New Form 941 Worksheet 2
for 2021

Employee Retention Credit Calculation for 2021

New Form 941 Worksheet 2 for Q2 2021

Updated on October 04, 2021 - 10:30 AM by Admin, TaxBandits

The American Rescue Plan extended the sick and family leave credits and the employee retention credit. According to this, the IRS Revised Form 941 for Q2 2021. The employee retention credit is reported separately on its own worksheet for the second quarter, this is Worksheet 2.

The following topics are covered in this:

1. Who should file the new Form 941 Worksheet 2 for Q2 2021?

The new Form 941 Worksheet 2 for Q2 2021 should be completed by all employers that paid qualified wages for the employee retention credit after April 1, 2021. This is reported on the revised Form 941 Worksheet 1. This worksheet 2 is applicable only for the second quarter of 2021. When it comes to Worksheet 2, there are two steps. Both step 1 and step 2 should be completed.

2. Line by Line instruction of Form 941 Worksheet 2 for Q2

Step 1 of Form 941 Worksheet 2

Step 1 of Form 941 Worksheet 2

Step 1 of Form 941 Worksheet 2

This section of the worksheet should be used to determine the employer share of social security taxes minus credits.

  • Line 1a

    If you completed Worksheet 1 for the second quarter of 2021 to claim a credit for qualified sick and family leave wages for leave taken before April 1, 2021, enter the amount from Worksheet 1, Step 1, line 1l, and go to Step 2. If you’re not claiming a credit for qualified sick and family leave wages for leave taken before April 1, 2021, continue by completing lines 1b–1n below and then go to Step 2 .

  • Line 1b

    Enter the amount of social security tax from Form 941, Part 1, line 5a, column 2.

  • Line 1c

    Enter the amount of social security tax from Form 941, Part 1, line 5b, column 2.

  • Line 1d

    Add lines 1b and 1c.

  • Line 1e

    Multiply line 1d by 50% (.50).

  • Line 1f

    If you’re a third-party payer of sick pay that isn't an agent and you're claiming credits for amounts paid to your employees, enter the employer share of social security tax included on Form 941, Part 1, line 8 (enter as a positive number).

  • Line 1g

    Subtract line 1f from line 1e.

  • Line 1h

    If you received a Section 3121(q) Notice and Demand during the quarter, enter the amount of the employer share of social security tax from the notice.

  • Line 1i

    Employer share of social security tax. Add lines 1g and 1h.

  • Line 1j

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

  • Line 1k

    Enter the amount to be claimed on Form 5884-C, line 11, for this quarter.

  • Line 1l

    Enter the amount to be claimed on Form 5884-D, line 12, for this quarter.

  • Line 1m

    Total nonrefundable credits already used against the employer share of social security tax. Add lines 1j, 1k, and 1l.

  • Line 1n

    Employer share of social security tax remaining. Subtract line 1m from line 1i.

Step 2 of Form 941 Worksheet 2

Step 2 of Form 941 Worksheet 2

Step 2 of Form 941 Worksheet 2

This section of Worksheet 2 helps employers determine their share of Medicare taxes.

  • Line 2a

    Qualified wages (excluding qualified health plan expenses) for the employee retention credit (Form 941, Part 3, line 21).

  • Line 2b

    Qualified health plan expenses allocable to qualified wages for the employee retention credit (Form 941, Part 3, line 22).

  • Line 2c

    Add lines 2a and 2b.

  • Line 2d

    Retention credit. Multiply line 2c by 70% (0.70).

  • Line 2e

    Enter the amount of the employer share of social security tax from Step 1, line 1a, or, if applicable, Step 1, line 1n.

  • Line 2f

    Enter any second quarter amount of the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021, from Worksheet 1, Step 2, line 2j.

  • Line 2g

    Subtract line 2f from line 2e.

  • Line 2h

    Nonrefundable portion of employee retention credit. Enter the smaller of line 2d or line 2g. Enter this amount on Form 941, Part 1, line 11c.

  • Line 2i

    Refundable portion of employee retention credit. Subtract line 2h from line 2d and enter this amount on Form 941, Part 1, line 13d.

3. When is the deadline to file 941 Worksheet?

Worksheet 2, much like Worksheet 1 doesn’t have to be filed with the Form 941. It is for the employer’s records only and is just a tool to help calculate the sick and family leave credits for the quarter.

The following are the deadlines for Form 941 for the rest of 2021.

Quarter Reporting Period Deadline
Quarter 1 Jan, Feb, and Mar April 30, 2021
Quarter 2 Apr, May, and Jun August 02, 2021
Quarter 3 Jul, Aug, and Sep November 01, 2021
Quarter 4 Oct, Nov, and Dec January 31, 2022

Visit https://www.taxbandits.com/form-941/form-941-due-date/ to know more.

4. How to E-file 941 along with Worksheet for 2021?

When it comes to completing Worksheet 2 and the other Worksheets you may need to calculate your tax credits for Form 941, e-filing makes this easier. When paper filing you will need to determine the worksheets needed for the quarter and make all tax calculations by hand. When e-filing your Form 941 with TaxBandits, the worksheets needed for the second quarter are built into the filing process.

E-filing the Form 941 with TaxBandits is simple, just follow these steps.

  • Sign in to your TaxBandits account, or create one for free!

  • Select the tax year and quarter you want to file for.

  • Enter the form details.

  • Enter the deposit schedule and tax liabilities.

  • Review your Form 941.

  • Pay the filing fee and transmit your form to the IRS.

The IRS releases the final version of Form 941. E-file 941 with TaxBandits and make a secure and easy filing.

Success Starts with TaxBandits

The Smart Business Owners Choice