You may have heard that the IRS has released another revised draft of Form 941, Employer’s Quarterly Federal Tax Return for the 3rd quarter of 2020. Are you a Form 941-PR or Form 941-SS filer? Are you a reporting agent that is required to complete the Schedule R? Here is what you need to know.
Background on Payroll Tax Deferral
The current administration has passed a temporary tax deferment as additional aid to businesses struggling through the COVID-19 pandemic. This tax deferment is effective September 1, 2020 through December 31, 2020.
During this time employers can not only defer their share of Social Security taxes, but they are now able to defer the employees’ share of Social Security taxes.
Employers can choose whether or not they opt into this employee tax deferment. However, despite what a business organization chooses, the Form 941, Employer’s Quarterly Federal Tax Return, will need to be revised.
Expected Changes on Form 941
While we saw a complete overhaul of the Form 941 between the 1st and 2nd quarters of 2020, the new revisions for the 3rd and 4th quarter are much more subtle. These changes revolve mostly around the option to defer employees’ share of Social Security taxes.
The IRS released a draft of the revised Form 941 for the 3rd and 4th quarters of 2020 on August 28, 2020. This is not the finalized version of Form 941 that employers will file with the IRS, however, it is a helpful tool. This draft gives insight into what the final form will look like and what employers can expect.
The IRS plans to release the finalized version of this form at a later date, before the 3rd quarter deadline of 2020, November 2, 2020. Learn more about the draft in this video
We know that the Form 941 is affected, but what about the Form 941-PR and Form 941-SS? What can Schedule R filers expect? Here is what is known about these forms currently.
The Form 941-PR is a quarterly federal tax return for businesses residing in Puerto Rico. The 3rd quarter deadline of this form is November 2, 2020.
The IRS has not released a separate draft of this form for the 3rd quarter, but based upon the Form 941 and Form 941-SS, we can assume that the following changes will also be present on this form.
The Form 941-SS is a quarterly federal tax return for businesses residing in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands. The 3rd quarter deadline of this form is November 2, 2020.
The IRS also released a draft of the Form 941-SS on August 28, 2020. This form is also affected by the new guidance on Payroll Tax Deferments. The following are lines that have been added to the form or changed for the 3rd quarter.
Line 13b– Deferred amount of Social Security tax
Line 24- Deferred amount of the employee share of Social Security tax included on line 13b
Line 25- Reserved for future use.
Form 941 Schedule R
The IRS has not released any guidance on the Schedule R for the 3rd and 4th quarters, but information is expected in the near future.
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