What Is a 945 Tax Form? Deposits, Filing, and Penalties

A 945 tax form is the IRS’s annual return for reporting federal income tax withheld from non-payroll payments. If your business held back federal tax from things like a 1099 contractor payment subject to backup withholding, a pension or IRA distribution, or a large gambling payout, that withholding gets reported once a year on Form 945 rather than on the quarterly Form 941 you’d use for employee wages. The common thread across every payment that belongs on this form is that only federal income tax is withheld — no Social Security, no Medicare.1Internal Revenue Service. About Form 945, Annual Return of Withheld Federal Income Tax

Payments That Belong on Form 945

Four categories of withholding show up on this return.

Backup withholding applies when a payer doesn’t have a correct Taxpayer Identification Number on file for a payee, when the IRS has told the payer the TIN is wrong, or when the recipient has underreported interest or dividend income. The rate is a flat 24% of the reportable payment. It reaches most 1099 income types, including interest, dividends, commissions, independent contractor payments, and broker transactions.2Internal Revenue Service. About Backup Withholding

Pensions, annuities, and retirement distributions are withheld on based on Form W-4P (periodic payments) or Form W-4R (nonperiodic payments and eligible rollover distributions). Every dollar withheld on those distributions flows through Form 945.3Internal Revenue Service. Form W-4P Withholding Certificate for Periodic Pension or Annuity Payments4Internal Revenue Service. Form W-4R Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions

Gambling winnings require 24% withholding on net proceeds (winnings minus wager) exceeding $5,000 from sweepstakes, wagering pools, lotteries, and certain other wagers. The payer reports the amount to the winner on Form W-2G and aggregates all such withholding on Form 945.5Internal Revenue Service. Instructions for Forms W-2G and 5754

Voluntary withholding on government payments covers unemployment compensation, Social Security benefits, certain agricultural payments, and other government checks where a recipient has filed Form W-4V to ask that tax be withheld. The paying agency reports that withholding on Form 945.6Internal Revenue Service. About Form W-4V, Voluntary Withholding Request

Who Has To File, and When

Anyone who withheld federal income tax from any non-payroll payment during the calendar year must file. That includes businesses with no employees whatsoever. Withhold from one 1099 payment because the vendor’s TIN was missing, and you have a Form 945 to file for that year.1Internal Revenue Service. About Form 945, Annual Return of Withheld Federal Income Tax

The deadline is January 31 of the year after the withholding occurred. Withholding done during 2025 goes on the 2025 Form 945, due January 31, 2026. If January 31 lands on a weekend or holiday, the deadline moves to the next business day. Filers who deposited every dollar of tax on time throughout the year get an automatic extension to February 10.7Internal Revenue Service. Instructions for Form 945

The IRS encourages electronic filing but doesn’t require it for this form. E-filers can settle any balance due through Electronic Funds Withdrawal at the same time.8Internal Revenue Service. 2025 Instructions for Form 945

Depositing the Tax Through the Year

You can’t wait for the January filing to hand over the money. Throughout the year, withheld tax has to be deposited electronically on a schedule set by your prior filing history.

Monthly or Semi-Weekly

The IRS uses a lookback period — the second calendar year before the current one — to place you on a schedule. Your 2026 schedule is set by the total tax reported on your 2024 Form 945.9eCFR. 26 CFR 31.6302-4 – Deposit Rules for Withheld Income Taxes Attributable to Nonpayroll Payments

A first-time filer with no lookback year is treated as a monthly depositor by default.

The $100,000 Next-Day Rule

Whatever your schedule, an accumulated liability of $100,000 or more on any single day must be deposited by the close of the next business day.11Internal Revenue Service. Topic No. 757, Forms 941 and 944 – Deposit Requirements A monthly depositor who trips this rule becomes a semi-weekly depositor for the rest of the current year and all of the next.12eCFR. 26 CFR 31.6302-1 – Deposit Rules for Taxes Under the Federal Insurance Contributions Act (FICA) and Withheld Income Taxes

Paying Electronically

All federal tax deposits must go through electronic channels — most commonly EFTPS, though IRS Direct Pay and the IRS business tax account also work.8Internal Revenue Service. 2025 Instructions for Form 945 Mailing a check as a deposit isn’t allowed. A deposit made outside the electronic system can draw a 10% penalty by itself, on top of any late-deposit penalty.13Internal Revenue Service. IRM 20.1.4 Failure to Deposit Penalty

Filling Out the Form

The return itself is short. The core figure is total federal income tax withheld from all non-payroll payments during the year. That total is reconciled against what you’ve already deposited.

Reconciliation is where mistakes tend to surface. Total backup withholding shown across all your 1099s should match the backup-withholding portion of your Form 945 liability. Total tax withheld on your W-2Gs should match the gambling-winnings portion. When the numbers don’t align, a payment has usually been miscategorized or a deposit posted to the wrong period.

Deposits above the year’s liability create an overpayment you can refund or roll into next year’s Form 945. Deposits below it leave a balance due with the return. The form also asks for a monthly breakdown of liability, which the IRS uses to check your deposits.

Semi-weekly depositors attach Form 945-A (Annual Record of Federal Tax Liability), which shows liability day by day rather than month by month.14Internal Revenue Service. Instructions for Form 945-A

Keep copies of each filed return, EFTPS deposit confirmations, and every withholding certificate you collected (W-4P, W-4R, W-4V). Employment tax records must be retained at least four years after filing.15Internal Revenue Service. Employment Tax Recordkeeping

Penalties

Three penalty regimes can hit a Form 945 obligation, and they can run at the same time.

Late Deposits

The failure-to-deposit penalty is tiered by how late the deposit is:

  • 1 to 5 days late: 2% of the unpaid deposit
  • 6 to 15 days late: 5%
  • More than 15 days late: 10%
  • Still unpaid 10 days after the first IRS notice: 15%

You pay the rate for the tier your lateness reaches, not a cumulative total.16Internal Revenue Service. Failure to Deposit Penalty

Late Filing and Late Payment

Missing January 31 triggers a failure-to-file penalty of 5% of the unpaid tax for each month or partial month the return is late, capped at 25%.17Internal Revenue Service. Failure to File Penalty If you’ve deposited everything on time, no tax is unpaid and the penalty is effectively zero. A separate failure-to-pay penalty of 0.5% per month applies to any tax shown on the return that remains unpaid past the due date, also capped at 25%.18Internal Revenue Service. Failure to Pay Penalty

Trust Fund Recovery Penalty

Withheld taxes are trust fund taxes: money you hold on the government’s behalf. When a responsible person willfully fails to collect, account for, or deposit those funds, the IRS can assess the Trust Fund Recovery Penalty personally against that individual. A responsible person is anyone with authority to direct how the business spends money — officers, directors, sometimes an employee with check-signing authority. Conduct is “willful” if the person knew of the obligation and used available funds to pay other creditors instead.19Internal Revenue Service. Employment Taxes and the Trust Fund Recovery Penalty (TFRP) The penalty equals 100% of the unpaid trust fund tax and is collected from the individual, not the entity. It applies to non-payroll withholding the same way it applies to payroll tax.

Fixing an Error After Filing

Corrections go on Form 945-X, one form per year corrected.20Internal Revenue Service. About Form 945-X An underreported correction means you owe the shortfall plus any interest. An overreported correction can be refunded or applied to a future return, but you have to certify that you either repaid the recipient for any excess withholding or obtained the recipient’s consent to file the claim.21Internal Revenue Service. Instructions for Form 945-X – Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund

The window is fixed: file 945-X within three years of filing the original Form 945, or two years from when the tax was paid, whichever is later. After that, the IRS won’t process the claim.22Office of the Law Revision Counsel. 26 USC 6511 – Limitations on Credit or Refund