The deadline to file Form 941, Employer’s Quarterly Federal Tax Return, is creeping up on us! The deadline to file this form for the third quarter is November 2, 2020, that’s just over two weeks away.
If the prospect of filing your Form 941 this quarter seems scarier than an all-day horror movie marathon, just remember that the IRS created Worksheet 1 to help you!
Just think of it this way, if the IRS Form 941 is Freddy Krueger, then Worksheet 1 is that cold splash of water that will wake you up from the nightmare!
What is Worksheet 1?
Don’t worry, you don’t have to attach Worksheet 1 to IRS Form 941 when you submit it to the IRS. This is just a helpful tool that the IRS created to help you calculate the refundable and nonrefundable portion of tax credits.
Why is Worksheet 1 important?
Due to COVID-19, there are many changes to the Form 941. These are largely because of the tax relief for businesses created by the CARES Act. This allows you to claim tax credits for sick and family leave wages as well as the employee retention credit.
To prevent employers from struggling to calculate their refundable and non-refundable tax credits, Worksheet 1 was created. There are three sections of the 941 worksheet 1, the first refers to the reduction of the employer’s share of social security tax for the quarter. The second portion of the form refers to credits for sick and family leave wages, and the third section helps employers figure out the employee retention credit.
Do I need to complete all 3 sections?
While there are three sections of the form, not every employer will need to fill out the entire worksheet. You only need to complete the sections that apply to you. Here is an easy guide to determining which steps of the form you should follow.
Step 1, Step 2, and Step 3 of the worksheet should be completed by employers who have paid sick and family leave wages and qualified wages under the employee retention credit.
Step 1 and Step 2 should be completed by employers who have paid sick and family leave wages, but have not paid qualified wages under the employee retention credit.
Step 1 and Step 3 should be completed by employers who have paid qualified wages under the employee retention credit, but they have not paid sick and family leave wages.
Need some help getting started?
We know that much like the new data fields on Form 941, Worksheet 1 can be intimidating initially. Although once you get the hang of it, you will find that it is actually very helpful in calculating your refundable and nonrefundable credits.
Did you know that when you e-file Form 941 with TaxBandits, Worksheet 1 is built into the filing flow, this makes the calculation even easier for you!
Check out this video to see how simple the filing process is!