Calculating the Employee Retention Credit for the Remainder of 2021

Make sure you calculate the ERC using Worksheet 4 this quarter!

It’s that time again, time to file your Form 941 for the upcoming quarter. While there are not any major changes to Form 941 this quarter, there is one notable change that employers need to know about. This applies to the employee retention credit.

When it comes to calculating the refundable and non-refundable portions of the employee retention credit (ERC), employers will need to use a different Worksheet for the upcoming third quarter and the fourth quarter of 2021. 

Employers no longer need 941 Worksheet 2

That’s right, Worksheet 2 is so last quarter! This quarter employers that have paid their employees wages that qualify for the ERC should complete Worksheet 4 instead. 

Worksheet 4 follows the same format as Worksheet 2, however, it is designed to calculate the ERC for qualified wages paid after June 30, 2021. 

It is important that employers use Worksheet 4 this quarter and next, otherwise, they will end up with incorrect amounts on certain lines of Form 941. 

How to complete 941 Worksheet 4

It is important to note that employers who are claiming a credit for sick and family leave wages for the third quarter will need to complete Worksheet 3 before beginning this worksheet. This is because this will affect how you complete Worksheet 4. 

For example, employers who have completed Worksheet 3 are able to enter the amount from Worksheet 3, step 1, line f on line 1a of Worksheet 4, then they can skip the rest and continue to step 2. 

Step 1 of Worksheet 4 helps employers determine their share of Medicare tax. Then, step 2 helps them figure out the employee retention credits 

The most important lines of Worksheet 4 are: 

  • Line 2h: Non Refundable portion of employee retention credit
  • Line 2i: Refundable portion of employee retention credit.

Both of these amounts must be entered on your Form 941. Line 2h is entered on part 1, line 11c of Form 941 and line 2i should be entered on part 1, line 13d of Form 941. 

Form 941 Deadlines

There are two more 941 deadlines remaining for 2021. Now that the third quarter has ended, the 941 filing deadline is approaching in just a few weeks!

Third Quarter of 2021- November 1, 2021

Fourth Quater of 2021- January 31, 2022

Simplify your 941 Filing with TaxBandits

For many employers, the addition of the Form 941 worksheets has been stressful. There are so many more manual calculations required on 941 than there have been in the past! One of the best ways to combat mathematical errors on Form 941 and ensure that you complete the correct worksheets is by e-filing with TaxBandits. 

We update our e-filing process every quarter to ensure that we include all the latest updates employers need. We also design our process to be easy-to-follow and efficient.

TaxBandits has the worksheets you need built-in, so there is no need to worry about which worksheet to complete or when in the filing process you should complete it. 

Not to mention our automatic calculations and built-in error checks help you ensure the accuracy of your forms! Get started today and meet your third-quarter deadline!

To learn more about the TaxBandits Form 941 e-filing process for Q3, check out this video:

Add a Comment

Your email address will not be published. Required fields are marked *