How to File Form 945 Electronically

Form 945, the Annual Return of Withheld Federal Income Tax, serves a specific purpose in the realm of federal tax reporting. Businesses use this form to report federal income tax withheld from nonpayroll payments. These nonpayroll payments include items such as pensions, annuities, IRA distributions, military retirement pay, gambling winnings, and backup withholding. Electronic filing of Form 945 offers several advantages, contributing to a more streamlined and accurate tax compliance process.

Electronic submission expedites tax return processing, as it eliminates the need for manual data entry by the Internal Revenue Service (IRS). This method typically results in fewer errors compared to paper filing, with electronic returns having a significantly lower error rate. Electronic filing provides quicker confirmation of receipt, often within 24 hours, giving filers peace of mind. Enhanced security measures inherent in digital transmission protect sensitive financial information.

Preparing for Electronic Submission

Before initiating the electronic submission of Form 945, gathering all necessary information and establishing the appropriate electronic filing infrastructure is a foundational step. This preparation ensures a smooth and efficient filing experience, minimizing delays and preventing errors.

You will need your business information, including your legal name, Employer Identification Number (EIN), and address. Compile the total amount of federal income tax withheld from nonpayroll payments throughout the tax year, including details on backup withholding, total taxes, and total deposits made. If your business is a semiweekly depositor or accumulated $100,000 or more in tax liability on any single day, you may also need to complete Form 945-A, Annual Record of Federal Tax Liability, to report your tax liabilities.

Businesses can choose from several electronic filing methods. The IRS recommends electronic filing for Form 945 due to its efficiency. Businesses can opt to use IRS-authorized e-file providers, which include tax software vendors or tax professionals. These providers offer platforms designed to guide users through the process, often incorporating built-in accuracy checks.

Establishing an account and obtaining necessary credentials with your chosen e-file provider or the IRS is a prerequisite for electronic filing. If you plan to file directly or as a tax professional for clients, you may need an Electronic Filing Identification Number (EFIN). Applying for an EFIN involves creating an IRS e-services account, completing an online application, and undergoing a suitability check. This process can take approximately 45 days, so early application is advisable. When using third-party software, setting up an account with the vendor involves providing business details and creating login credentials. Familiarizing yourself with the software’s interface and data entry fields can enhance efficiency.

The Electronic Filing Process

After preparation, electronic filing of Form 945 involves accurately inputting data, verifying correctness, and securely submitting the return to the IRS.

Enter your business and withholding information into the designated fields of the tax software or online platform. This includes your business name, EIN, and address, along with the aggregated financial data such as federal income tax withheld from nonpayroll payments and backup withholding. The software typically guides you through each line of Form 945, such as for total federal income tax withheld from various nonpayroll sources and for backup withholding. If applicable, details from Form 945-A for semiweekly depositors are also entered, ensuring the total tax liability matches across forms.

After data input, thoroughly review and verify the electronically prepared Form 945 before final submission. The software usually provides a preview feature to check for accuracy and identify errors. This review confirms figures are correctly transcribed and calculations align with IRS requirements, reducing rejection likelihood. Ensure all required fields are complete and information matches your records.

Digitally signing and authenticating the return within the electronic system is a mandatory security measure. This typically involves using an IRS-assigned 94x Online Signature PIN or utilizing Form 8453-EMP, Employment Tax Declaration for an IRS e-file Return. The IRS accepts various electronic signature methods:
Typed names
Scanned images of handwritten signatures
Shared secrets like PINs or passwords
Signatures created by third-party software

The chosen method must demonstrate the signer’s intent and ensure the signature is securely associated with the form.

The final step is submitting the form by clicking a “submit” or “transmit” button. Upon successful transmission, the system usually provides a confirmation message or screen, often including an acknowledgement number. This immediate confirmation indicates the IRS has received your e-filed return. Some e-file providers may also send an email with the status of your filing.

Post-Submission Procedures

After electronic submission of Form 945, several procedures follow to confirm successful filing, manage tax payments, and maintain proper records. These steps are integral to ensuring tax compliance and provide a clear path for any necessary follow-up actions.

Verification of successful electronic submission is typically provided through an acceptance confirmation from the IRS. This confirmation is usually received within 24 hours of filing and confirms the return has been received and accepted. Most e-file software platforms provide status updates, allowing you to track progress and confirm acceptance. This electronic acknowledgement serves as official proof of timely filing.

Associated tax payments for Form 945 must be made electronically, primarily through the Electronic Federal Tax Payment System (EFTPS). EFTPS is a free service provided by the U.S. Department of the Treasury, allowing businesses to make federal tax payments online or by phone. To enroll in EFTPS, you will need your EIN, business name, and bank account information. You will receive a Personal Identification Number (PIN) in the mail within five to seven business days. Payments can be scheduled up to 365 days in advance and must be submitted by 8 p.m. ET at least one calendar day before the tax due date. While EFTPS is the primary method, some tax software may offer electronic funds withdrawal (EFW) as an integrated payment option when e-filing.

Maintaining accurate records is vital following the submission of Form 945. Retain electronic or paper copies of the filed Form 945, confirmation receipts, and all supporting documentation. These records should be kept for a minimum of three years from the filing date or due date, whichever is later, for future reference or audits. Secure digital storage can protect these documents.

In the event of a rejection notice after submission, troubleshoot the issue promptly. The e-file software typically provides a rejection report with an explanation of the error. Common reasons for rejection include typos, incorrect EINs or Social Security numbers, or mismatched names or dates of birth. In most cases, these errors can be corrected within the software, and the return can be retransmitted electronically. If a rejection occurs after the filing deadline, you generally have an additional five to ten days to correct and retransmit. For complex rejections, or if re-e-filing is not possible, mailing a paper return may be required.