Mystery Solved: Exempt Organization Employment & Form 941

When you first think of a nonprofit organization or charity, you initially think that everyone participating is volunteering their time and not on payroll. However, in order to effectively carry out of the work of your organization, it is necessary (at times) to employ individuals to serve as yearly staff. 

Although these employed individuals work for a tax exempt organization, they are not excluded from having taxes withheld from their earnings. Employment taxes are reported to the IRS through Form 941, Employer’s Quarterly Federal Tax Return.

Organizations, charities, and small business owners who prepare payroll checks for the employment of staff are expected to file this form quarterly (four times a year); even if the business does not have employees during select quarters. 

However, exceptions are made for seasonal employees, whose taxes are not required to be filed each quarter.

NOTE: If you have decided to close your business/organization or stop paying wages that would subject you to payroll taxes, your obligation to file quarterly returns can end. This can be done by designating the return for the last quarter that you pay taxable wages as a “final” return at the top of the return.

In order to file Form 941, you must report three major things:

Payroll records along with any documents supplied by employees with taxable tips will be needed as well. For more information on Social security and Medicare tax, click here.

To complete the Form 941 filing process, you must have details about your business readily available, such as your company’s EIN and online signature PIN (preferred). 

To obtain a PIN for your business or organization for FREE, click here. Once you have received your PIN, you can easily complete the simplified filing process. 

HINT: Form 941 can be e-signed through Form 8453-EMP.

Calculating and filing your payroll tax information can be stressful and confusing. For that reason, our sister product, ExpressTaxFilings, was created to assist small business owners and exempt organizations with an easy-to-use filing process for annual and quarterly payroll tax needs. ExpressTaxFilings takes pride in providing an accurate, efficient, and secure e-filing process that will save you both time and money.