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

checkbox and enter the date final income payments were

section 13 of Circular E for more information. The

made above line 1.

Circular E instructions for making adjustments refer to

Form 941 but also apply to Form 945 adjustments.)

Line 1 —Federal income tax withheld. Enter the

income tax you withheld from pensions, annuities, IRAs,

Note: If you are not required to complete line 8 or Form

military retirement, Indian gaming profits, and gambling

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

winnings (regular gambling withholding only). Also enter

not show adjustments on line 8 or on Form 945-A.

any voluntary amount you withheld on certain

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

government payments. If you are required to report

subtract any net adjustment on line 3. If total taxes are

income tax withholding on Forms 1099 (e.g., Form

$2,500 or more, the amount reported on line 4 must

1099-R) or Form W-2G, you must report the taxes

equal the total liability for the year reported on line 8M of

withheld on Form 945. Income tax withholding reported

the Monthly Summary of Federal Tax Liability, or line M

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

of Form 945-A.

Schedule H (Form 1040), as appropriate.

Line 5 —Total deposits. Enter the total Form 945

Line 2 — Backup withholding. Enter any backup

deposits for the year, including any overpayment applied

withholding, including backup withholding on gambling

from the prior year.

winnings.

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

Regulated investment companies (RICs) and real

is under $1.You should have a balance due only if your

estate investment trusts (REITs) must report any backup

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

withholding on Form 945 in the year the dividends are

(However, see section 11 of Circular E regarding

actually paid. This includes January payments of

payments made under the Accuracy of Deposits rule.)

dividends declared during October, November, and

Enter your EIN, “Form 945”, and “2001” on your check or

December of the prior year. (See the 2001 Instructions

money order and make it payable to the “United States

for Form 1099-DIV for special reporting requirements.)

Treasury”. If line 4 is $2,500 or more and you deposited

Line 3 —Adjustment to correct administrative errors.

all taxes when due, the amount on line 6 should be zero.

You cannot make an adjustment on Form 945 to correct

If you fail to make required deposits (using

income tax withholding or backup withholding reported in

EFTPS or Form 8109, as required) and instead

a prior calendar year unless it is to correct an

pay these amounts with your return, you may be

CAUTION

administrative error. An administrative error occurs if

subject to a penalty.

the amount you entered on Form 945 is not the amount

Line 7 —Overpayment. If you deposited more than the

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

correct amount for the year, you can have the

actually withheld was incorrectly reported on Form 945

overpayment refunded or applied to your next return by

due to a math or transposition error, this is an

checking the appropriate box. The IRS may apply your

administrative error. The administrative error adjustment

overpayment to any past due tax account under your

corrects the amount reported on Form 945 to agree with

EIN. If line 7 is under $1, we will send a refund or apply it

the amount actually withheld from nonpayroll payments.

to your next return only on written request.

You must report an adjustment to correct an

Line 8 —Monthly summary of Federal tax liability.

administrative error on Form 945 in the year in which you

Note: This is a summary of your monthly tax liability, not

discover the error. If the net adjustment is negative

a summary of deposits made. If line 4 is less than

(reducing your tax liability), enclose the amount reported

$2,500, do not complete line 8 or Form 945-A.

on line 3 in parentheses.

Complete line 8 if you were a monthly schedule

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

depositor for the entire year. (See Determining your

year overpayment of income tax that you withheld from a

deposit schedule on page 2).

payee. This is because the payees use the amount of

withholding shown on the information return (e.g., Form

Report your liabilities on Form 945-A instead of on line

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

8 if:

•

If you are making an adjustment(s) to correct a prior

You were a semiweekly schedule depositor during

year administrative error, report the net adjustment

2001. Do not complete entries A through M of line 8.

(including adjustments to income tax withholding and

Instead, complete and file Form 945-A with Form 945.

•

You were a monthly schedule depositor for 2001

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

Supporting Statement To Correct Information, or an

and during any month you accumulated nonpayroll taxes

equivalent statement, and file it with Form 945 to provide

of $100,000 or more. Because this converted you to a

semiweekly schedule depositor for the remainder of 2001

the required information on the adjustment(s). Be sure to

identify the adjustment(s) in the supporting statement

and for 2002, you must report your liabilities on Form

(Part V of Form 941c) as correcting an administrative

945-A for the entire year. Do not complete entries A

error and provide a description of the error(s). Do not file

through M of line 8. (See section 11 of Circular E for

more information on the $100,000 next-day deposit

Form 941c separately from Form 945.

rule.)

Reporting adjustments on line 8 or on Form 945-A.

The amount of the adjustment(s) also must be taken into

Third party designee. If you want to allow the IRS to

account in the monthly summary of Federal tax liability

discuss your 2001 Form 945 with a designated third

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

party, complete the Third-Party Designee section of the

Liability. If the adjustment increases your tax liability,

return. The third-party designee may be either an

include the adjustment with any other amount on the

employee of the business or an individual paid preparer.

entry space for the date you discovered the error. If the

The designation must specify an individual and may not

adjustment decreases your tax liability, use the

refer to your payroll office or a tax preparation firm. Also,

adjustment amount as a credit to offset subsequent

enter that person’s name, phone number, and any five

liabilities on line 8 or Form 945-A until it is used up. (See

digits that person chooses as his or her personal

-3-

Instructions For Form 945 - Annual Return Of Withheld Federal Income Tax - 2001 Page 3

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