IRS Form 941 is Revised to Defer Payroll Tax for 3rd and 4th quarters, 2020

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The IRS Finalized Form 941 for the 3rd and 4th Quarters

Updated on October 15, 2020 - 10:30 AM by Admin, TaxBandits

This August, the IRS released the draft of Form 941 with the expected changes. Following that, the IRS has finalized the Form 941 for the 3rd and 4th quarters and released it on September 30. Therefore, employers can begin to e-file Form 941 for the 3rd quarter of 2020 as the deadline is on November 2, 2020. Before that, we want to give a little background on Form 941 and changes incorporated for the 3rd and 4th quarters of 2020.

In this article, we cover the following topics:

1. Paycheck Protection Program (PPP) under CARES Act

Many small businesses face cash crunch because of this on-going COVID-19 pandemic. To help employers keep their employees on the payroll, Paycheck Protection Protection was introduced under CARES Act. This program allows the employers to apply for loans and they can use the loan amount to pay their employees and certain other costs. Basically, the PPP loan amount is equal to 2.2 times the employer’s average monthly payroll expenses. The deadline to apply for a PPP loan was June 20, 2020. Later, it was extended
to August 8, 2020.

2. Payroll Tax Deferment

In March 2020, the government introduced the Social Security Tax Deferral Program in response to the COVID-19 pandemic. This program allows employers to defer their portion of Social Security taxes from the 2nd quarter of 2020. On August 8, the president passed a new order allowing employers to defer the employee share of withholding and deposits of Social Security taxes as well. This deferment is applicable to qualified wages paid between September 1, 2020 and December 31, 2020.

3. Revisions to Form 941, 2020 - Quarters 3 & 4

In June 2020, the IRS revised Form 941 with 23 new fields to benefit the filers during the pandemic. Those changes are effective from the 2nd quarter of 2020. Now, the most anticipated Form 941 for the third quarter of 2020 is out. In the finalized version, we can see that the changes affect four lines:
1, 13b, 24, and 25.

Below are the changes in the Form 941 for the third quarter compared to Form 941 for the
second quarter of 2020.

  • Line 1 for the 2nd quarter

    Existing form can be used for the pay period - Quarter 2, Quarter 3, or Quarter 4.

IRS Form 941 Line 1

IRS Form 941 Line 1

  • Line 1 for 3rd and 4th quarter

    In the finalized version, we can see that line 1 has been adjusted to report the number of employees who received wages for the pay period, Quarter 3 and 4. Simply, this means that this version can only be used for the 3rd and 4th quarters of 2020.

Form 941 Line by Line Instructions

IRS Form 941 Line 1 for quarters 3 and 4

  • Line 13b for the 2nd quarter

    Only the deferred amount of the employer share of social security tax can be reported.

 IRS Form 941 Line 13b

IRS Form 941 Line 13b

  • Line 13b for 3rd and 4th Quarters

    The new line 13b allows employers to enter the deferred amount of employer and employee shares of social security tax.

IRS Form 941 Line 13b for quarters 3 and 4

IRS Form 941 Line 13b for quarters 3 and 4

  • Line 24 for the 2nd quarter

    It is used to report the qualified wages paid between March 12 and March 31, 2020, for the employee retention credit.

IRS Form 941 Line 24

IRS Form 941 Line 24

  • Line 24 for 3rd and 4th Quarters

    Line 24 is now allocated to enter the deferred amount of the employee share of social security tax.

IRS Form 941 Line 24 for quarters 3 and 4

IRS Form 941 Line 24 for quarters 3 and 4

  • Line 25 for the 2nd quarter

    It is used to enter the qualified health plan expenses.

IRS Form 941 Line 25

IRS Form 941 Line 25

  • Line 25 for 3rd and 4th Quarters

    Line 25 is reserved for future use.

IRS Form 941 Line 25 for quarters 3 and 4

IRS Form 941 Line 25 for quarters 3 and 4

Line 25 is still a mystery. The IRS has simply earmarked it for future use.

What are the Changes in IRS Form 941 for 3rd Quarter 2020?

4. Complete Form 941 for the third quarter with TaxBandits

All the recent changes announced by the IRS in Form 941 for the third and fourth quarter of 2020 have been incorporated in TaxBandits. So, you can begin to e-file Form 941 at TaxBandits securely.

Besides Form 941, we also support Form 940, 943, 944, 945, 1099 series, and W-2. We offer manual upload and bulk upload features to make data upload easy. While e-filing forms like 1099-MISC or 1099-NEC, you can directly import information from QuickBooks or XERO to TaxBandits. Most importantly, we audit every form against the IRS business rules. Once forms are transmitted to the IRS, we will keep you updated with the status of your return.

5. Filing Form 941 with zero taxes through TaxBandits

We know that this sudden pandemic made many businesses halt their production for some time. Some employers have not paid their employees and eventually the taxes would be zero. Even if they have zero taxes to report, the IRS expects to file Form 941. Therefore, TaxBandits has come up with an exclusive feature where you don’t have to enter zero throughout the form. Just, choose the quarter and select “I don’t have taxes to report”. By doing so, you will be redirected to the summary page. Therefore, no need for putting 0s in each and every line. From the 3rd quarter of 2020, e-filers can easily file
Form 941 reporting zero taxes.

To learn more about reporting zero taxes on Form 941, click here.

6. Further Information

The changes that we discussed above are applicable to Form 941-PR and Form 941-SS. If you have any questions regarding Form 941, please visit our FAQs.

For any questions, please contact our support team over phone, email or live chat.
We are always here to help you.

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