What IRS Form 945 (2022) Is For
IRS Form 945 (2022) is used to report federal income tax withheld from nonpayroll payments made during the tax year 2022. This includes taxes withheld from payments such as military retirement, IRA distributions, tax-favored retirement plans, and Indian gaming profits. Businesses and individuals who withhold federal income tax from government payments, insurance contracts, or deferred compensation arrangements are required to file this form.
Ensure you retain a copy of the payment voucher and all supporting annual record documents for your business address. It is essential for entities to correctly report all withheld federal income tax to avoid costly mistakes and ensure accurate processing by the Internal Revenue Service.
When You’d Use IRS Form 945
You must file IRS Form 945 if you have withheld federal income tax from nonpayroll payments during the calendar year, including payments such as backup withholding or profit-sharing plans. This form is required for payments subject to withholding, such as those from regulated investment companies, Alaska Native corporations, and certain government payments.
Businesses must file if they are a monthly schedule depositor, making total tax deposits for nonpayroll payments, like final nonpayroll payments or IRA distributions. Form 945 is also required for exempt organizations and individuals who withheld taxes on certain payments, including gambling winnings or IRA distributions. If you have a past due tax account or need to make adjusted annual returns, you must submit this form to the Internal Revenue Service.
Key Rules or Details for 2022
For the tax year 2022, the IRS has specific rules for monthly depositors and electronic filing. Monthly depositors must follow the deposits rule, which specifies how and when to submit federal tax deposits to avoid penalties. The due date for these deposits depends on your status, and you must follow the correct schedule to avoid penalties.
Certain payments, such as those from real estate investment trusts, are subject to withholding. If a paid preparer or third-party designee is involved, ensure the correct forms and documentation are filed with the Internal Revenue Service. Be mindful of legal holidays, as they may affect the filing and payment schedule, particularly the business day requirements.
Step-by-Step (High Level)
Filing Form 945 late can be a straightforward process when following these essential steps:
- Step 1: Gather all necessary documents, including your monthly summary of federal tax and total deposits for the year. Verify that you have the correct authorized person and paid tax preparer details, if applicable.
- Step 2: Complete Form 945, ensuring accurate information about federal tax deposits and withheld taxes. Double-check your legal residence and summary of federal tax details.
- Step 3: Choose whether to file electronically or by mail. Submit the form to the Treasury Internal Revenue Service or the appropriate IRS processing center.
- Step 4: Retain a copy of the form and related documents for your records. If any overpayment is due, include it with your submission.
Common Mistakes and How to Avoid Them
When filing Form 945, there are several common mistakes to avoid. First, never mix payroll taxes with nonpayroll payments such as military retirement or profit-sharing plans. Always ensure backup withholding is properly reported and that the total deposits are correctly calculated.
Second, verify that the Employer Identification Number (EIN) is accurate and matches IRS records. Incorrect EINs can delay the processing of your Form 945 and may lead to penalties. Lastly, ensure you follow the correct deposit rules for monthly depositors or semiweekly depositors, as failing to comply can result in additional penalties.
These steps help avoid mistakes and ensure timely filing. Having your authorized agent handle your submission correctly can also prevent errors.
What Happens After You File
After filing Form 945, the IRS assigned processing center will begin reviewing your return. If there are discrepancies or missing information, you will receive specific IRS notices requesting clarification. These notices will explain any issues with your tax return and may include instructions for correcting the information.
If you owe a tax liability, you will be informed of the amount due and given options for payment. Depending on the federal tax liability, the IRS may offer an installment agreement or require immediate payment. If you filed as a semiweekly schedule depositor, ensure you followed the correct deposits rule to avoid additional penalties.
Once the IRS processes your return, it will apply any overpayment to your prior year tax account. Ensure you retain a copy of the payment voucher and all supporting annual record documents for your business address.
FAQs
What penalties apply if I file Form 945 late?
Filing Form 945 late can result in penalties for federal income tax withheld and missed federal tax deposits. The IRS typically charges 5% per month of federal tax liability, with a maximum penalty of 25%. If you fail to make timely deposits, you could also face additional fines for backup withholding errors.
Can I claim a refund if I file Form 945 late?
Yes, you can still claim a refund for federal income tax withheld if you file Form 945 before the statute of limitations expires, typically three years from the calendar year in which the tax was due. However, refunds for certain gambling winnings are subject to specific rules set by the Wisconsin Department and other state agencies.
How do I file Form 945 if I withhold taxes for Indian Tribal Governments?
If you are part of an Indian tribal governmental entity, you must follow the same process for federal tax deposits as any other employer. When filing Form 945, ensure you check the appropriate box indicating that the payments are subject to withholding. This ensures the IRS processes your annual return of withheld federal tax accurately.
What is the taxpayer identification number (TIN), and how does it relate to Form 945?
The taxpayer identification number (TIN) is essential for filing Form 945. If you are submitting the form for a business, use the employer identification number (EIN). For individuals, the TIN helps the IRS link your filing to the correct federal tax account and ensure accurate processing.
Can I use electronic funds transfer (EFT) to submit my Form 945 payments?
Yes, the IRS allows electronic funds transfer (EFT) for federal tax deposits related to Form 945. This method is often the quickest and most efficient way to pay any federal tax liability. Be sure to follow the IRS guidelines for EFT to avoid errors and ensure timely payments.
