IRS Form 941 First Quarter Deadline is April 30, 2021

Form 941 Instructions for 2021

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IRS Form 941 - Line by Line Instructions - Explained

Updated on March 05, 2021 - 10:30 AM by Admin, TaxBandits

If you are an employer, you likely need to fill out and file Form 941 each quarter. To avoid major mistakes, learn how to fill out Form 941 line by line.

In this article, we cover the following topics:

Just follow the below instructions to complete and File your form 941 to the IRS.

1. Complete Business Information

First, complete your basic details in

  • Box 1 - Entering Employer Details

    In box 1, enter the EIN, name, business name, and address.

  • Box 2 - Choosing Quarter

    In box 2, choose a quarter for which Form 941 is being filed.

For example, if you are filing the Form for the first quarter of 2021 tax year, put an “X” in the box next to “January, February, March.”

Form 941 for 2021

Form 941 for 2021

2. Part 1 - Questions for the quarter

Part 1 reports the employees, their wages, and the federal income taxes withheld from their paycheck.

Part 1 consists of 15 lines where each line is explained in detail with the information that must be entered.

  • Line 1

    Enter the number of employees, who got wages, tips, or other pay in the particular quarter

  • Line 2

    Enter the complete wages, tips, paid and other pay to your employees

  • Line 3

    Enter the federal income tax withheld from the employee’s paycheck

  • Line 4

    Check this box if wages are not subject to social security and medicare tax. And if it doesn't apply, please skip this line

Form 941 Line by Line Instructions

Form 941 - Part 1 Instructions

  • Line 5a - Taxable social security wages

    Line 5a = Column 1 x 0.124 = Column 2

  • Line 5a (i) - Enter the Qualified sick leave wages

    Line 5a (i) = Column 1 x 0.062 = Column 2

  • Line 5a (ii) - Enter the Qualified family leave wages

    Line 5a (ii) = Column 1 x 0.062 = Column 2

  • Line 5b - Taxable social security tips

    Enter the tips reported for all your employees during the quarter

    Line 5b = Column 1 x 0.124 = Column 2

  • Line 5c - Taxable Medicare wages & tips

    Enter the wages, tips, that are subject to medicare tax

    Line 5c = Column 1 x 0.029 = Column 2

  • Line 5d - Taxable wages & tips subject to Additional Medicare Tax withholding

    Enter all the taxable wages & tips subject to Additional Medicare Tax withholding

    Line 5d = Column 1 x 0.009 = Column 2

  • Line 5e - Total social security and Medicare taxes

    Sum of Column 2 from Lines 5a, 5a(i), 5a(ii) 5b, 5c and 5d.

  • Line 5f - Section 3121(q) Notice and Demand—Tax due on unreported tips

    Enter the tax due that you have received from the Section 3121(q) Notice and Demand

Form 941 Line 5 Instructions

Form 941 - 5a-5f Instructions

  • The IRS issues Section 3121(q) Notice and Demand to employers advising them to report tips that their employees have failed to report. Employers aren’t liable for their share of social security and medicare taxes unless the employer receives this notice.
  • Line 6 - Total taxes before adjustments

    Enter the sum of line 3, 5e, and 5f

  • Line 7 to 9 - Tax Adjustments

    Enter the Adjustment for a fraction of cents (Line 7), sick pay (Line 8), tips and group life insurance (Line 9)

  • Line 10 - Total taxes after adjustments

    Enter the sum of line 6 to line 9

  • Line 11a - Qualified small business payroll tax credit for increasing research activities

    Enter the amount calculated in Form 8974 and attach.

  • Form 8974 is used to determine the amount of credit that can be claimed for the increasing research activities.
  • Line 11b - Nonrefundable portion of credit for qualified sick and family leave wages from Worksheet 1

    Use Worksheet 1 to calculate the non refundable portion of credit for qualified sick and family leave wages and enter the amount.

  • Line 11c - Nonrefundable portion of employee retention credit from Worksheet 1

    Enter the amount of nonrefundable portion of employee retention credit which was calculated on worksheet 1.

Form 941 Line by Line Instructions
  • Line 11d - Total nonrefundable credits

    Enter the total nonrefundable credits by adding 11a, 11b and 11c.

  • Line 12 - Total taxes after adjustments and nonrefundable credits

    Enter the difference between line 11d and 10

  • Line 13a - Total deposits for this quarter, including overpayment applied from a prior quarter and overpayments applied from Form 941-X, 941-X (PR), 944-X, or 944-X (SP) filed in the current quarter

  • Line 13b - Reserved for future use

    This was previously used for entering deferred amount of social security tax. Now it is reserved for future use.

  • Line 13c - Refundable portion of credit for qualified sick and family leave wages from Worksheet 1

    Use Worksheet 1 to calculate the refundable portion of credit for qualified sick and family leave wages and enter the amount.

  • Line 13d - Refundable portion of employee retention credit from Worksheet 1

    Enter the amount of refundable portion of employee retention credit which was calculated on worksheet 1.

  • Line 13e - Total deposits and refundable credits

    Enter the total refundable credits by adding 13a, 13c and 13d.

  • Line 13f - Total advances received from filing Form(s) 7200 for the quarter

    Enter the total amount of advances received from filing Form 7200.

  • Line 13g - Total deposits and refundable credits less advances

    Subtract line 13f from line 13e and enter the amount.

  • Line 14 - Balance due

    Enter the difference, If line 12 is more than the line 13g.

  • You can make federal tax deposits for the amount
    shown on line 14 using EFW.
  • If you are a monthly schedule depositor and making a payment for the amount shown on Line 14, you can pay by EFW, EFT, Credit or debit card, check, money order.
  • File Form 941-V, if you prefer to pay the balance due using check or money order.
  • If you were unable to pay the balance due in full you can apply for an installment agreement online. To apply using the Online Payment Agreement Application, please visit IRS.gov/OPA.
  • Line 15 - Overpayment

    Enter the difference, if line 13g is more than line 12. Choose either box, Apply to next return or send a refund as you prefer

Form 941 Line by Line Instructions

Form 941 Part 1 Instructions

  • If you deposited more than the correct amount for the quarter, you can either choose to get the refund for the overpayment or apply it to your next 941 return.

Part 2 - Deposit schedule and tax liability for the quarter

Part 2 requires information about tax liability for the quarter, whether you are a semiweekly or monthly depositor.

Line 16, you have options to check any one of the boxes based on your tax liability.

Check box 1, If Line 12

  • On your Form 941 was less than $2,500
  • On your previous quarterly return was less than $2,500
  • You didn’t incur a $100,000 next-day deposit obligation during the current quarter

Check box 2, If you were

A monthly schedule depositor for the entire quarter, and enter your tax liability for each month of the quarter (Month 1, Month 2, and Month 3).

Your total liability for the quarter must be equal to line 12 on your form 941.

Check box 3, If you were

A semiweekly depositor during any part of the quarter.

You must also enter the tax liability on Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors, and attach it along the Form 941 if you were a semiweekly depositor.

Form 941 Part 2 Instructions

Form 941 Part 2 Instructions

Part 3 - About your business

Part 3 will be mostly used by the businesses closed for the year or by the seasonal employer.

  • Line 17 - If your business has closed or you stopped paying wages

    If your business was closed or you stopped paying wages in the quarter, check on line 17 and enter the final date when you paid wages.

  • Line 18 - If you are a seasonal employer and you don’t have to file a return for every quarter of the year

    If you are a seasonal employer and don’t have to file Form 941 every quarter, then check the box under line 18.

  • Line 19 - Qualified health plan expenses allocable to qualified sick leave wages

    Enter the qualified health plan expenses allocatable to qualified sick leave wages and also need to enter this total on Worksheet 1 - Step 2, line 2b.

  • Line 20 - Qualified health plan expenses allocable to qualified family leave wages

    Enter the qualified health plan expenses allocatable to qualified family leave wages and also need to enter this total on Worksheet 1 - Step 2, line 2f.

  • Line 21 - Qualified wages for the employee retention credit

    Enter the qualified wages for the Employee Retention Credit and also need to enter this total on Worksheet 1 - Step 3, line 3a.

  • Line 22 - Qualified health plan expenses allocable to wages reported on line 21

    Enter the qualified health plan expenses for the Employee Retention Credit. This total is also entered on Worksheet 1- Step 3, line 3b.

  • Line 23 - Credit from Form 5884-C, line 11, for this quarter

    Enter the credit amount from the line 11 of Form 5884-C.

  • Line 24 and Line 25 - Reserved for future use

Form 941 Line 17 & 18 Instructions

Form 941 Line 17 to 25 Instructions

  • If lines 17 and 18 don’t apply to your business, then just leave Part 3 blank and move on to Part 4.

Part 4 - Third-party designee

Part 4 requires information about the third party designee that the employer authorizes to discuss with the IRS.

Check “Yes”, If you wish to discuss this return with the IRS and provide the designee name and phone number. Also, enter the 5 digit pin to use while talking with the IRS.

Check “No”, if you don’t wish to discuss.

Form 941 Part 4 Instructions

Form 941 Part 4 Instructions

Part 5 - Signature

Once each and every part is completed, you are required to sign Form 941.

The following persons are authorized to sign the return for each type of business entity.

  • Sole proprietorship: Individual who owns the company
  • Corporation or an LLC treated as a corporation: President, vice president, or other principal officer
  • Partnership or an LLC treated as a partnership: Partner, member, or officer
  • Single-member LLC: Owner of the LLC or a principal officer
  • Trust or estate: The fiduciary

Paid Preparers Using Only Form 941 must be

  • Form 941 must be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.
  • If the form is prepared by the paid preparer, enter their information such as name, signature, address, PTIN, and contact number.
  • A paid preparer is someone who completes your Form 941 filing and is responsible for preparing payroll tax forms on your behalf.
  • If your Form 941 is filed by a paid preparer, they have to enter their information on part 5.
Form 941 Part 5 Instructions

Form 941 Part 5 Instructions

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