What are the changes to Form 941 for the 3rd & 4th Quarters of 2020?
An Overview of Form 941
In general, employers withhold a certain portion from employees’ paycheck for the federal income tax, Social Security, and Medicare taxes. Those amounts should be reported to the IRS in a timely manner using Form 941. They should also report their portion of Social Security and Medicare taxes.
Basically, Form 941, Employer’s Quarterly Federal Tax Return, is used to report the following amounts:
- Employees’ share of income tax, Social Security, and Medicare tax.
- Employer’s share of Social Security and Medicare tax.
For each quarter, there is a standard deadline for filing 941. And, it is the last day of the month that follows the quarter’s end.
- Q1 (Jan, Feb, & Mar) — Apr 31, 2020
- Q2 (Apr, May, & Jun) — Jul 31, 2020
- Q3 (Jul, Aug, & Sep) — Nov 2, 2020
- Q4 (Oct, Nov, & Dec) — Jan 31, 2020
The Form 941 deadline for Quarter 3 of 2020 is nearing! The IRS has released the draft version of Form 941, which is said to be effective from the 3rd quarter of 2020.
Changes on Form 941 for Q3, 2020:
On August 8, 2020, the Presidential Memorandum was released on deferring the payroll tax obligations in response to the COVID-19 pandemic. The memorandum says that employers can now defer the employee’s share of Social Security tax on the compensation paid from September 1 to December 31, 2020. Although, the deferred amount should be deposited as below.
i) 50 percent of the eligible deferred amount should be paid on or before December 31, 2021, and
ii) The remaining amount should be paid on or before December 31, 2022.
To incorporate the changes described in the memorandum, the IRS has released the draft version of Form 941 for Quarter 3 of 2020. It shows the adjustments in Lines 1, 13b, 24, and 25. The final version has yet to be released.
The purpose of the draft version is only to give an insight into how the final version of Form 941 will look like. Once the IRS releases the final version, employers can begin using it to file Form 941 for the 3rd quarter.
Read on to learn more about the line by line changes stated in the draft of Form 941 for Quarters 3 and 4!
Line 1
In the existing Form 941, Line 1 is used to report the number of employees who received wages, tips, or other compensation, including Quarter 2, 3, or 4. Now, in the draft version of Form 941, Line 1 is adjusted for the pay periods, Quarter 3 and Quarter 4. It indicates that the new version could be used only for Q3 and Q4.
Existing Form 941
Draft Form 941
Line 13b
Line 13b of the existing Form 941 is used to report the deferred employer portion of the Social Security tax. The recently released draft version shows that Line 13b can be used to report the deferrals of both employer and employee portions of Social Security tax for the 3rd and 4th quarters of 2020.
The line’s title has also been changed from the Deferred amount of the employer share of social security tax to the Deferred amount of social security tax.
Existing Form 941
Draft Form 941
Line 24 and 25
In the current Form 941, lines 24 and 25 allow the employers to report qualified wages and health plan expenses made between March 13 and March 31, 2020. As per the draft released for Quarter 3, it seems that line 24 is dedicated to entering the deferred amount of the employee share of social security tax, and line 25 is reserved for future use.
Existing Form 941
Draft Form 941
The finalized version of this form should be available from the IRS sometime in the near future.
Changes on Form 941-SS and 941-PR
Form 941-SS is the Employer’s Quarterly Federal Tax Return, is used in Samoa, Guam, the U.S Virgin Islands, and the Commonwealth of the Northern Mariana Islands. A new draft of Form 941-SS is also released incorporating the changes as in the new draft of standard Form 941.
Form 941-PR is the Employer’s Quarterly Federal Tax Return used in Puerto Rico. The changes are also to be made on this form regarding the deferrals of the employee portion of the Social Security tax, but the draft has yet to be released.
Like the standard Form 941, the changes are to be made on 941 forms used by U.S territories.
Note: Instructions on correction forms of all 941 versions are expected to be released shortly.
Changes on Form 941 Schedule R
There are no specific changes to be made on Form 941 Schedule R, so the IRS has not released the draft version. However, Schedule R lines can be adjusted to the corresponding Form 941 lines. The IRS has released the draft instructions for Form 941 Schedule R.
Once the IRS finalizes Form 941, you can begin to e-file Form 941 for the third quarter of 2020 at TaxBandits. Aside from the standard Form 941, Form 941-PR and 941-SS are also available.
If you want to integrate our software to make e-filing a breeze, you can opt for TaxBandits API. Regardless of your business size, TaxBandits is the right e-filing solution.
