What is form 945 used to report?

Form 945 is specifically used to report withheld federal income tax from nonpayroll payments, such as certain types of payments that are not made through a typical payroll process. This includes things like pensions, annuities, and other nonpayroll payments.

The importance of Form 945 lies in its role as a means for businesses and organizations to comply with federal tax withholding requirements for these types of payments. By accurately reporting withheld federal income tax, organizations ensure that they are meeting their tax obligations and providing the necessary information to the IRS.

This form is distinct from others like Form 941, which is used for reporting wages paid to employees and the associated payroll taxes, or Form 943, which relates to agricultural employees and their specific tax implications. Thus, the focus on nonpayroll payments is what clearly defines the purpose of Form 945.