--- title: "Form 945: Annual Return of Withheld Federal Income Tax | LedgerFi" description: Filing IRS Form 945? Learn how to correctly report federal tax withholdings for non-payroll income, avoid penalties, & ensure compliance with IRS requirements. image: https://www.ledgerfi.co/hubfs/LedgerFi-OG-Default.png --- IRS Notice # Form 945: Annual Return of Withheld Federal Income Tax Filing IRS Form 945? Learn how to correctly report federal tax withholdings for non-payroll income, avoid penalties, & ensure compliance with IRS requirements. [ Nathan Hodgens ](https://www.ledgerfi.co/irs-notice-library/author/team-ledger) Mar 6, 2025 [mailto:?subject=Check%20out%20https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax&utm_medium=social&utm_source=email%20&body=Check%20out%20https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax&utm_medium=social&utm_source=email](mailto:?subject=Check%20out%20https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax&utm_medium=social&utm_source=email%20&body=Check%20out%20https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax&utm_medium=social&utm_source=email) [IRS Notice](https://www.ledgerfi.co/irs-notice-library/tag/irs-notice) #### TABLE OF CONTENTS - [What is Form 945?](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#What) - [Why Did You Receive a Notice About Form 945?](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#Why) - [Key Deadlines for Form 945](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#Key) - [How to Fill Out Form 945](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#How) - [Common Errors & How to Avoid Them](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#Common) - [What Happens if You Don't File Form 945?](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#F945) - [Bottom Line](https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax#Bottom) ![Form 945: Annual Return of Withheld Federal Income Tax](https://www.ledgerfi.co/hubfs/AI-Generated%20Media/Images/The%20image%20depicts%20a%20neatly%20organized%20workspace%20featuring%20a%20wooden%20desk%20with%20a%20laptop%20open%20to%20a%20digital%20version%20of%20Form%20945-1.jpeg) × Need Help Fast? Talk to an Expert Instantly [** Call now ** ](tel:+18886026210) [ Schedule call ](https://meetings.hubspot.com/jeremy721/web-consultation?uuid=72d6ad92-b616-4404-8180-05ac0a3a20cd) ## TL; DR **Meaning**: Form 945 is used to report federal income tax withheld from non-payroll payments, such as pensions, gambling winnings, and backup withholding. It's not for wages—those go on Form 941 or 944. **Next Steps:** If you're required to file Form 945, gather all necessary withholding information from payments made throughout the year. This includes amounts withheld from pensions, IRAs, gambling winnings, and backup withholding for vendors. **What to Do:** Ensure that you file Form 945 by **January 31** each year (or February 10 if all taxes were deposited on time). Pay any outstanding withholding tax and ensure compliance to avoid penalties. ## **What is Form 945?** Form 945 is an annual IRS tax form used to report federal income tax withheld from certain types of non-payroll payments. Unlike Forms 941 or 944, which deal with payroll taxes, **Form 945 focuses on withholdings from sources like:** - Pensions and annuities - Gambling winnings - Dividends and interest (when subject to backup withholding) - Certain payments to non-employees that require withholding If you are a payer who withholds federal income tax from these types of payments, you must file **Form 945 once a year** to report those withholdings. ## **Why Did You Receive a Notice About Form 945?** ![Screenshot 2025-03-06 at 2.16.29 PM](https://www.ledgerfi.co/hs-fs/hubfs/Screenshot%202025-03-06%20at%202.16.29%20PM.png?width=660&height=354&name=Screenshot%202025-03-06%20at%202.16.29%20PM.png) You may have received a notice from the IRS regarding Form 945 because your company either: - Previously filed Form 945 in a prior tax year, or - Was expected to file Form 945 for the **2025 tax year** based on prior filings. To resolve this notice, follow these steps: ### **1. Determine if the Company is Required to File Form 945 ** - Review the **1099-MISC** and/or **1099-NEC** forms issued. - Look at **Box 4 (Federal Income Tax Withheld)** on these forms. - If **Box 4 is empty** on all forms, the company is **not required** to file Form 945. - If **Box 4 contains amounts**, Form 945 **must be filed**. ### **2. If Not Required to File Form 945** - Complete **pages 3 and 4** of the IRS notice. - Select the reason: **"My business had no activity for the period above."** - Send the response to the IRS: - **Mail** it to the address provided on the notice, or - **Fax** it to the tax number referenced in the form. ### **3. If Required to File Form 945** - Prepare and submit Form 945 to the IRS. ## Still Have Form 945 Questions? Talk to an expert directly! Call now at (888) 602-6210 [** Call now ** ](tel:+18886026210) ## **Key Deadlines for Form 945** - **Filing Deadline:** January 31 of the following year. - **Electronic Filing Option:** Employers can e-file Form 945 via the IRS **FIRE (Filing Information Returns Electronically) System**. - **Deposit Schedule:**If withholding is **$2,500 or less** for the year, you can pay with the return. - If your withholding is over** $2,500**, you must deposit electronically. You should use the **Electronic Federal Tax Payment System (EFTPS)** either monthly or biweekly. ## **How to Fill Out Form 945** ![Form 945 - IRS Annual Return of Withheld Federal Income Tax example](https://lh7-rt.googleusercontent.com/docsz/AD_4nXeOLrd4I5M8nAWJoCTi1XikfhHfDLoYuwd1m5QDb0ob8HcDIXAUu74lE1PRSE0DLyEvxH3IC0koSJrWE2n0fUtpi1cYWE5mweIeReDs2S4Uj0NtboNvGCN3QQ3UPUWqxB74jk4_Jw?key=UfrVILQ9fLH2IyIrrxojg-8M) ### **Page 1: Form 945 Overview** - **Business Information:** Enter your Employer Identification Number (EIN), name, and address. - **Federal Income Tax Withheld:** Total tax withheld from non-payroll payments during the year. - **Deposit Schedule & Tax Liability:** Check the appropriate box for deposit frequency (monthly/semiweekly). ### **Page 2: Payment & Reconciliation** ![Form 945 - filing instructions and line-by-line breakdown](https://lh7-rt.googleusercontent.com/docsz/AD_4nXdjmLRTZWKUiIjaFIgVNu7AhbRA8IVa8zj_buvK1gWtN9jDMh42AeD_GG3Ylg02YliDJc3TdaiJSl2aGOx5tCu0goTF70koMpFvki5yLARbEPLKffutc33IevjHU_VAEAlbHOi0gA?key=UfrVILQ9fLH2IyIrrxojg-8M) - **Total Deposits for the Year:** Compare total deposits to the tax withheld. - **Balance Due or Overpayment:** If an overpayment exists, choose whether to apply it to next year or request a refund. ## **Common Errors & How to Avoid Them** **Mixing payroll and non-payroll tax reporting:** **Do not** report payroll withholdings on Form 945. Use **Form 941 or 944** for payroll taxes. **Forgetting to deposit withheld amounts on time:** The IRS imposes **penalties** for **late deposits** or failure to deposit through **EFTPS**. **Failing to report backup withholding:** If you've issued **Form 1099-NEC or 1099-MISC** to a vendor but didn't receive a valid TIN, backup withholding applies—and **must** be reported on Form 945. ## **What Happens If You Don’t File Form 945?** ❌ **Failure to file:** The IRS may assess failure-to-file penalties, which start at 5% of the unpaid tax per month (up to 25%). ❌ **Late payment penalties:** If payments are late, penalties range from **2% to 15%**, depending on how late they are. ❌ **Interest accrues:** The IRS adds interest daily to unpaid tax amounts. To avoid these issues, file Form 945 on time and ensure all deposits are properly made. ## Still Have Questions? Talk to an expert directly! Call now at (888) 602-6210 [** Call now ](tel:+18886026210) [ Schedule a call ** ](https://meetings.hubspot.com/jeremy721/web-consultation?uuid=27a565c2-a1b5-4aab-857e-4f61ccf3f514) ## **Bottom Line** Form 945 is an important** **IRS tax form. Used to report **federal income tax **taken** from non-payroll payments, **this tax includes pensions, gambling winnings, and backup withholding. Filing it **correctly and on time** ensures compliance and prevents penalties. If you received an IRS notice about Form 945, first determine if you are required to file based on 1099 forms issued. If not, respond to the IRS with the appropriate notice pages. If filing is required, submit Form 945 before the deadline. **Need help?** Our experts at LedgerFi can assist you in navigating withholding requirements and IRS filings.[Contact us today](https://meetings.hubspot.com/jeremy721/web-consultation?uuid=ca861878-cb0c-4847-bcce-aac584da8203)! ## Similar posts IRS Notice ### [CP09: You May Qualify for the Earned Income Credit (EIC)](https://www.ledgerfi.co/irs-notice-library/cp09-you-may-qualify-for-the-earned-income-credit-eic) Received a CP09 notice from the IRS? It may mean you're eligible for the Earned Income Credit (EIC). Nathan Hodgens Jun 19, 2025 IRS Notice ### [IRS Notice CP30A – Estimated Tax Penalty Reduced or Removed](https://www.ledgerfi.co/irs-notice-library/irs-notice-cp30a-estimated-tax-penalty-reduced-or-removed) Got a CP30A notice from the IRS? It means your estimated tax penalty was reduced or removed. Learn why you got it & what steps to take next. 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Nathan Hodgens Apr 7, 2025 ## Talk to a Small Business Advisor Today ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Nathan Hodgens", "url" : "https://www.ledgerfi.co/irs-notice-library/author/team-ledger" }, "dateModified" : "2026-04-13T19:06:52.308Z", "datePublished" : "2025-03-06T19:39:45.000Z", "headline" : "Form 945: Annual Return of Withheld Federal Income Tax", "image" : [ "https://www.ledgerfi.co/hubfs/AI-Generated%20Media/Images/The%20image%20depicts%20a%20neatly%20organized%20workspace%20featuring%20a%20wooden%20desk%20with%20a%20laptop%20open%20to%20a%20digital%20version%20of%20Form%20945-1.jpeg" ], "mainEntityOfPage" : { "@id" : "https://www.ledgerfi.co/irs-notice-library/form-945-annual-return-of-withheld-federal-income-tax", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.ledgerfi.co/hubfs/ledger-logo-green%20(3).svg" }, "name" : "Ledger Fi" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.ledgerfi.co/#organization", "@type" : [ "AccountingService", "LocalBusiness" ], "address" : { "@type" : "PostalAddress", "addressCountry" : "US", "addressLocality" : "Cupertino", "addressRegion" : "CA", "postalCode" : "95014", "streetAddress" : "20065 Stevens Creek Blvd. Ste.B-1B" }, "areaServed" : [ { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "California" }, "name" : "San Jose" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "California" }, "name" : "San Francisco" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "Illinois" }, "name" : "Chicago" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "California" }, "name" : "Irvine" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "Texas" }, "name" : "Austin" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "Arizona" }, "name" : "Phoenix" }, { "@type" : "City", "containedInPlace" : { "@type" : "State", "name" : "Florida" }, "name" : "Orlando" } ], "description" : "LedgerFi provides bookkeeping, payroll, and expert tax strategy coaching for small businesses. 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