Instructions For Form 945 - Annual Return Of Withheld Federal Income Tax

If you are a monthly schedule depositor and

actually withheld. For example, if the total federal income tax

accumulate a $100,000 liability or more on any day

actually withheld was incorrectly reported on Form 945 due

during a calendar month, your deposit schedule

to a math or transposition error, this is an administrative

CAUTION

changes on the next day to semiweekly for the remainder of

error. The administrative error adjustment corrects the

the year and for the following year. For more information,

amount reported on Form 945 to agree with the amount

see the $100,000 Next-Day Deposit Rule in section 11 of

actually withheld from nonpayroll payments.

Pub. 15 (Circular E).

You must report an adjustment to correct an

Electronic deposit requirement. You must make

administrative error on Form 945 in the year in which you

electronic deposits of all depository taxes (such as

discover the error. Indicate negative adjustments with a

employment tax, withheld income tax, excise tax, and

minus sign (if possible). Otherwise, use parentheses.

corporate income tax) using the Electronic Federal Tax

You will not be allowed a refund or credit for any prior

Payment System (EFTPS) in 2007 if:

year’s overpayment of federal income tax that you withheld

•

The total deposits of such taxes in 2005 were more than

from a payee. This is because the payees use the amount of

$200,000 or

withholding shown on the information return (for example,

•

You were required to use EFTPS in 2006.

Form 1099-R) as a credit when filing their income tax

If you are required to use EFTPS and use Form 8109

returns.

instead, you may be subject to a 10% penalty. If you are not

If you are making an adjustment to correct a prior year

required to use EFTPS, you may participate voluntarily. To

administrative error, report the net adjustment (including an

get more information or to enroll in EFTPS, visit the EFTPS

adjustment to federal income tax withholding and backup

website at or call 1-800-555-4477.

withholding) on line 3. Complete Form 941c, Supporting

Statement To Correct Information, or an equivalent

statement, and file it with Form 945 to provide the required

Specific Instructions

information on the adjustment. Be sure to identify the

adjustment in the Explanation of Adjustments (Part V of

State code. If you made your deposits using Form 8109 or

Form 941c) as correcting an administrative error and

by using an EFTPS bank account in a state other than that

provide a description of the error(s). Do not file Form 941c

shown in your address on Form 945, enter the state code for

separately from Form 945.

the state where you made deposits or initiated EFTPS

Reporting the adjustment on line 8 or on Form 945-A.

transfers in the box provided in the upper left corner of

The amount of the adjustment also must be taken into

Form 945. Use the Postal Service two-letter state

account in the Monthly Summary of Federal Tax Liability

abbreviation as the state code. Enter the code “MU” in the

(line 8) or on Form 945-A, Annual Record of Federal Tax

state code box if you deposit in more than one state. If you

Liability. If the adjustment increases your tax liability, include

deposit in the same state as shown in your address, do not

the adjustment with any other amount on the entry space for

make an entry in this box.

the date that you discovered the error and increase any

Line A — Final return. If you go out of business or end

required deposit by the adjustment amount. If the

operations and you will not be required to file Form 945 in

adjustment decreases your tax liability, use the adjustment

the future, file a final return. Be sure to check the box in

amount as a credit to offset subsequent liabilities on line 8 or

line A and enter the date that final nonpayroll payments

Form 945-A until it is used up. For more information, see

were made.

section 13 of Pub. 15 (Circular E). The Pub. 15 (Circular E)

Line 1 — Federal income tax withheld. Enter the federal

instructions for making adjustments refer to Form 941 but

income tax that you withheld (or were required to withhold)

also apply to Form 945 adjustments.

from pensions (including distributions from governmental

If you are not required to complete line 8 or Form

section 457(b) plans), annuities, IRA distributions, military

TIP

945-A because your total taxes are less than $2,500,

retirement, Indian gaming profits, and gambling winnings

do not show the adjustment on line 8 or on Form

(regular gambling withholding only). Also enter any voluntary

945-A.

amount that you withheld on certain government payments.

Line 4 — Total taxes. Add lines 1 and 2 and add or subtract

If you are required to report federal income tax withholding

any net adjustment on line 3. If total taxes are $2,500 or

on Forms 1099 (for example, Form 1099-R or Form W-2G),

more, the amount reported on line 4 must equal the total

you must report the federal income tax withheld on

liability for the year reported on line 8M of the Monthly

Form 945.

Summary of Federal Tax Liability, or line M of Form 945-A.

Note. Federal income tax withholding reported on

Line 5 — Total deposits. Enter your total Form 945

Form W-2 must be reported on Form 941, Form 943, Form

deposits for the year, including any overpayment applied

944, or Schedule H (Form 1040), as appropriate.

from your 2005 return.

Line 2 — Backup withholding. Enter any backup

Line 6 — Balance due. You do not have to pay if line 6 is

withholding, including backup withholding on gambling

under $1. Generally, you should have a balance due only if

winnings.

your total taxes for the year (line 4) are less than $2,500. If

Regulated investment companies (RICs) and real estate

you made payments under the accuracy of deposits rule,

investment trusts (REITs) must report any backup

see section 11 of Pub. 15 (Circular E). Enter your EIN,

withholding on Form 945 in the year that the dividends are

“Form 945,” and “2006” on your check or money order and

actually paid. This includes January payments of dividends

make it payable to the “United States Treasury.” If line 4 is

declared during October, November, and December of the

$2,500 or more and you deposited all taxes when due, the

prior year. See the Instructions for Form 1099-DIV for

amount on line 6 should be zero.

special reporting requirements.

If you fail to make required deposits (using EFTPS or

Line 3 — Adjustment to correct administrative errors.

Form 8109, as required) and instead pay these

You cannot make an adjustment on Form 945 to correct

amounts with your return, you may be subject to a

CAUTION

federal income tax withholding or backup withholding

penalty.

reported in a prior calendar year unless it is to correct an

administrative error. An administrative error occurs if the

Line 7 — Overpayment. If you deposited more than the

amount you entered on Form 945 is not the amount that you

correct amount for the year, you can have the overpayment

-3-

Instructions For Form 945 - Annual Return Of Withheld Federal Income Tax - 2006 Page 3

Related Articles

Related forms

Related Categories