What IRS Form 945 (2025) Is For

IRS Form 945 is the Annual Return of Withheld Federal Income Tax used to report federal income tax withheld from nonpayroll payments (IRS Instructions for Form 945 (2025)). You must file this form if you withhold or are required to withhold federal income tax from payments such as pensions, annuities, military retirement, gambling winnings, backup withholding, voluntary withholding on certain government payments, and distributions from Alaska Native Corporations. Unlike payroll tax forms, Form 945 covers withholding from sources other than wages reported on Form W-2.

When You'd Use Form 945 for 2025 (Late or Amended Filing)

You'd file a late Form 945 for 2025 if you failed to meet the February 2, 2026 deadline (or February 10, 2026 if all deposits were made timely). Common scenarios include receiving IRS notices about unreported nonpayroll withholding, discovering backup withholding obligations you missed, or realizing you had pension/annuity withholding responsibilities. For amended returns, use Form 945-X if you discover errors on a previously filed Form 945—you can correct underreported taxes within 3 years of filing the original return, or correct overreported taxes within 3 years of filing or 2 years of paying the tax, whichever is later (IRS Instructions for Form 945-X (2025)). The IRS statute of limitations for refund claims is generally 3 years from the filing date.

Key Rules Specific to 2025

Form 945 for 2025 introduces direct deposit options for refunds due to Executive Order 14247, which mandates electronic payments for federal disbursements (IRS Instructions for Form 945 (2025)). Balance due payments must now be made electronically through methods like EFTPS, IRS Direct Pay, or business tax accounts. Form 945 return transcripts are now available electronically for tax years 2023 and later through your IRS business tax account. The backup withholding rate remains at 24% for tax years 2018-2025. Electronic filing of Form 945-X is now available through Modernized e-File (MeF).

Step-by-Step (High Level)

• Gather transcripts and records: Request Form 945 return transcripts through your IRS business tax account or by calling 800-829-4933 to understand what was previously reported
  
  
• Complete the correct-year form: Use the 2025 Form 945 for tax year 2025, ensuring you report all nonpayroll withholding including backup withholding, pension withholding, and gambling withholding
  
  
• Attach required schedules: Include Form 945-A if you were a semiweekly depositor or if you accumulated $100,000+ in any month as a monthly depositor
  
  
• File electronically or by mail: E-file through approved software or mail to addresses listed in Form 945 instructions based on your location and whether you're including payment
  
  
• Keep copies and documentation: Maintain copies of all filed forms and supporting documentation for at least 3 years from the filing date
  
  

Common Mistakes and How to Avoid Them

• Mixing payroll and nonpayroll withholding: Don't report W-2 withholding on Form 945—this belongs on Forms 941, 943, 944, or Schedule H. Only report nonpayroll withholding like pensions, gambling, and backup withholding
  
  
• Using wrong deposit schedule: Determine if you're monthly or semiweekly based on prior year Form 945 line 3 amount ($50,000 threshold), not your Form 941 deposits
  
  
• Incomplete backup withholding reporting: Report all backup withholding on line 2, including amounts from H-2A visa workers reported on Form 1099-MISC rather than Form W-2
  
  
• Incorrect EIN usage: Ensure the EIN matches exactly across Form 945 and related information returns (Forms 1099-R, 1099-MISC, etc.) to avoid processing delays
  
  
• Missing Form 945-A: File Form 945-A when required for semiweekly depositors or when monthly depositors hit the $100,000 next-day rule
  
  
• Late deposit penalties: Don't confuse filing deadlines with deposit requirements—deposits are due according to monthly or semiweekly schedules throughout the year, separate from the annual return filing
  
  

What Happens After You File

The IRS typically processes Form 945 returns within 6-8 weeks for paper filing or 2-4 weeks for electronic filing. If you're due a refund, direct deposit (new for 2025) typically processes within 21 days, while paper checks take 6-8 weeks (IRS Instructions for Form 945 (2025)). You may receive notices if there are math errors, missing information, or discrepancies with information returns. If you owe additional tax, you can request an installment agreement online at IRS.gov/OPA if you owe $25,000 or less and can pay within 24 months. For penalty assessments, you have appeal rights—respond within 30 days of receiving penalty notices to preserve your appeal options. Use Form 843 to request penalty abatement for reasonable cause, not Form 945 or 945-X.

FAQs

How long do I have to file an amended Form 945?

You can file Form 945-X to correct underreported taxes within 3 years of filing the original return, or to correct overreported taxes within 3 years of filing or 2 years of paying the tax, whichever is later (IRS Instructions for Form 945-X (2025)).

What penalties apply for filing Form 945 late?

The failure-to-file penalty is 5% of unpaid tax per month (or part of month), up to 25% maximum. If filed more than 60 days late, the minimum penalty for 2025 is $510 or 100% of unpaid tax, whichever is less (IRS Instructions for Form 945 (2025)).

How do I get Form 945 transcripts for prior years?

Access transcripts electronically through your IRS business tax account at IRS.gov/BusinessAccount for tax years 2023 and later, or call 800-829-4933 for earlier years.

Can I get a refund if I overpaid on a late-filed return?

Yes, but you must file within the statute of limitations—generally 3 years from the original due date or 2 years from when you paid the tax. Interest on refunds is taxable income when received.

Do I need to amend state returns if I file Form 945-X?

Form 945 deals with federal income tax withholding, not state taxes. However, if your Form 945-X correction affects information returns (like Form 1099-R), you may need to file corrected state information returns depending on your state's requirements.

What if I can't pay the balance due on my late Form 945?

Apply for an installment agreement online at IRS.gov/OPA if you owe $25,000 or less. You'll pay setup fees ($31-$225 depending on payment method) plus interest and penalties until paid in full.

How do I avoid backup withholding obligations going forward?

Ensure all payees provide valid taxpayer identification numbers on Forms W-9. When TINs are missing or incorrect, you must backup withhold at 24% and report it on Form 945 line 2, plus issue appropriate information returns.

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