Processing 941 Q2 2020

The following significant changes have been made to Form 941 to allow for the reporting of new employment tax credits and other tax relief related to COVID-19.

• The new credit for qualified sick and family leave wages is reported on line 11b and, if applicable, line 13c. The employee share of social security tax on qualified sick and family leave wages is reported on lines 5a and 5a(ii). Qualified sick and family leave wages aren’t subject to the employer's share of social security tax. Qualified health plan expenses allocable to sick and family leave wages are reported on lines 19 and 20. See the instructions for line 11b for information about the new credit for qualified sick and family leave wages.

• The new employee retention credit is reported on line 11c and, if applicable, line 13d. Qualified wages (excluding qualified health plan expenses) for the employee retention credit are reported on line 21. Qualified health plan expenses allocable to the qualified wages for the employee retention credit are reported on line 22. For the second quarter Form 941 only, qualified wages (excluding qualified health plan expenses) for the employee retention credit and qualified health plan expenses allocable to the qualified wages for the period from March 13, 2020, to March 31, 2020, are reported on lines 24 and 25, respectively. See the instructions for line 11c for information about the new employee retention credit.

• Employers can defer the deposit and payment of the employer share of social security tax otherwise due during the calendar quarter. The amount of deferral is reported on line 13b. See the instructions for line 13b for more information.

• Employers that requested an advance of the sick and family leave credit and/or the employee retention credit would have filed a Form 7200, Advance Payment of Employer Credits Due to COVID-19, during the quarter. The amount of all advances received from Forms 7200 filed during the quarter is reported on line 13f. See the instructions for line 13f for more information.

• The credit for qualified sick and family leave wages (reported on lines 11b and 13c) and the employee retention credit (reported on lines 11c and 13d) are figured on Worksheet 1.

Information about the credits on the Q2 941 can be found with the following links.

Tax credits for Family and Sick leave
https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs

Employee Retention:
https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Deferral of tax deposits:
https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020

Forms listed as additional on the 941:

Form 8974 from Line 11a:
https://www.irs.gov/forms-pubs/about-form-8974

Form 7200from line 13f:
https://www.irs.gov/forms-pubs/about-form-7200

Form 5884-C from line 1f of the worksheet:
https://www.irs.gov/forms-pubs/about-form-5884-c

Related Pages:

941 Form Printing

Learn which page printing format is accepted by IRS.

Attaching the Schedule B

Learn when and how you attach the 941 Schedule B

941 Form Payment Information

Learn about 941 payment being made at the same time as the 941 Form.

Reverting Back to an Old 941 Form Version

Read more if the software allows you to use old forms.

Fractions of Cents

Learn about fraction of cents on the 941 and how to calculate it.