 6: Pay Balance Due or Request Refund
If line 3 exceeds line 4, compute the balance due on line 5 and remit payment with Form 945-V. Make checks or money orders payable to “United States” Treasury, noting your EIN, “Form 945,” and “2021” on the payment. Complete Form 945-V (similar to Form 592-V for California) with payment amount, EIN, business name, and address. Do not staple Form 945-V, your payment, or the return together—mail all three items separately to avoid processing delays. Electronic filing through the IRS e-file system allows electronic balance due payments via direct deposit, avoiding paper filing complications.
Step 7: Complete Monthly Schedule or Form 945-A
Filers with total taxes of $2,500 or more must report tax liability using either the monthly schedule (line 7) or Form 945-A. Complete the monthly schedule only if you were a monthly schedule depositor for the entire year, determined by having $50,000 or less in tax liability on your 2020 Form 945 line 3. The sum of lines A through L must equal line 3. Semiweekly schedule depositors (those with more than $50,000 in prior-year liability or who accumulated $ 100,000 or more on any single day during 2021) must complete Form 945-A instead and check the appropriate box above line 7. This prevents dual reporting and ensures proper liability tracking.
Step 8: Sign and Authorize the Return
Sign and date the return under penalties of perjury per Section 6109 and Paperwork Reduction Act requirements. Include your title and printed name. Corporate officers may sign using approved methods detailed in draft instructions. If using tax professionals or tax software, paid preparers must sign manually, enter their Preparer Tax Identification Number (PTIN) obtained via Form W-12, and provide firm information, including EIN. Authorize a third-party designee if desired—this person can discuss the return with the Internal Revenue Service, answer questions, and respond to specific notices. However, they cannot represent you beyond the limited purposes outlined in Publication 947.
2021-Specific Considerations
Deposit Thresholds and Requirements
The $2,500 deposit threshold remained unchanged in 2021. Filers below this threshold may remit payment with the return using Form 945-V and avoid monthly deposits. Those meeting or exceeding $2,500 must reconcile monthly or semiweekly tax liability on line 7 or Form 945-A. Consult Publication 1281 for backup withholding guidance and deposit timing.
Payment Processing Requirements
Form 945-V payment voucher instructions specify “United States Treasury” as payee with EIN, “Form 945,” and “2021” noted on payments. Keep vouchers, costs, and returns separate when mailing to ensure proper crediting via your IRS Business Tax Account and avoid interest charges or penalties.
Backup Withholding Compliance
Line 2 reports all Section 3402 backup withholding for 2021, whether due to missing Taxpayer Identification Numbers, IRS notifications, or other triggers. Report these amounts on Form 1099 series returns. Armed Forces retirement pay, governmental section 457(b) plans, and H-2A visa worker payments may trigger special withholding rules requiring coordination with Form 1099-MISC or other information returns.
Filing Deadlines and Methods
The 2021 Form 945 filing deadline is January 31, 2022, or February 10, 2022, if all deposits were made timely. Electronic filing through the IRS e-file system is strongly encouraged over paper filing for faster processing. Electronic funds transfer is mandatory for federal tax deposits—the Electronic Federal Tax Payment System provides free, secure logistics for tax payments.
Corrections and Amendments
Use Form 945-X to correct previously filed returns or claim refunds. Use Form 843 to request abatement of assessed penalties or interest charges. Never request penalty abatement directly on Form 945. Maintain accurate records as required by the Paperwork Reduction Act and OMB control number requirements.
State Considerations
While this checklist covers federal requirements, some states also have parallel requirements. For example, California uses the Franchise Tax Board forms, including FTB Form 592, Form 592-V, and Form 592-B for state withholding. Consult FTB Publication 1023S and FTB Publication 1017 for California-specific guidance.
Professional Resources
Tax professionals can access Legal AI products, generative AI tools like CoCounsel Legal, and Thomson Reuters resources, including the 2025 Future of Professionals Report. Create an account and sign in to access Enhanced Content, Recent Developments, and the Table of Contents for comprehensive tax guidance. Cloud Audit Suite and other tax software help prevent payroll fraud and administrative errors, while also improving the user experience.
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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.
