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Everything You Need To Know About Form 941 Schedule B

Here’s a simple tax guide to help you understand Form 941 Schedule B. Explore instructions, filing requirements, and tips.

Employers are required to withhold a certain amount from their employee’s pay. Be it wages, salaries, bonuses, tips, and other variables. The IRS requires the employer to withhold a small percentage of the employee’s pay as federal income tax, social security tax, and Medicare tax. 

These taxes accumulate over every tax year and allow the IRS to understand the employment tax information from you (the employer) and the income information of your employees. 

This, in return, helps the IRS credit the amount to employees in payment of the tax liabilities. This is the overall gist of the federal income tax withholding regime, for which an IRS Form 941 Schedule B is used. 

However, there is more to Form 941 Schedule B than just this. And we will discuss these particulars in detail as follows. 

Contents Of The Blog

What Is Schedule B (Form 941)?

Form 941 is an information form in the payroll form series which deals with employee pay reports, such as salaries, wages, tips, and taxes. Schedule B specifically deals with reporting federal income tax, social security tax, and Medicare tax withheld from the employee’s pay. 

The federal laws require all employers to file Schedule B (Form 941) if they’re a semi-weekly schedule depositor.

You are a semi-weekly schedule depositor if:

  • You report more than $50,000 employment taxes in the lookback period 
  • You have an accumulated tax liability of $100,000 or more on any given day in the current or prior calendar year.

Why Should Employers File Form 941 Schedule B?

Form 941 Schedule B is used by the IRS to check if employers have deposited their employment tax liabilities on time. If you’re a semi-weekly schedule depositor and you miss or delay your deposits, the IRS can and will assess you with an average Failure to Deposit (FTD) penalty.

How To Report With Schedule B (Form 941)?

Form 941 Schedule B
Form 941 Schedule B

Filling out Schedule B (Form 941) is relatively easier than you might think. Your business information, deposit claims, and specific calendar dates are all you need to fill out Schedule B (Form 941). We have curated a simple 3-step guide to help you furnish the required information in an easier manner. 

Let’s take a look. 

  • Step 1: Business/Legal Information 

This is where you will need to furnish the business/entity name and the EIN in the form. Ensure that the information you’re entering here is accurate and in accordance with the IRS records (as assigned by the IRS).

  • Step 2: Quarter & Calendar Year 

Look at the table below to gain a fair understanding of the quarter you’re reporting for. 

Quarter IncludesQuarter Ends
Jan, Feb, MarMar 31
Apr, May, JuneJun 30
July, Aug, SeptSep 30
Oct, Nov, DecDec 31

Use the above table to report the quarter for which you’re reporting and enter the calendar year. For example, if you’re reporting for the third quarter of 2021 select the “July, Aug, Sept” box and enter 2021 in the ‘Calendar Year’ box. 

  • Step 3: Enter Tax Liability By Month 

Take a look at Schedule B Form 941 below. 

Form 941 - Tax Liability By Month

As you can see, the quarter is broken down into 3 months and each month is represented with the typical 31 day-period. The ‘Month 1’ box represents the first month of the quarter, the Month 2 box represents the second month of the quarter, and so on. You can report the tax liabilities in accordance with the date on which you paid the wages. 

For example, if you have paid your employees a total of $1500 as wages on the 2nd of April, 2021, then you are required to report the date of payment as 2nd April. But you don’t have to enter the actual date, just enter the amount you paid on the date in the corresponding boxes.

 In this example, 2nd April is the second day of the first month in the 2nd quarter (April, May, June). So, you will enter the amount in Box 2 of Month 1. Note: It is important to understand that you need to enter the date on which the wages were paid, not the date on which payroll liabilities were accrued or deposits were made.

When Is Form 941 Schedule B Due?

Schedule B must be attached with Form 941. So, the due date that applies to Form 941 will also apply to Schedule B. The following table will help you understand the quarterly due dates for Schedule B (Form 941) in accordance with the quarters. 

Quarterly IncludesQuarter EndsDue Dates
Jan, Feb, MarMar 31May 2, 2021
Apr, May, JuneJun 30Aug 1, 2021
July, Aug, SeptSep 30Nov 1, 2021
Oct, Nov, DecDec 31Jan 31, 2022

Penalties For Not Filing Schedule B (Form 941)

While there is no approximate figure on the penalties levied for non-filing of Schedule B (Form 941) alone, the IRS will assess the penalty by taking into consideration the total tax liability you reported on Line 12 of IRS Form 941 for the tax period. The failure to file penalty may also apply in this scenario and the IRS specifies that the penalty for failure to file is usually higher than the penalty for incorrect reports or delayed filing.  

Changes & Updates To Form 941 Schedule B For 2021 

IRS Form 941 is used to report employee pay and federal tax withholdings from the employee pay. Earlier in 2021, the IRS introduced [1] [2] the following, intending to adjust the tax liability for non-refundable credits claimed in the following lines of Form 941. 

  • Qualified small business payroll tax credit for increasing research activities
  • Non refundable portion of credit for qualified sick and family leave wages for leave before
    April 1, 2021
  • Non Refundable portion of employee retention credit
  • Non Refundable portion of credit for qualified sick and family leave wages for leave after
    March 31, 2021
  • Non Refundable portion of COBRA premium assistance credit

Find more updates here

eFile Schedule B With Form 941 Through Tax1099 Conveniently 

Prepare and file your payroll forms with Tax1099, an IRS-authorized digital tax compliance enabler trusted by 100,000+ businesses. 

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Tax1099 enables businesses to organize, prepare, validate, schedule, and eFile their IRS forms securely through its sleek e-transmission platform. 

Businesses can import their payroll data with the available integrations, and Tax1099 will populate the forms to reduce manual data entry efforts. 

Your teams can further validate the EINs/legal name combination against real-time identity check tools, such as TIN Matching, Tax-exempt Org check, USPS Address validation, and other KYC & KYB API solutions to accelerate reporting accuracy. This is especially useful if you’re a licensed CPA preparing on behalf of your clients. 

Simplify your approach to payroll tax reporting with Tax1099 – the smarter way to do taxes. Get Started Now

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