USTaxPenaltySaverForm 941 Penalty Calculator IRC § 6651/6656
Calculate penalties for late Form 941 payroll tax returns. FTF: 5%/month (max 25%). FTP: 0.5%/month. FTD: 2%-15% based on deposit lateness.
First Time Abatement may eliminate your penalties. Also covers Form 940 and Form 944.
Employer Tax Penalty Types
Three types of penalties can apply to Form 941 and other employer tax returns
- • IRC § 6651(a)(1)
- • Per month or partial month
- • Combined with FTP = 5% cap
- • Reduced to 4.5% when FTP applies
- • IRC § 6651(a)(2)
- • Per month or partial month
- • Continues after FTF stops
- • 0.25% with installment agreement
- • IRC § 6656
- • Tiered based on days late
- • Applies per deposit
- • 15% after IRS notice
Failure to Deposit (FTD) Penalty Tiers
Deposit penalties increase based on how late the deposit is made
Penalties apply to each late deposit separately, not the total balance
Deposit Schedule Requirements
Your deposit schedule is determined by your lookback period tax liability
Monthly Schedule
Lookback period liability (Jul 1 - Jun 30 of prior two years)
- •Deposit by 15th of following month
- •New employers default to monthly
- •Many small businesses qualify
Semi-Weekly Schedule
Lookback period liability (Jul 1 - Jun 30 of prior two years)
- •Wed-Fri paydays → deposit by following Wed
- •Sat-Tue paydays → deposit by following Fri
- •3 banking days to deposit
Next-Day Deposit Rule
If you accumulate $100,000 or more in tax liability on any single day, you must deposit by the next banking day. This applies regardless of your normal deposit schedule and triggers semi-weekly status for the remainder of the calendar year and the following year.
Employer Forms Covered
Our calculator handles all major employer tax forms
- • Federal income tax withholding
- • Social Security tax (employer + employee)
- • Medicare tax (employer + employee)
- • Due: Apr 30, Jul 31, Oct 31, Jan 31
- • Federal Unemployment Tax
- • Employer-only tax (6%)
- • First $7,000 wages per employee
- • Due: January 31
- • Alternative to Form 941
- • For employers ≤ $1,000/year liability
- • IRS invitation required
- • Due: January 31
First Time Abatement (FTA) for Employer Penalties
You may qualify to have your Form 941/940/944 penalties completely waived under the IRS First Time Abatement policy. This administrative waiver is available even without demonstrating reasonable cause.
No penalties assessed in the prior 3 tax years
All required returns filed or valid extensions in place
All taxes paid or you have an approved payment plan
Trust Fund Taxes: Personal Liability Warning
The employee portion of Form 941 taxes (federal income tax withholding, employee Social Security, and employee Medicare) are "trust fund taxes". Under IRC § 6672, responsible persons who willfully fail to collect, account for, or pay these taxes can be held personally liable for 100% of the unpaid trust fund amount.
- • Federal income tax withholding
- • Employee Social Security (6.2%)
- • Employee Medicare (1.45%)
- • Employer Social Security (6.2%)
- • Employer Medicare (1.45%)
- • FUTA tax (Form 940)
Form 941 Penalty FAQs
The Failure to File (FTF) penalty for Form 941 is 5% of the unpaid tax per month (or partial month), up to a maximum of 25%. However, when both FTF and Failure to Pay (FTP) penalties apply simultaneously, the combined penalty is capped at 5% per month. After 5 months, the FTF penalty stops accruing, but FTP continues at 0.5% per month.
The FTD penalty (IRC § 6656) applies when you fail to make timely payroll tax deposits. It has four tiers: 2% for deposits 1-5 days late, 5% for 6-15 days late, 10% for 16+ days late, and 15% if you do not deposit within 10 days of receiving an IRS notice demanding payment. The penalty applies to each late deposit separately.
Deposit due dates depend on your deposit schedule. Monthly depositors must deposit by the 15th of the following month. Semi-weekly depositors (required if lookback liability exceeds $50,000) must deposit within 3 banking days: Wednesday-Friday paydays require deposit by the following Wednesday, and Saturday-Tuesday paydays require deposit by the following Friday. If you accumulate $100,000+ in one day, next-day deposit is required.
Your deposit schedule is based on your "lookback period" liability—the total tax reported during July 1 through June 30 of the two prior years. If your lookback liability is $50,000 or less, you deposit monthly. If it exceeds $50,000, you must deposit semi-weekly. New employers default to monthly deposits.
Yes. First Time Abatement (FTA) is available if: (1) you have no penalties in the prior 3 tax years, (2) all required returns are filed or you have valid extensions, and (3) all taxes are paid or you have a payment arrangement. Reasonable cause relief is also available for circumstances like natural disasters, death/illness of a key person, IRS errors, or system failures.
Form 941 is the quarterly employment tax return reporting federal income tax withholding, Social Security, and Medicare taxes. Form 940 is the annual FUTA (Federal Unemployment) tax return, due January 31. Form 944 is an annual alternative to 941 for small employers with $1,000 or less in annual tax liability. All forms have similar FTF/FTP penalties, but deposit requirements differ.
Each quarter is calculated separately. Penalties can compound quickly. For example, missing 4 quarters with $10,000 tax liability each could result in: FTF penalties up to 25% each ($10,000 total), FTP penalties up to 25% each ($10,000 total), plus FTD penalties on late deposits. Trust fund taxes (employee withholding) face aggressive collection, including potential personal liability under IRC § 6672.
Yes. If you have an approved IRS installment agreement (Form 9465), the FTP penalty rate is reduced from 0.5% to 0.25% per month. This only applies while the installment agreement is in effect. This represents a 50% reduction in the ongoing FTP penalty.
Calculate Your Employer Tax Penalty
Get accurate FTF, FTP, and FTD penalty estimates with FTA eligibility check
This calculator provides estimates for informational purposes only. Employer tax penalties and deposit requirements can be complex. Consult a qualified tax professional for advice regarding your specific situation. We do not provide legal, tax, or financial advice and do not represent you before the IRS.