Instructions for Form 945-A (12/2020)

Annual Record of Federal Tax Liability

Section references are to the Internal Revenue Code unless otherwise noted.

Revised: 12/2020


Instructions for Form 945-A - Introductory Material

Future Developments

For the latest information about developments related to Form 945-A and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form945A.

What’s New

Adjusting tax liability for nonrefundable credits claimed on Form CT-1, lines 16 and 17, or Form 944, lines 8a, 8b, and 8c.

See Adjusting Tax Liability for Nonrefundable Credits Claimed on Form CT-1, Lines 16 and 17, or Form 944, Lines 8a, 8b, and 8c, later, for instructions on how to report on Form 945-A adjustments to your tax liabilities for the qualified small business payroll tax credit for increasing research activities (Form 944 only), the credit for qualified sick and family leave wages (compensation), and the employee retention credit.

Adjusting tax liability for the deferred amount of social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax) that you pay or deposit in 2020.

See Adjusting tax liability for the deferred amount of social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax) that you pay or deposit in 2020, later, for instructions on how to report your tax liabilities on Form 945-A if you defer social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax) and subsequently pay or deposit that deferred amount in the same year it was deferred.

Reminders

Reporting prior period adjustments.

Prior period adjustments are reported on Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund; Form CT-1 X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund; or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund, and aren't taken into account when figuring the tax liability for the current year.

When you file Form 945-A with your Form 945, CT-1, or 944, don't change your current year tax liability by adjustments reported on any Form 945-X, CT-1 X, or 944-X.

Amended Form 945-A.

If you have been assessed a failure-to-deposit (FTD) penalty, you may be able to file an amended Form 945-A. See Correcting Previously Reported Tax Liability, later.

General Instructions

Purpose of Form 945-A

Use Form 945-A to report your federal tax liability (based on the dates payments were made or wages were paid) for the following tax returns.

  • Forms 945 and 945-X for federal income tax withholding on nonpayroll payments. Nonpayroll withholding includes backup withholding and federal income tax withholding on pensions, annuities, IRAs, Indian gaming profits, gambling winnings, military retirement, certain government payments on which the recipient elected voluntary income tax withholding, and dividends and other distributions by an Alaska Native Corporation on which the recipient elected voluntary income tax withholding.

  • Forms CT-1 and CT-1 X for both employee and employer share of Tier 1 and Tier 2 taxes.

  • Forms 944 and 944-X for federal income tax withheld plus both employee and employer share of social security and Medicare taxes.

Don't reduce your liability reported on Form 945-A for Form 944 by the deferred amount of any employer share of social security tax reported on Form 944, line 10b, or by the deferred amount of any employee share of social security tax reported on Form 944, line 10c. Don't reduce your liability reported on Form 945-A for Form CT-1 by the deferred amount of the Tier 1 Employer tax reported on Form CT-1, line 21, or by the deferred amount of any Tier 1 Employee tax reported on Form CT-1, line 22. See the Caution under Enter Your Tax Liability by Month, later. Don't use Form 945-A to show federal tax deposits. The IRS gets deposit data from electronic funds transfers.

Forms 944(SP) and 944-X (SP)

If you're a semiweekly schedule depositor who files Formulario 944(SP), Declaración Federal ANUAL de Impuestos del Patrono o Empleador, you should use Formulario 943A-PR, Registro de la Obligación Contributiva Federal del Patrono Agrícola, to report your tax liability. You should also file Form 943A-PR if you file Form 944-X (SP) and you need to amend a previously filed Form 943A-PR.

.This is an Image: caution.gifThe IRS uses Form 945-A to match the tax liability you reported on the returns indicated earlier with your deposits. The IRS also uses Form 945-A to determine if you have deposited your tax liabilities on time. Unless Form 945-A is properly completed and filed (if applicable) with your tax return, the IRS may propose an “averaged” FTD penalty. See Deposit Penalties in section 11 of Pub. 15, Employer’s Tax Guide, for more information..

Who Must File?

Semiweekly schedule depositors must complete and file Form 945-A with their tax return. Don't file Form 945-A if your net tax liability for the return period is less than $2,500. Don't file this form if you're a monthly schedule depositor unless you accumulated a tax liability of $100,000 during any month of the year. Monthly schedule depositors who accumulate $100,000 or more of tax liability on any day of a calendar month become semiweekly schedule depositors on the next day and remain so for at least the remainder of the year and for the next year, and must also complete and file Form 945-A for the entire year. The $100,000 tax liability threshold requiring a next-day deposit is determined before you consider any reduction of your liability for nonrefundable credits. See IRS.gov/ETD for more information.

The deposit rules, including the $100,000 Next-Day Deposit Rule, are explained in section 11 of Pub. 15 and in the instructions for your tax return.

When Must You File?

File Form 945-A with your Form 945, CT-1, or 944 every year when Form 945, CT-1, or 944 is due. See the instructions for these forms for their due dates.

Specific Instructions

Completing Form 945-A

Enter Your Business Information

Carefully enter your employer identification number (EIN) and name at the top of the form. Make sure that they exactly match the name of your business and the EIN that the IRS assigned to your business and also agree with the name and EIN shown on the attached Form 945, 945-X, CT-1, CT-1 X, 944, or 944-X.

Calendar Year

Enter the calendar year of the Form 945, 945-X, CT-1, CT-1 X, 944, or 944-X to which Form 945-A is attached.

Form 945 Filers

Don't complete entries A through M of the Monthly Summary of Federal Tax Liability (Form 945, line 7). Be sure to mark the semiweekly schedule depositor checkbox above line 7 on Form 945.

Form CT-1 Filers

Don't complete the Monthly Summary of Railroad Retirement Tax Liability (Part II of Form CT-1).

Form 944 Filers

On Form 944, check the box for “Line 9 is $2,500 or more” at line 13, and leave lines 13a through 13m blank.

Enter Your Tax Liability by Month

Each numbered space on Form 945-A corresponds to a date during the year. Enter your tax liabilities in the spaces that correspond to the dates you paid wages to your employees or made nonpayroll payments, not the date liabilities were accrued or deposits were made. The total tax liability for the year (line M) must equal net taxes on Form 945, line 3; Form CT-1, line 19 (line 15 for years before 2020); or Form 944, line 9. Enter the monthly totals on lines A, B, C, D, E, F, G, H, I, J, K, and L. Enter the total for the year on line M.

For example, if you're a Form 945 filer, and you became liable for a pension distribution on December 31, 2019, but didn't make the distribution until January 7, 2020, you would:

  • Go to January on Form 945-A filed with your 2020 return, and

  • Enter your tax liability on line 7 because line 7 represents the seventh day of the month.

Example 1.

Cedar Co., which has a semiweekly deposit schedule, makes periodic payments on gambling winnings on the 15th day of each month. On December 24, 2020, in addition to its periodic payments, it withheld from a payment on gambling winnings under the backup withholding rules. Since Cedar Co. is a semiweekly schedule depositor, it must record these nonpayroll withholding liabilities on Form 945-A. It must report tax liabilities on line 15 for each month and line 24 for December.

Cedar Co. enters the monthly totals on lines A through L. It adds these monthly subtotals and enters the total tax liability for the year on line M. The amount on line M should equal Form 945, line 3.

Example 2.

Fir Co. is a semiweekly schedule depositor. During January, it withheld federal income tax on pension distributions as follows: $52,000 on January 10 and $35,000 on January 24. Since Fir Co. is a semiweekly schedule depositor, it must record its federal income tax withholding liabilities on Form 945-A. It must record $52,000 on line 10 and $35,000 on line 24 for January.

Example 3.

Elm Co. is a new business and monthly schedule depositor for 2020. During January, it withheld federal income tax on nonpayroll payments as follows: $2,000 on January 10 and $99,000 on January 24. The deposit rules require that a monthly schedule depositor begin depositing on a semiweekly deposit schedule when a $100,000 or more tax liability is accumulated on any day within a month (see section 11 of Pub. 15 for details). Since Elm Co. accumulated $101,000 ($2,000 + $99,000) on January 24, 2020, it became a semiweekly schedule depositor on January 25, 2020. Elm Co. must complete Form 945-A and file it with Form 945. It must record $2,000 on line 10 and $99,000 on line 24 for January. No entries should be made on Form 945, line 7, even though Elm Co. was a monthly schedule depositor until January 25.

.This is an Image: caution.gif Form 944 filers. Your total liability for the year must equal line 9 on Form 944; therefore, don't reduce your total liability reported on Form 945-A by the deferred amount of the employer or employee share of social security tax, the refundable portion of the credit for qualified sick and family leave wages, or the refundable portion of the employee retention credit. The deferred amount of the employer share of social security tax reported on Form 944, line 10b, and the deferred amount of the employee share of social security tax reported on Form 944, line 10c, don't reflect deferred liabilities, but instead postponed due dates for payment. See the Instructions for Form 944 for more information. .

.This is an Image: caution.gif Form CT-1 filers. Your total liability for the year must equal line 19 on Form CT-1; therefore, don't reduce your total liability reported on Form 945-A by the deferred amount of the Tier 1 Employer tax and/or Tier 1 Employee tax, the refundable portion of the credit for qualified sick and family leave compensation, or the refundable portion of the employee retention credit. The deferred amount of the Tier 1 Employer tax reported on Form CT-1, line 21, and the deferred amount of the Tier 1 Employee tax reported on Form CT-1, line 22, don't reflect deferred liabilities, but instead postponed due dates for payment. See the Instructions for Form CT-1 for more information. .

Adjusting Tax Liability for Nonrefundable Credits Claimed on Form CT-1, Lines 16 and 17, or Form 944, Lines 8a, 8b, and 8c

.This is an Image: taxtip.gifThe credits discussed in this section aren't available on Form 945. The qualified small business payroll tax credit for increasing research activities is available only on Form 944..

Semiweekly schedule depositors must account for nonrefundable credits claimed on Form CT-1, lines 16 and 17, or Form 944, lines 8a, 8b, and 8c, when reporting their tax liabilities on Form 945-A. The total tax liability for the year must equal the amount reported on Form CT-1, line 19, or Form 944, line 9. Failure to account for the nonrefundable credits on Form 945-A may cause Form 945-A to report more than the total tax liability reported on Form CT-1, line 19, or Form 944, line 9. Don't reduce your daily tax liability reported on Form 945-A below zero.

Qualified small business payroll tax credit for increasing research activities (Form 944, line 8a).

The qualified small business payroll tax credit for increasing research activities is limited to the employer share of social security tax on wages paid in the quarter that begins after the income tax return electing the credit has been filed. In completing Form 945-A, you take into account the payroll tax credit against the liability for the employer share of social security tax starting with the first payroll payment of the quarter that includes payments of wages subject to social security tax to your employees. The credit may be taken to the extent of the employer share of social security tax on wages associated with the first payroll payment, and then to the extent of the employer share of social security tax associated with succeeding payroll payments in the quarter until the credit is used. Consistent with the entries on Form 945-A, the payroll tax credit should be taken into account in making deposits of employment tax. If any payroll tax credit is remaining at the end of the quarter that has not been completely used because it exceeds the employer share of social security tax for the quarter, the excess credit may be carried forward to the succeeding quarter and allowed as a payroll tax credit for the succeeding quarter. The payroll tax credit may not be taken as a credit against income tax withholding, Medicare tax, or the employee share of social security tax. Also, the remaining payroll tax credit may not be carried back and taken as a credit against wages paid from preceding quarters that are reported on the same Form 944 or on Forms 944 for preceding years. If an amount of payroll tax credit is unused at the end of the calendar year because it is in excess of the employer share of social security tax on wages paid during the applicable quarters in the calendar year, the remaining payroll tax credit may be carried forward to the first quarter of the succeeding calendar year as a payroll tax credit against the employer share of social security tax on wages paid in that quarter. For more information about the payroll tax credit, go to IRS.gov/ResearchPayrollTC.

Example.

Rose Co. is an employer with a calendar tax year that filed its timely income tax return on April 15, 2020. Rose Co. elected to take the qualified small business payroll tax credit for increasing research activities on Form 6765. The third quarter of 2020 is the first quarter that begins after Rose Co. filed the income tax return making the payroll tax credit election. Therefore, the payroll tax credit applies against Rose Co.'s share of social security tax on wages paid to employees in the third quarter of 2020. Rose Co. is a semiweekly schedule depositor. Rose Co. completes Form 945-A by reducing the amount of liability entered for the first payroll payment in the third quarter of 2020 that includes wages subject to social security tax by the lesser of (1) its share of social security tax on the wages, or (2) the available payroll tax credit. If the payroll tax credit elected is more than Rose Co.'s share of social security tax on the first payroll payment of the quarter, the excess payroll tax credit would be carried forward to succeeding payroll payments in the third quarter until it is used. If the amount of the payroll tax credit exceeds Rose Co.'s share of social security tax on wages paid to its employees in the third quarter, the excess credit would be treated as a payroll tax credit against its share of social security tax on wages paid in the fourth quarter. If the amount of the payroll tax credit remaining exceeded Rose Co.'s share of social security tax on wages paid in the fourth quarter, it could be carried forward and treated as a payroll tax credit for the first quarter of 2021.

Nonrefundable portion of credit for qualified sick and family leave compensation (Form CT-1, line 16).

Follow the instructions under Part II. Record of Railroad Retirement Tax Liability in the Instructions for Form CT-1 to adjust your tax liability on Form 945-A.

Nonrefundable portion of credit for qualified sick and family leave wages (Form 944, line 8b).

The nonrefundable portion of the credit for qualified sick and family leave wages is limited to the employer share of social security tax on wages paid in the year that is remaining after that share is first reduced by any credit claimed on Form 944, line 8a, for the qualified small business payroll tax credit for increasing research activities, and/or any credit to be claimed on Form 5884‐C, line 11, for the work opportunity credit for qualified tax‐exempt organizations hiring qualified veterans. In completing Form 945-A, you take into account the nonrefundable portion of the credit for qualified sick and family leave wages (including the qualified health plan expenses and employer share of Medicare tax allocable to those wages) against the liability for the first payroll payment of the year, but not below zero. Then reduce the liability for each successive payroll payment in the year until the nonrefundable portion of the credit is used. Any credit for qualified sick and family leave wages that is remaining at the end of the year because it exceeds the employer share of social security tax is claimed on Form 944, line 10d, as a refundable credit. The refundable portion of the credit doesn't reduce the liability reported on Form 945-A. For more information about the credit for qualified sick and family leave wages, including the dates for which the credit may be claimed, go to IRS.gov/PLC.

Example.

Maple Co. is a semiweekly schedule depositor that pays employees every Friday. Maple Co. had pay dates every Friday of 2020 starting January 3, 2020. Maple Co. paid qualified sick and family leave wages on May 1 and May 8. The nonrefundable portion of the credit for qualified sick and family leave wages for the year is $10,000. On Form 945-A, Maple Co. will use the $10,000 to reduce the liability for the January 3 pay date, but not below zero. If any nonrefundable portion of the credit remains, Maple Co. applies it to the liability for the January 10 pay date, then the January 17 pay date, and so forth until the entire $10,000 is used.

Nonrefundable portion of employee retention credit (Form CT-1, line 17).

Follow the instructions under Part II. Record of Railroad Retirement Tax Liability in the Instructions for Form CT-1 to adjust your tax liability on Form 945-A.

Nonrefundable portion of employee retention credit (Form 944, line 8c).

The nonrefundable portion of the employee retention credit is limited to the employer share of social security tax on wages paid in the year that is remaining after that share is first reduced by any credit claimed on Form 944, line 8a, for the qualified small business payroll tax credit for increasing research activities; or any credit to be claimed on Form 5884‐C, line 11, for the work opportunity credit for qualified tax‐exempt organizations hiring qualified veterans; and/or any credit claimed on Form 944, line 8b, for the nonrefundable portion of the credit for qualified sick and family leave wages. In completing Form 945-A, you take into account the nonrefundable portion of the employee retention credit against the liability for the first payroll payment of the year, but not below zero. Then reduce the liability for each successive payroll payment in the year until the nonrefundable portion of the credit is used. Any employee retention credit that is remaining at the end of the year because it exceeds the employer share of social security tax is claimed on Form 944, line 10e, as a refundable credit. The refundable portion of the credit doesn't reduce the liability reported on Form 945-A. For more information about the employee retention credit, including the dates for which the credit may be claimed, go to IRS.gov/ERC.

Example.

Maple Co. is a semiweekly schedule depositor that pays employees every Friday. Maple Co. had pay dates every Friday of 2020 starting January 3, 2020. Maple Co. paid qualified wages for the employee retention credit on May 1 and May 8. The nonrefundable portion of the employee retention credit for the year is $10,000. On Form 945-A, Maple Co. will use the $10,000 to reduce the liability for the January 3 pay date, but not below zero. If any nonrefundable portion of the credit remains, Maple Co. applies it to the liability for the January 10 pay date, then the January 17 pay date, and so forth until the entire $10,000 is used.

.This is an Image: taxtip.gifYou may reduce your deposits by the amount of the nonrefundable and refundable portions of the credit for qualified sick and family leave wages (compensation), the nonrefundable and refundable portions of the employee retention credit, and any deferred employment taxes. For more information on reducing deposits, see Notice 2020-22, 2020-17 I.R.B. 664, available at IRS.gov/irb/2020-17_IRB#NOT-2022-22; Notice 2020-65, 2020-38 I.R.B. 567, available at IRS.gov/irb/2020-38_IRB#NOT-2020-65; and IRS.gov/ETD. Also see IRS.gov/ERC and IRS.gov/PLC for more information, including examples, about reducing deposits..

Adjusting tax liability for the deferred amount of social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax) that you pay or deposit in 2020.

If you defer the employer and/or employee share of social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax) and subsequently pay or deposit that deferred amount during 2020, you should report the amount of the payment or deposit on Form 945-A on the date of the payment or deposit and not the date of liability. You shouldn't include any portion of the deferred amount of social security taxes (Tier 1 Employer tax and/or Tier 1 Employee tax) already paid or deposited by December 31, 2020, on Form 944, line 10b or 10c (or Form CT-1, line 21 or 22).

Example.

If you're a semiweekly schedule depositor that has an employment tax liability of $10,000 every 2 weeks and you defer $2,000 of the employer share of social security tax from your August 26, 2020, deposit for the August 19, 2020, pay date, but you deposit your deferred amount of $2,000 together with your deposit of $10,000 on September 23, 2020, for the September 16, 2020, pay date, you would report $8,000 for your August 19, 2020, tax liability ($10,000 minus $2,000) and $12,000 for your September 16, 2020, tax liability ($10,000 plus $2,000) on Form 945-A.

For more information about the deferral of the employer and employee share of social security tax (Tier 1 Employer tax and/or Tier 1 Employee tax), including the dates the payment may be deferred, see the Instructions for Form CT-1, the Instructions for Form 944, and IRS.gov/ETD.

Correcting Previously Reported Tax Liability

Semiweekly schedule depositors.

If you have been assessed an FTD penalty and you made an error on Form 945-A and the correction won't change the total liability you reported on Form 945-A, you may be able to reduce your penalty by filing an amended Form 945-A.

Example.

You reported a tax liability of $3,000 on January 1. However, the liability was actually for March. Prepare an amended Form 945-A showing the $3,000 liability on March 1. Also, you must enter the liabilities previously reported for the year that didn't change. Write “Amended” at the top of Form 945-A. The IRS will refigure the penalty and notify you of any change in the penalty.

Monthly schedule depositors.

You can file Form 945-A if you have been assessed an FTD penalty and you made an error on the monthly tax liability section of Form 945, CT-1, or 944. When completing Form 945-A for this situation, only enter the monthly totals. The daily entries aren't required.

Where to file.

File your amended Form 945-A, or, for monthly schedule depositors, your original Form 945-A at the address provided in the penalty notice you received. If you're filing an amended Form 945-A, you don't have to submit your original Form 945-A.

Forms 945-X, CT-1 X, and 944-X

You may need to file an amended Form 945-A with Forms 945-X, CT-1 X, or 944-X to avoid or reduce an FTD penalty.

Tax decrease.

If you're filing Form 945-X, CT-1 X, or 944-X, you can file an amended Form 945-A with the form if both of the following apply.

  1. You have a tax decrease.

  2. You were assessed an FTD penalty.

File your amended Form 945-A with Form 945-X, CT-1 X, or 944-X. The total liability reported on your amended Form 945-A must equal the corrected amount of tax reported on Form 945-X, CT-1 X, or 944-X. If your penalty is decreased, the IRS will include the penalty decrease with your tax decrease.

Tax increase—Form 945-X, CT-1 X, or 944-X filed timely.

If you're filing a timely Form 945-X, CT-1 X, or 944-X showing a tax increase, don't file an amended Form 945-A, unless you were assessed an FTD penalty caused by an incorrect, incomplete, or missing Form 945-A. Don't include the tax increase reported on Form 945-X, CT-1 X, or 944-X on an amended Form 945-A you file.

Tax increase—Form 945-X, CT-1 X, or 944-X filed late.

If you owe tax and are filing late, that is, after the due date of the return for the filing period in which you discovered the error, you must file the form with an amended Form 945-A. Otherwise, the IRS may assess an “averaged” FTD penalty.

The total tax reported on line M of Form 945-A must match the corrected tax (Form 945, line 3; Form 944, line 9; Form CT-1, line 19 (line 15 for years before 2020)), combined with any correction reported on Form 945-X, line 5; Form 944-X, line 18; or Form CT-1 X, line 19, for the year, less any previous abatements and interest-free tax assessments.

.This is an Image: caution.gifForm CT-1 X will be revised in March 2021 and Form 944-X will be revised in February 2021. If you’re using the March 2021 revision of Form CT-1 X or the February 2021 revision of Form 944-X, the total tax reported on the "Total liability for the year" line of the amended Form 945-A must match the corrected tax (Form CT-1, line 19 (line 15 for years before 2020), combined with any correction reported on Form CT-1 X, line 21; or Form 944, line 9, combined with any correction reported on Form 944-X, line 22) for the year, less any previous abatements and interest-free assessments..

Instructions for Form 945-A - Notices

Paperwork Reduction Act Notice.

We ask for the information on this form to carry out the Internal Revenue laws of the United States. You're required to give us the information. We need it to ensure that you're complying with these laws and to allow us to figure and collect the right amount of tax.

You're not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by Code section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping 6 hr., 27min.
Learning about the law or the form 6 min.
Preparing and sending the form to the IRS 12 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the IRS at the address listed in the Privacy Act Notice for your tax return.