What IRS Form 945 (2016) Is For

Form 945 is used to report withheld federal income tax from nonpayroll payments made during 2016. Organizations and individuals who withhold federal income tax from nonpayroll sources—such as pensions, retirement plan distributions, gambling winnings, backup withholding, and military retirement payments—must file this annual return (IRS Instructions for Form 945 (2016)).

When You'd Use Form 945 for 2016 (Late or Amended Filing)

You might need to file a late or amended Form 945 for 2016 if you received IRS notices about unfiled returns, discovered unreported withholding from nonpayroll payments, or need to correct errors on a previously filed return. The original filing deadline was January 31, 2017 (February 10, 2017 if all deposits were made timely), so any filing after these dates constitutes a late filing. For amended returns, you would use Form 945-X, which is a stand-alone form that can be filed when errors are discovered on the original Form 945 (IRS Instructions for Form 945 (2016)). Late filing may result in penalties and interest charges that continue to accrue until the return is filed and any balance due is paid.

Key Rules Specific to 2016

For 2016, all federal tax deposits had to be made using Electronic Funds Transfer (EFT), typically through the Electronic Federal Tax Payment System (EFTPS). The $2,500 threshold applied for deposit requirements—if your total annual tax liability was less than $2,500, you weren't required to make periodic deposits during the year. Form 945 for 2016 covered withholding from Forms 1099 (including 1099-R and 1099-MISC) and Form W-2G, but specifically excluded wage withholding reported on Form W-2, which belonged on employment tax returns like Forms 941 or 944 (IRS Instructions for Form 945 (2016)).

Step-by-Step (High Level)

• Gather transcripts and records: Obtain business tax transcripts for 2016 from the IRS online business account or by requesting them via Form 4506-T to verify what, if anything, was previously filed
  
  
• Complete Form 945 for 2016: Use the correct year's form and instructions, reporting all nonpayroll withholding from pensions, gambling winnings, backup withholding, and other qualifying payments
  
  
• Attach required schedules: Include Form 945-A if you're a seasonal employer or have quarterly breakdowns, and any supporting documentation for corrections
  
  
• Submit the return: Mail paper returns to the address specified in the 2016 instructions, or check if electronic filing options are available for prior-year returns
  
  
• Keep complete copies: Maintain copies of the filed return, all attachments, proof of mailing or electronic confirmation, and payment records for your files
  
  

Common Mistakes and How to Avoid Them

• Mixing payroll and nonpayroll withholding: Don't report wage withholding (Form W-2 items) on Form 945—this belongs on Forms 941, 944, or other employment tax returns
  
  
• Filing multiple Form 945s for one year: Submit only one Form 945 per calendar year, combining all nonpayroll withholding regardless of how many different payment types you handled
  
  
• Incorrect deposit reporting: Ensure you properly report all deposits made during 2016, including any overpayments applied from prior years or Form 945-X adjustments
  
  
• Missing backup withholding: Include all backup withholding situations, such as payments to contractors without proper TIN certification or bank interest when account holders failed to provide correct taxpayer identification
  
  
• Using wrong year's form: Always use the 2016 version of Form 945 and its instructions, as tax law changes between years can affect calculations and requirements
  
  
• Incomplete electronic payment information: When making late payments, ensure EIN, "Form 945," and "2016" are clearly noted on electronic payments or checks
  
  

What Happens After You File

The IRS typically processes Form 945 within several weeks to a few months, though late-filed returns may take longer due to additional verification procedures. You'll receive notices confirming receipt and any balance due calculations, including penalties and interest that have accrued since the original due date. If you owe money, you have payment options including installment agreements using Form 9465 for amounts you cannot pay immediately (IRS.gov). The IRS will also update your business tax account transcript to reflect the filed return. If you disagree with any IRS determination regarding penalties, interest, or tax calculations, you have appeal rights and can request a Collection Due Process hearing for certain enforcement actions (IRS.gov).

FAQs

Can I still get a refund from my 2016 Form 945 if I'm filing late?

Generally, you have three years from the original due date (until January 31, 2020 for 2016 returns) to claim refunds, so this deadline has passed for 2016 Form 945 refunds.

What penalties will I face for filing Form 945 late for 2016?

Late filing penalties are typically 5% of unpaid tax per month (or part of month), up to 25% maximum, plus failure-to-pay penalties and interest that continue accruing until paid in full (IRS.gov).

How do I get transcripts to help prepare my late 2016 Form 945?

Request business tax transcripts through your IRS online business account or by mailing Form 4506-T, specifying Form 945 and tax year 2016 (IRS.gov).

Should I file an amended state return if I'm correcting my 2016 Form 945?

Check with your state tax agency, as some states require amended returns when federal nonpayroll withholding information changes, especially for state income tax purposes.

Can I make payments electronically for my 2016 Form 945 balance due?

Yes, you can use EFTPS or pay online at IRS.gov, ensuring you specify the correct tax year (2016), form type (945), and your EIN for proper credit.

What if I discover I should have filed Form 1042 instead of Form 945 for 2016?

Form 1042 covers withholding on payments to foreign persons, while Form 945 covers domestic nonpayroll withholding—if you filed the wrong form, you may need to file the correct form and possibly amend the incorrect one.

Do I need to file Form 945 for 2016 if I had no withholding liability that year?

No, you only file Form 945 for years when you actually withheld federal income tax from nonpayroll payments (IRS Instructions for Form 945 (2016)).

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