Changes in Form 941 for 3rd and
4th Quarter 2020
Updated on September 15 - 10:30 AM by Admin, ExpressEfile
The IRS is revising Form 941 for quarters 3 and 4. A draft version of Form 941 has been released to give filers a heads-up of what's coming. The IRS is yet to finalize the form, and employers can start filing Form 941 once it’s finalized.
Form 941 was revised for quarter 2, 2020, to accommodate the reporting of refundable employment tax credits, advance payment of employment tax credits, and deferral of employment taxes.
In this article, we cover the following topics:
1. Form 941 - Things to Report
Form 941, Employer’s Quarterly Federal Tax Return, is filed by employers every quarter to report the following to the IRS:
- Wages paid during the quarter
- Tips reported by employees
- Federal income tax withheld from employees
- Employee and employer share of FICA taxes (social security and Medicare)
- Additional Medicare taxes withheld from employees
- Adjustments to social security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance for the quarter
- Employer share of deferred social security tax
- Qualified small business payroll tax credit for increasing research activities
- Credit for qualified sick and family leave wages.
- Employee retention credit
The deadline to file IRS Form 941 is the last day of the following month of the quarter. For Quarter 3, the deadline is November 02, 2020, as October 31 falls on a Saturday.
2. Changes in Payroll Tax Deferment
The Presidential Memorandum on Deferring Payroll Tax Obligations has been issued on August 08, 2020, to tackle the COVID-19 disaster. This memorandum was released directing the Department of Treasury to issue guidance allowing employers to defer the employee portion of social security taxes.
On August 28, 2020, the IRS published guidance under Notice 2020-65. The Notice states that employers can defer the 6.2% withholding of employee social security taxes for the wages paid between September 1 and December 31, 2020. It’s not mandatory to defer the employee portion of social security taxes. Employers who elect to defer must pay the tax by April 30, 2021.
3. Form 941 Quarter 3 and 4 Changes - What to Expect?
Since the employers can elect to defer the employee portion of social security taxes for the wages paid between Sep. 1 and Dec. 31, 2020, the IRS has released a draft version of Form 941 for Quarter 3 and 4, accommodating the changes. There will be changes in four lines, i.e., Lines 1, 13b, 24, and 25.
Here are the changes in Form 941 for Quarters 3 and 4 (Draft):
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Line 1
This shows that this revised form can only be used for Quarters 3 and 4
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Line 13 b
This line is to be used for reporting both the employer and employee share of deferred social security tax.
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Line 24
This line is to be used for reporting the employee share of deferred social security tax.
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Line 25
This line is only reserved for future use. There’s no need to report anything in this line.
E-file Form 941 With 3rd Quarter Changes
Employers can e-file Form 941 with quarter 3 changes easily with ExpressEfile by following a few simple steps. Just enter the required information, review the form, and transmit it directly to the IRS. The whole process takes only a few minutes.