A Complete Guide to Filing Out Form 941 Worksheet 1 for 2021
The IRS has released a revised Form 941 for the first quarter of 2021. Worksheet 1, a part of revised form 941, has also been updated with a few minor changes. Employers filing form 941 must use the revised form for the Q1 of 2021.
This article covers everything you need to know about Worksheet 1 for 2021.
- Purpose of Form 941 Worksheet 1
- Who should complete 941 Worksheet 1
- Changes to Form 941 Worksheet 1 for 2021
- Steps to complete Worksheet 1
What is the purpose of Form 941 Worksheet 1?
The IRS introduced 941 Worksheet 1 to help businesses to calculate tax credits. To be precise, it should be used to calculate the refundable and nonrefundable shares of qualified family & sick leave and employee retention credits.
This worksheet consists of three steps to be completed based on how employers paid their employees. Below are these steps:
- Step 1 — Determine the employer share of social security tax
- Step 2 — Figure out refundable and nonrefundable portions of sick and family leave credits
- Step 3 — Figure out refundable and nonrefundable portions of the employee retention credit
Please be informed that this worksheet is optional and not required to be attached with 941.
Who should complete 941 Worksheet 1?
Employers filing 941 may use this worksheet to calculate the refundable and nonrefundable portions of the following tax credits.
- Qualified sick leave credits
- Qualified family leave credits
- Employee Retention credits
What are the changes to Form 941 worksheet 1 for 2021?
As per the recent changes in Form 941 instructions, Worksheet 1 has also been updated. Below are the changes to Worksheet 1 for the first quarter of 2021.
Changes in Step 1 of Worksheet 1
- Line 1j(i) — Enter the amount to be claimed on Form 5884-D, line 12, for this quarter.
Changes in Step 2 of Worksheet 1
- Line 2a(iii) — Qualified sick leave wages excluded from the definition of employment under section 3121(b).
- Line 2e(ii) — Enter the total qualified family leave wages. Add lines 2e and 2e(i).
- Line 2e(iii) — Qualified family leave wages excluded from the definition of employment under section 3121(b).
- Line 2h — Enter the credit for qualified family leave wages. Add lines 2e(ii), 2e(iii), 2f, and 2g.
Changes in Step 3 of Worksheet 1
- Line 3d — Retention credit. Multiply line 3c by 70% (0.70).
Above are the changes to Form 941’s Worksheet 1 for the first quarter of 2021 and other lines remain the same.
How to complete Worksheet 1?
Worksheet 1 is a straightforward form, and it is easy to complete. This worksheet has 3 sections, Step 1, Step 2, and Step 3.
Step 1: This step should be completed to calculate the employer share of social security tax.
Step 2: This step should be completed to calculate refundable and nonrefundable portions of credits for qualified sick and family leave wages.
Step 3: This step should be completed to calculate refundable and nonrefundable portions of employee retention credits.
Note: Which steps you need to complete depends on how you paid your employees during the quarter.
If you’ve paid both qualified sick and family leave wages and qualified wages for purposes of the employee retention credit for this quarter, you should complete Step 1, Step 2, and Step 3.
If you’ve paid qualified sick and family leave wages this quarter, but you didn’t pay any qualified wages for purposes of the employee retention credit for this quarter, you should complete Step 1 and Step 2.
If you’ve paid qualified wages for purposes of the employee retention credit this quarter but you didn’t pay any qualified sick and family leave wages for this quarter; you must complete Step 1 and Step 3.
When e-filing Form 941, you can efficiently complete Worksheet 1 and determine the tax credits you are eligible for. If you’re searching for an IRS-authorized e-file service provider to file 941 for the first quarter of 2021, you should try out TaxBandits.
TaxBandits also supports many other tax forms, such as the 1099 series, W-2, W-2PR, W-9, 1095-B, 1095-C, and W-4.
