E-File Form 941 Schedule R

The March 2024 revision of Schedule R introduced several notable changes and reverted to a previous format used in March 2022. Here are the key points explained:

Fundamental Changes in the March Q1 2024 Revision of Schedule R are

• Reverted Format: The Schedule R format has returned to the layout used in the March 2022 revision in which certain columns are now "Reserved for future use" once again, indicating they are not required to be filled out. The following columns include:

• Column m- Form 941, line 11d-Nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021
• Column s- Form 941, line 20-Qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021
• Column t-Form 941, line 23-Qualified sick leave wages for leave taken after March 31, 2021, and before October 1, 2021
• Column v- Form 941, line 25- Amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 23.

The Schedule R March 2024 revision can be used for quarters starting after December 31, 2023, while the previous version of Schedule R can be used for quarters starting before December 31, 2023.

• When these revisions are applicable:

• The Schedule R March 2024 revision should be used for quarters starting after December 31, 2023.
• Exceptionally, it might be used for filing Form 941-X (Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund) for quarters before January 1, 2024. An example is if a client is eligible for the COBRA premium assistance credit after the first quarter of 2022.

• Calendar Year Field: The calendar year field on Schedule R is no longer filled in automatically. This means users now have to enter the year themselves.
• New Checkbox: A new checkbox has been added to indicate whether Schedule R is attached to Form 941 (Employer's QUARTERLY Federal Tax Return) or Form 941-X (Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund). This helps clarify the context in which Schedule R is being used.
• Column Usage: Columns f, l, n, o, p, u, w, x, and y on Schedule R are required only when the schedule is attached to Form 941-X (Correction form or ‘Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund’). This means you should only fill out these columns if you are using Schedule R to correct a previously filed Form 941. It is essential to understand this distinction to ensure you complete the form correctly and comply with IRS regulations. If Schedule R is not being used with Form 941-X, these columns should be left blank.

Note: Form 941 for 2024 no longer includes specific lines mentioned above for claiming qualified sick and family leave wages or COVID-19-related credits. As a result, employers will need to be aware of these changes when preparing their tax filings.

• Expected Future Use: The IRS expects that this revised Schedule R and its instructions will be used for the second, third, and fourth quarters of 2024 and potentially for a more extended period.

CPEO's and Section 3504 reporting agents are required to attach Schedule R (Form 941) to the aggregate Form 941. Schedule R simplifies the aggregate reporting process by allocating aggregate wages reported on Form 941 to each of their clients.

Generally, CPEO's are required by the IRS to file their Schedule R electronically and can file the returns listed on Form 8973. Also, Section 3504 Agents can file the returns listed on their Form 2678 appointment.

Aggregate filers can use their own EIN to file a single Form 941 for all their clients with Schedule R along with their respective wage and tax liability information for the tax period.

Form 941 Schedule R must be filed by Agents approved by the IRS, under Section 3504, CPEOs, and Other third-party payers such as non-certified PEOs.

Certified Professional Employer Organization (CPEO):

• For all the clients, the aggregate returns filed and Tax paid is under the EIN of CPEOs
• CPEO is solely responsible for timely filing and deposit of taxes withheld.

Section 3504 Agent:

• For all the clients, the aggregate returns filed and Tax paid is under the EIN of Section 3504 Agent
• Both the Employer and 3504 Agent are liable for timely filing and deposit of taxes withheld.
• To request approval to act as an agent for an employer under section 3504, the agent must file Form 2678 with the IRS.

Other third-party payers (Non-Certified PEOs):

• A Professional Employer Organization (PEO) is a type of third party payer who is responsible for filing and tax payments of the employer.

You must follow a specific process to amend your Schedule R(Form 941). Here’s a step-by-step explanation.

Steps to Correct Schedule R(Form 941)

• Complete Form 941-X: File Form 941-X, “Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund,” to correct errors on a previously filed Form 941. Fill out Form 941-X with the corrected information. On this form, you'll indicate the specific corrections needed.
• Attach Corrected Schedule R: Attach the corrected Schedule R to Form 941-X. Ensure that the revised Schedule R reflects accurate information. In schedule R (Form 941), check the box for 941-X, and fill in the Client EIN details followed by the lines corresponding to Form 941-X.
  

  Columns f, l, n, o, p, u, w, x, and y on Schedule R are required only when Form 941-X is attached to it.

• Transmit to the IRS: File Form 941-X along with the corrected Schedule R to the IRS.

Use the above steps if you have missed filing for a client, are considering adding a new client, or need to correct information in a previously filed return.

Form 941 Schedule R is generally due by the last day of the month following the end of the quarter. You’re required to file Form 941 for each quarter.

• First-quarter (JAN, FEB, MAR) is due on April 30, 2025
• Second-quarter (APR, MAY, JUN) on July 31, 2025
• Third-quarter (JUL, AUG, SEP) on October 31, 2025
• Fourth-quarter (OCT, NOV, DEC) on January 31, 2026

Click here to learn more about Schedule R (Form 941) deadlines.

Generally, the CPEO is solely responsible for paying the client's employment taxes, filing returns, and making deposits and payments for the reported taxes. IRC Section 3504 Agents and their clients are both responsible for paying their employment taxes, filing returns, and making deposits and payments for the reported taxes. Click here to learn more about Form 941 penalties.