elenaleonova / E+ / Getty Images Form 945 pertains only to what the IRS calls “nonpayroll payments.” This form is commonly used for payments to certain independent contractors, as well as for qualified pensions, gambling profits, and military retirement, and pay. Form 945 is a summary form, showing all the different nonpayroll payments you’ve made. Generally speaking, you only have to withhold on payments to independent contractors if the contractor doesn’t give you a taxpayer identification number (TIN), the TIN they give you is incorrect, or you get a notice from the IRS saying you have to withhold taxes.
Who Uses Form 945?
Employers use Form 945. The form isn’t reserved just for payments to independent contractors, though. There are also some other types of payments that your business might make that are subject to backup withholding and would require you to withhold income taxes and report those taxes to the IRS on Form 945. The IRS calls this “non-payroll income tax withholding.” You would use Form 945 if you made payments for:
PensionsGambling winnings that aren’t subject to regular gambling withholdingIndian gaming profitsMilitary retirementVoluntary withholding on some government payments
Form 945 basically corresponds with any payments that are made and reported on one of the various 1099 forms, including 1099-MISC, 1099-NEC, or on Form W-2G.
Where To Get Form 945
Form 945 is available on the IRS website. It’s interactive, so you can complete it online and print it out.
How To Fill Out Form 945
Information you must report on Form 945 includes:
All federal income tax withheld from all individuals subject to backup withholdingBackup withholdingTotal deposits made during the yearBalance due or overpayment
Can Form 945 Be E-Filed?
You can file Form 945 using the IRS e-file system, and you can make backup withholding payments to the IRS electronically using the EFTPS system.
Where To Mail Form 945
Addresses for sending the form by regular mail depend on your state, whether you’re an exempt organization, and whether you’re also making a payment. The IRS publishes a list of the addresses on its website broken down by state and these other factors.
Requirements for Form 945
You would be required to file Form 945 if, for example, you had a freelance web designer working for you last year that you paid as an independent contractor. The contractor did not give you a TIN or the TIN they gave you was incorrect. Now the IRS has sent you a notice that backup withholding payments must be made. Generally speaking, you’ll want to notify your employee you’ll collect backup withholding, report the withholding to the IRS, and then deposit the withholding to the IRS on a monthly or semiweekly schedule. At the end of the year, you’ll submit Form 945. Typically, you can stop backup withholdings if the contractor gives you their correct TIN or the IRS tells you that you can stop. Form 945 is filed with the IRS at the same time you would file W-2 forms and 1099 forms. Filing Form 1099-NEC or 1099-MISC doesn’t relieve you of the responsibility to file Form 945 in addition to the other form. Form 945 doesn’t go to the payee. Backup withholding payments are made the same as withholding from employees, using the rules for determining whether to make deposits semi-weekly or monthly.
