Employer’s Quarterly Federal Payroll Tax Form 941 has changed for COVID-19
Form 941 reports federal payroll tax withholding and employer taxes on wages paid to employees. If you pay wages subject to federal income tax withholding or social security and medicare taxes, you must file Form 941 quarterly. Recently, the Form 941 has undergone changes for COVID-19 related employment tax credits and other tax relief. The staff at Wilson Toellner CPA is sharing with you the changes you'll see when filing the Form 941.
You will notice the following changes:
All of us here at Wilson Toellner CPA hope you found this blog helpful when it understanding the changes you'll see on the Form 941. We understand that this is a lot of information to take in at once, so if you have any questions on any of this, please do not hesitate to give us a call. We can be reached at the numbers listed below. You can also follow us on our social media channels listed below to stay as up to date as possible on our latest announcements. Throughout the COVID-19 pandemic, changes are constantly being made that can affect your taxes, so it's important for you to stay as updated as possible.
You will notice the following changes:
- Include the Qualified Sick and Family Leave Wages separately on Form 941. These wages were required to be paid to employees due to the Families First Coronavirus Response Act (if applicable) and will reduce your tax by the employer share of the Social Security tax (6.2%). You will only pay tax on the employee share.
- Report the credit for Qualified Sick and Family Leave Wages. The credit on the Qualified Sick and Family Leave Wages consists of the Qualified Sick and Family Leave Wages, Qualified Health Plan expenses, and the employer share of Social Security tax (6.2%). Complete Worksheet 1 to figure the credit.
- Report the Employee Retention Credit (50% credit on up to $10,000 in wages for each employee). This refundable credit encourages businesses to keep employees on their payroll. You can get immediate access to the credit by reducing employment tax deposits you would otherwise be required to make. Note: You will not receive a refund or credit of any amount of tax already deposited or paid for the quarter. If you received the Small Business Interruption Loan (PPP), you cannot claim the retention credit. Complete Worksheet 1 to figure the credit.
- Report the amount of deferral of the employer share of social security tax, if you elect to defer the payment. An Eligible Employer is permitted to defer the deposit and payment of the employer’s share of Social Security tax (6.2%) under the CARES Act during the period beginning March 27, 2020 and ending December 31, 2020.
- Employers eligible for the Employee Retention Credit could request an advance of the credit by submitting Form 7200. If you did this, the amount of your advanced credit will be reported on Form 941 and will reduce your total deposits paid for the quarter.
- Part 3 of Form 941 is for informational purposes.
All of us here at Wilson Toellner CPA hope you found this blog helpful when it understanding the changes you'll see on the Form 941. We understand that this is a lot of information to take in at once, so if you have any questions on any of this, please do not hesitate to give us a call. We can be reached at the numbers listed below. You can also follow us on our social media channels listed below to stay as up to date as possible on our latest announcements. Throughout the COVID-19 pandemic, changes are constantly being made that can affect your taxes, so it's important for you to stay as updated as possible.
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