What are Non-Payroll Payments?
Non-payroll payments describe any payments made to non-employees or payments outside of regular wages.
What is Form 945?
Form 945 is an annual return that employers use to report all federal income tax withheld from payments outside of employee salaries. It is most commonly used to report backup withholdings on payments made to an independent contractor.
It is also used to report federal income tax withheld from:[1]
- Qualified pensions (including distributions from tax-favored retirement plans such as 401(k), 403(b), and 457(b) plans) and annuities
- Military retirement benefits
- Gambling winnings
- Indian gaming profits
- Voluntary withholding on certain government payments
Who Files Form 945?
Employers who make non-payroll payments subject to federal income tax or backup withholding must file Form 945.[2]
For example, if an employer pays an independent contractor who does not provide their Tax Identification Number (TIN), the employer must apply backup withholdings on their payment.
When is Form 945 Due?
The deadline to file is January 31 in the following tax year. For employers who have fully paid off their tax liability, the IRS allows a 10-day extension.[3]
Where to File
Electronically
The IRS recommends filing Form 945 electronically. To do so, employers may use IRS-approved software to complete and e-file the document on their own, or they can find an authorized e-file provider to submit it on their behalf. A fee may be charged to file electronically.
Where to Mail
The mailing address for sending a paper copy of Form 945 varies depending on the employer’s location and whether a tax payment will be included.[4]
| Location | Without a Payment | With a Payment |
|---|---|---|
| Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin | Department of the Treasury
Internal Revenue Service Kansas City, MO 64999-0005 |
Internal Revenue Service
P.O. Box 806532 Cincinnati, OH 45280-6532 |
| Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming | Department of the Treasury
Internal Revenue Service Ogden, UT 84201-0005 |
Internal Revenue Service
P.O. Box 932100 Louisville, KY 40293-2100 |
| No legal residence or principal place of business in any state | Internal Revenue Service
P.O. Box 409101 Ogden, UT 84409 |
Internal Revenue Service
P.O. Box 932100 Louisville, KY 40293-2100 |
| Special filing address for exempt organizations; governmental entities; and Indian tribal governmental entities; regardless of location | Department of the Treasury
Internal Revenue Service Ogden, UT 84201-0005 |
Internal Revenue Service
P.O. Box 932100 Louisville, KY 40293-2100 |
Instructions for Form 945 (10 Parts)
Line 1: Federal Income Tax Withheld
Enter the total federal income tax you withheld or were required to withhold from pensions, annuities, IRA distributions, military retirement, Indian gaming profits, and gambling winnings.
If you voluntarily withheld from certain government payouts or on dividends and distributions by an Alaska Native Corporation (ANC), include that amount as well.
Line 5: Balance Due
This line calculates how much you owe the IRS. If line 3 is more than line 4, enter the difference for your balance due. If you are required to make federal tax deposits, pay the balance due by EFT. Otherwise, you can pay via other electronic payment options.
Line 7: Monthly Summary of Federal Tax Liability
Complete this section only if you were a monthly schedule depositor for the entire year and line 3 is $2,500 or more.
If you were a semi-weekly schedule depositor, skip this section and complete 945-A instead.
Third-Party Designee
Indicate whether you want to designate a third party, such as an employee or a tax preparer, to discuss the return with the IRS on your behalf. If yes, provide the designee’s name, phone number, and PIN.
By selecting yes, you are authorizing the third-party designee to:[5]
- Provide the IRS with any information that is missing from the return
- Contact the IRS for information about processing the return
- Respond to certain IRS notices about errors
Signature
A person authorized to sign Form 945 must provide a signature, along with their official title and a daytime contact phone number.
Authorized signees vary depending on the type of business entity:[6]
- Sole proprietorship — The owner of the business.
- Corporation (including an LLC treated as a corporation) —The president, vice president, or other principal officer duly authorized to sign.
- Partnership (including an LLC treated as a partnership) or unincorporated organization — A responsible and duly authorized partner, member, or officer having knowledge of its affairs.
- Single-member LLC treated as a disregarded entity for federal income tax purposes — The owner of the LLC or a principal officer duly authorized to sign.
- Trust or estate —The fiduciary.
An agent authorized by a valid power of attorney may also sign the form on the taxpayer’s behalf.
Payment Voucher
Only use the attached payment voucher (Form 945-V) to make a payment if:
- Your total taxes for the year (line 3) are less than $2,500 and you’re paying in full with a timely filed return;
- Or if you’re a monthly schedule depositor making a payment in accordance with the Accuracy of Deposits Rule.[7]
Otherwise, you must make deposits by electronic funds transfer.
Frequently Asked Questions (FAQs)
What is backup withholding?
Backup withholding is a fixed tax rate of 24% withheld from non-payroll payments to make up for any possible shortfalls in federal income tax. Payments can be subject to backup withholding if the payee does not provide the correct TIN to the payer in a timely manner, or if they fail to report earnings in interest or dividends.[8]
How do I correct an error on Form 945 after filing?
Download and complete Form 945-X to correct an administrative error, such as underreported or overreported withheld amounts. Mail the completed form to the corresponding IRS address under “With a Payment” in the above section titled Where to Mail.[9]
Sources
- IRS — Instructions for Form 945 (2022): Purpose of Form 945
- IRS — Instructions for Form 945 (2022): Who Must File
- IRS — Instructions for Form 945 (2022): When to File
- IRS — Instructions for Form 945 (2022): Where to File
- IRS — Instructions for Form 945 (2022): Third-Party Designee
- IRS — Instructions for Form 945 (2022): Who Must Sign
- IRS — Notice 931: Deposit Requirements for Employment Taxes
- IRS — Topic No. 307, Backup Withholding
- IRS — Instructions for Form 945-X (02/2014): Where Should You File?