Form 941 Instructions for 2023

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 Tax Form 941 is being filed.

For example, if you are filing the Form for the first quarter of 2022 & 2023 tax year, put an “X” in the box next to “January, February, March.”

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

• Line 5a* - Taxable Social Security Wages

  (*Include qualified sick and family leave wages taken after March 31, 2021)

  Line 5a = Column 1 x 0.124 = Column 2

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

  (*Only include wages paid after March 31, 2020, for leave taken before April 1, 2021)

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

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

  (*Only include wages paid after March 31, 2020, for leave taken before April 1, 2021)

  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

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 for leave taken before April 1, 2021

  Enter the amount from Worksheet 1, step 2, line 2j.

• Line 11c - Nonrefundable portion of the employee retention credit

  Note: Reserved for future use

• Line 11d - Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021

  Enter the amount from Worksheet 3, step 2, line 2r.

• Line 11e - Nonrefundable Portion of COBRA Premium Assistance Credit

  Note: Reserved for future use

• Line 11f - Number of Individuals Provided COBRA Premium Assistance

  Note: Reserved for future use

• Line 11g - Total nonrefundable credits

  Add the amounts from lines 11a, 11b, 11c, 11d.

• Line 12 - Total taxes after adjustments and nonrefundable credits

  To get this amount, subtract line 11g from line 10, the amount on line 12 can’t be less than zero.

• 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 for leave taken before April 1, 2021

  Enter the amount from Worksheet 1, step 2, line 2k.

• Line 13d - Refundable Portion of Employee Retention Credit

  Note: Reserved for future use

• Line 13e - Refundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

  Enter the amount from Worksheet 3, step 2, line 2s.

• Line 13f - Refundable Portion of COBRA Premium Assistance Credit

  Note: Reserved for future use

• Line 13g - Total Deposits and Refundable Credits

  To get the total, add lines 13a, 13c, 13d, 13e.

• Line 13h - Total Advances Received From Filing Form(s) 7200 for the Quarter

  Note: Reserved for future use

• Line 13i - Total Deposits and Refundable Credits Less Advances

  Note: Reserved for future use

• Line 14 - Balance due

  If the amount you entered in line 12 is more than the amount entered on line 13i, enter the difference here.

• 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

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.

3. Form 941 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 tax 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.

4. Form 941 Part 3 - About your business

The third portion of the 2023 IRS Form 941 collects information that will not be relevant to every business, for example if the business is closing or is a seasonal employer. If the question does not apply to the business you are filing for, leave the field blank.

• 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 18a - 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 for leave taken before April 1, 2021

  Enter the amount on Worksheet 1, step 2, line 2b.

• Line 20 - Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages for Leave Taken Before April 1, 2021

  Enter the amount from Worksheet 1, step 2, line 2f.

• Line 21 - Qualified Wages for the Employee Retention Credit

  Note: Reserved for future use

• Line 22 - Qualified Health Plan Expenses for the Employee Retention Credit

  Note: Reserved for future use

• Line 23 - Qualified Sick Leave Wages for Leave Taken After March 31, 2021

  Enter the amount from Worksheet 3, step 2, line 2a.

• Line 24 - Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages Reported
  on Line 23

  Enter the amount from Worksheet 3, step 2, line 2a.

• Line 25 - Amounts Under Certain Collectively Bargained Agreements Allocable to Qualified Sick Leave Wages Reported on Line 23 Enter the collectively bargained defined benefit pension

  Enter the amount from Worksheet 2, step 2, line 2c.

• Line 26 - Qualified Family Leave Wages for Leave Taken After March 31, 2021

  Enter the amount from Worksheet 3, step 2, line 2g.

• Line 27 - Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages Reported on Line 26

  Enter the amount from Worksheet 3, step 2, line 2h.

• Line 28 - Amounts Under Certain Collectively Bargained Agreements Allocable to Qualified Family Leave Wages Reported on Line 26

  Enter the amounts from Worksheet 3, step 2, line 2i.

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

5. Form 941 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.

6. Form 941 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.

7. E-file Form 941 with TaxBandits in Minutes

TaxBandits makes the filing easier with these Form 941 instructions. E-File 941 with TaxBandits and get an Instant Approval from the IRS.

Follow the below simple steps to e-file form 941 for 2023 & Prior years (2022, 2021 & 2020).

• Create a free TaxBandits account!
• Choose "Form 941" and enter the details.
• Review and Transmit to the IRS.