The new version of Form 941 will be three pages (currently, two pages). The bottom of page 1 of the form notes that employers must complete all three pages of Form 941 and sign the form. In the upper right of page one of the form, employers check a box to indicate what quarter they are filing the form for. The first quarter 2020 box is grayed out because the new version of the form should not be filed for the first quarter.
Part 1, Line 5a (Taxable social security wages), of the form has been expanded. In the first quarter, employers only reported the taxable portion of Social Security wages and multiplied that amount by 12.4% (employer and employee tax rate on taxable Social Security wages). On the draft version of Form 941, there are also lines 5a (i) (Qualified sick leave wages) and 5a (ii) (Qualified family leave wages). Both qualified sick leave wages and qualified family leave wages are multiplied by 6.2%.
Part 1, Line 11b (Nonrefundable portion of credit for qualified sick and family leave wages from Worksheet 1), has been added to the form. This is where employers will be able to claim a credit against their share of Social Security taxes for providing qualified leave wages.
Part 1, Line 11c (Nonrefundable portion of employee retention credit from Worksheet 1), is where employers claim the employee retention credit.
Part 1, Lines 11b and 11c, will reduce the Form 941 tax liability.
Worksheet 1 was not available at the time this article was published.
Part 1, line 13b, is where employers report the deferred amount of the employer share of Social Security tax.
Part 1, line 13c, is where employers report the refundable portion of credits for qualified sick and family leave wages from Worksheet 1.
Part 1, line 13d, is where employers report the refundable portion of the employee retention credit from Worksheet 1.
Part 1, line 13f, is where employers report total advances received from filing Form(s) 7200 for the quarter.
The draft version of the form does not contain any changes to Part 2 of the form. This is where employers provide information on their deposit schedule (monthly, semiweekly) and tax liability. Failure to complete this Part correctly may result in an employment tax deposit penalty .
The IRS has substantially expanded Part 3 of the form (Tell us about your business) on the draft version of Form 941. There are now lines for:
- Qualified health plan expenses allocable to qualified sick leave wages (line 19).
- Qualified health plan expenses allocable to qualified family leave wages (line 20).
- Qualified wages for the employee retention credit (line 21).
- Qualified health plan expenses allocable to wages reported on line 21 (line 22).
- Credit from Form 5884-C (Work Opportunity Credit), line 11, for this quarter (line 23).
- Qualified wages paid March 13 through March 31, 2020, for the employee retention credit (use this line only for the second quarter filing of Form 941) (line 24).
- Qualified health plan expenses allocable to wages reported on line 24 (use this line only for the second quarter filing of Form 941) (line 25).
The IRS says that the instructions for the draft version of Form 941 will be available soon.