Now that the IRS has released the revised Form 941 for the second quarter of 2020, we have all had some time to look over the changes. There are many new additions to this form to reflect the tax relief available to employers during this quarter. To help filers complete the revised Form 941 successfully, they have also released Worksheet 1. Let’s take a deeper dive into this worksheet and its significance.
The Revised Form 941
The revised Form 941 is drastically different from the version of the Form 941 that businesses filed for the first quarter of 2020. The form has been expanded to include the tax relief set in place by the CARES Act. Employers are able to take advantage of the refundable credits for paid sick and family leave. Employers also have the opportunity to take advantage of employee retention credits.
These tax credits became available during the second quarter of 2020, therefore they must be reported to the IRS on the Form 941. Given that these changes in reporting are new to business owners, tax professionals, and the IRS itself, the IRS has provided revised instructions for filers. They have also provided filers with a worksheet to assist in calculating the COVID-19 related tax credits.
What is the purpose of Worksheet 1?
Worksheet 1 is not an official attachment to Form 941, therefore you won’t have to worry about submitting it to the IRS. This worksheet is for your records and to assist you in completing the new data fields of Form 941.
Who Will Find Worksheet 1 Helpful?
This worksheet is not mandatory, but could be very helpful for any business owner who has taken advantage of the tax credits during the second quarter of 2020. This includes:
Paid sick leave credits
Paid family leave credits
Employee retention credits
How Does Worksheet 1 work?
At first glance, worksheet 1 can look intimidating, it is important to note that not all employers will have to complete all 3 portions of the form. Let’s take a moment to break down the worksheet and take a closer look at what is required.
The end result of Step 1 will be the remaining Employer Share of Social Security. This amount can then be further used for deductions in Step 2 and Step 3.
Step 2 applies to sick leave and family leave credits. This section will assist filers in determining what amounts of wages are eligible for refundable tax credits and what amount is nonrefundable.
Step 3 refers to the employee retention credit. This section will help filers determine what portion of their employees’ wages are eligible for refundable tax credits and what wages are nonrefundable.
Does TaxBandits support Worksheet 1?
Yes! When you file your Form 941 with TaxBandits you are able to utilize Worksheet 1. Much like with your Form 941, completing Worksheet 1 electronically will help you avoid errors. If you have questions throughout your e-filing process feel free to reach out to our support team. With the second quarter deadline for Form 941 approaching on July 31, 2020 now is a great time to begin e-filing your form. Get started today!
For additional help with the Form 941 filing process, check out this video!