If you make certain types of payments that aren’t wages, like pensions, IRAs, gambling winnings, or backup withholding, you may need to file IRS Form 945, Annual Return of Withheld Federal Income Tax. This form is how the IRS keeps track of federal income tax withheld on non-payroll payments. Understanding who needs to file and when can save you from unnecessary stress and penalties.

Contents hide

1 Who Needs to File Form 945

2 When is it Due?

3 How to File

4 Common Questions

4.1 Do I file Form 945 if I only withheld once?

4.2 What if I didn’t withhold any taxes?

4.3 Is Form 945 filed quarterly like payroll forms?

5 Conclusion

Who Needs to File Form 945

You must file Form 945 if your business or organization withheld federal income tax from non-wage payments. Examples include:

Backup withholding on payments such as interest or dividends
Federal tax withheld from pensions, annuities, or IRAs
Withholding on certain gambling winnings

In short, if you’re responsible for reporting and paying withheld federal income tax that doesn’t come from wages (wages are covered by Form 941 or 944), then it’s required.

When is it Due?

Form 945 is due January 31st following the tax year. If you’ve made all required deposits on time, the IRS gives you until February 10th to file. Deposits are generally required throughout the year if your withholding reaches certain thresholds, so don’t wait until year-end to catch up.

How to File

Filing is pretty straightforward:

Gather all records of non-wage payments and withholding.
Complete the form with totals for the year.
Submit electronically using IRS e-file (recommended) or by mailing a paper form.
Make sure all deposits were made using EFTPS if required.

Common Questions

Do I file Form 945 if I only withheld once?

Yes. Even if you only withheld federal income tax one time during the year, you still need to file.

What if I didn’t withhold any taxes?

If the IRS has notified you to file, you must submit the form, even if no taxes were withheld, by entering “zero.”

Is Form 945 filed quarterly like payroll forms?

No. It is filed once a year. However, deposits may be required during the year depending on how much you withhold.

Conclusion

Form 945 might not apply to every business, but for those that handle non-wage payments with withholding, it’s an essential part of annual tax compliance. Filing on time and keeping up with deposits ensures you avoid pena l ties. A little preparation now can save you a lot of hassle later.

BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.