945 taxes are federal income taxes withheld from non-wages or from independent contractors.
Non-wage payments subject to 945 taxes include the following:
• Pensions, annuities, and IRAs
• Military retirement income
• Gambling winnings
• Indian reservation gaming profits
Federal Form 945
The Annual Return of Withheld Federal Income Tax Form (Form 945) is filed annually by those employers who must make federal tax deposits for non-payroll taxes, i.e., backup withholding from pension payments, gambling winnings, and military retirement income.
Providing 945 taxes
For 945 payments made through Signature, it is imperative that you:
1. Create a separate company/subcompany for the 945 tax types processed through your payroll district office:
This ensures that data is distinguished from regular wage payments and is reported on the 945 return, not the 941 return.
To create a separate company, contact your payroll district office to obtain a Start-Up Kit. In completing the kit, you will include all the applicable tax codes that apply. Request the Tax Service setup tax codes for each type of payment; i.e., pension, back-up withholding. Once the kit is completed, return it to your district office.
2. Provide tax and payment information to the Tax Service according to pay period and quarter-end deadlines.
For payments processed outside of the Ceridian payroll, you must provide the Tax Service with any 945 taxes withheld from persons not on your payroll (i.e., 1099-R payments). It is imperative that you:
a. Request a separate division at the Tax Service.
To create a separate company, contact your payroll district office to obtain a Start-up Kit. In completing the kit, you will include all the applicable tax codes that apply. Request the Tax Service setup tax codes for each type of payment; i.e., pension, back-up withholding. Once the kit is completed, return it to your district office.
b. Choose a transmission option to enable the Tax Service to deposit and file the liabilities.
You must choose one of the following two options for the Tax Service to deposit and file these liabilities:
Use the Tax Management System (TMS Tax Management System) software to transmit your liabilities on a per payment basis. The Tax Service will obtain your funds and make deposits.
Contact your Tax Service Representative to obtain this.
Fax the following information to your Tax Service Representative on a per payment basis so the data can be included on the 945 return.
Specific tax type (i.e., FIT Federal Income Tax or Backup Withholding)
Liability amount
Check date
3. Provide the Tax Service with tax and payment totals at quarter-end according to published deadlines.