What is IRS Form 945?

IRS Form 945 is used by businesses to report federal income tax withheld from non-payroll payments. Unlike Forms 941 and 944, which cover payroll tax withholdings, Form 945 is specifically for reporting withheld taxes from other types of payments, such as:

Backup withholding on vendor or contractor payments
Withholding on retirement distributions
Federal tax withholdings on gambling winnings

For businesses using Homebase payroll, staying compliant with IRS regulations—including Form 945—is essential for avoiding penalties and ensuring accurate tax reporting.

Who needs to file Form 945?

Your business must file Form 945 if you withhold federal income tax from any of the following:

Non-employee compensation subject to backup withholding
Dividends and interest payments
Retirement plan distributions
Certain gambling winnings
Other reportable payments requiring tax withholding

Employers should review IRS guidelines to determine if they are responsible for filing.

When is Form 945 due?

Form 945 is due annually by January 31 for the previous tax year.

If your total tax liability is $2,500 or more, deposits must be made following the IRS deposit schedule, either monthly or semi-weekly.

Steps to file Form 945

Filing Form 945 involves a few key steps:

Gather records – Identify all non-payroll payments with federal tax withholdings.
Complete Form 945 – Report total withholdings for the year.
Submit to the IRS – File electronically or mail a paper return.
Deposit withheld taxes – Use the Electronic Federal Tax Payment System (EFTPS) if required.

How Form 945 fits into your tax reporting

Even though Form 945 doesn’t replace payroll tax filings, businesses making both payroll and non-payroll payments must:

File Form 941 for payroll tax withholdings
File Form 945 for non-payroll tax withholdings
Maintain detailed records for IRS compliance

Using Homebase payroll simplifies this process by tracking tax liabilities and filing automatically, reducing the risk of penalties.

How Homebase helps with Form 945 compliance

Tracking tax withholdings manually can be time-consuming and prone to errors. Homebase payroll helps businesses stay compliant by:

Automating tax tracking for payroll and non-payroll payments
Ensuring compliance with filing deadlines and deposit schedules
Providing detailed payroll and tax reports for accurate record-keeping
Reducing filing errors to prevent penalties

Try Homebase payroll today to streamline tax reporting and stay compliant with IRS regulations.

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