IRS Form 941 Worksheets for 2023

1. What are the new changes in Form 941 Worksheets for 2023?

The IRS has updated the first step of Worksheet 1 and reintroduced Worksheet 2. These changes are based on Form 8974 changes for the first quarter of 2023.

Worksheet 1: Step 1

• Line 1i - Enter the amount from Form 941, Part 1, line 11a (credit from Form 8974).

Worksheet 2: Step 1

• Line 1g - Enter the amount from Form 8974, line 16, for this quarter.
• Line 1h - Employer share of Medicare tax remaining. Subtract line 1g from line 1f.

2. About Form 941 Worksheet 2

Worksheet 2 should be used by employers to calculate the Employee Retention Credit for the Second Quarter of 2021 Only (Wages Paid After March 31, 2021, and Before July 1, 2021). This worksheet is specifically for calculating the refundable and non-refundable portions of the employee retention credit for the third quarter of 2021.

After the second quarter of 2021, employers should no longer use 941 Worksheet 2 to calculate the employee retention credit. For the third and fourth quarters of 2021, employers should use Worksheet 4 instead.

Use Worksheet 2 to figure the credit for qualified sick and family leave wages paid in 2022 for leave taken after March 31, 2021, and before October 1, 2021.

3. How to calculate credit for Sick and Family leave wages in Form 941 Worksheet 3?

Worksheet 3 is used to help employers calculate the sick and family leave credits for qualified wages for leave taken after March 31, 2021. Employers who have claimed these credits should complete Worksheet 3 for the second, third, and fourth quarters of 2021. This worksheet has two steps. In step 1, employers should determine their share of Medicare taxes. Step 2, which is a much longer section, helps employers calculate the sick and family leave credit for the quarter.

Line 2r of Worksheet 3 is the nonrefundable portion of credit for sick and family leave wages and Line 2s is the refundable portions, these two lines are very important because the employer will need to enter these
values on Form 941.

4. What is IRS Form 941 Worksheet 4?

Worksheet 4 is used to calculate the Employee Retention Credit for Third and Fourth Quarters of 2021 Only (Qualified Wages Paid After June 30, 2021). Worksheet 4 is designed to be used to calculate the refundable and nonrefundable portions of the employee retention credits for the third and fourth quarters of 2021.

Using worksheet 4 for the third and fourth quarters of 2021 is crucial for employers. If they use worksheet 2, the worksheet that was only meant for the second quarter, they will end up with incorrect calculations on their Form 941.

5. How to calculate COBRA credit in Form 941 Worksheet 5?

The American Rescue Plan Act (ARPA), which was released in early 2021, expanded and extended the existing COVID-19 tax credits. This included the employee retention credit and the sick and family leave credit. However, this act also added a new tax credit that employees are able to claim for the remainder of 2021, this is the COBRA premium assistance credit.

The ARPA allowed employees to receive a COBRA subsidy if they lost their job or full-time status due to the pandemic. Employers should cover this cost and then claim it later on Form 941. To claim this credit, employers must use Worksheet 5. The amounts totaled on Line 2g and 2h are the nonrefunable and refundable portions of the COBRA premium assistance credit. Both amounts should be entered as directed on Form 941.