Form 941 Explained: What Businesses Need to Know for the 2021 Tax Year

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This month, businesses are preparing to meet their first-quarter Form 941 deadline for 2021. Form 941 is due April 30, 2021. As a result of COVID-19 tax relief measures, Form 941 went through a series of changes in 2020 and has just been updated again for the first quarter of 2021.

With all the recent revisions, it is important for employers to get familiar with the latest IRS changes for 2021. Here is what you need to know for a safe and smooth Form 941 deadline.

What is Form 941?

Employers use Form 941, the Employer’s Quarterly Federal Tax Return, to report the amounts withheld from their employees’ paychecks for income, Social Security, and Medicare taxes. This tax form is due every quarter.

Who Needs to File Form 941?

Form 941 is a requirement for almost all businesses. Employers with one or more employees whose wages are subject to withholdings will need to report those on Form 941 every quarter.

Seasonal employers only need to file Form 941 for the quarters in which they are paying their employees. For example, an amusement park that only operates during the summer will not need to file Form 941 for quarters in which they are not operational.

There are a few categories of employers that do not fall under the Form 941 filing requirements. Employers with household or farming employees will have other IRS requirements and do not need to file Form 941.

What are the Form 941 Changes for 2021?

After a whole series of IRS updates over the last few quarters, Form 941 has been updated one more time for 2021. The most recent changes involve the end of the deferral period for social security taxes.

In August 2020, a Presidential Memorandum announced a decision allowing employers to defer employee portions of Social Security Taxes between  September 1, 2020 and December 31, 2020.

Now that this deferral period is over, the IRS has revised Form 941 to no longer support deferral decisions for the first quarter of 2021.

There are a few changes employers will run into when they file Form 941 for their first quarter. It can be helpful to know exactly what to expect to avoid confusion during the filing process. Here is a closer look at the line-by-line Form 941 changes for 2021.

Line 13b was previously for reporting deferred amounts of Social Security taxes. This option ended in December 2020. Now Line 13b is reserved for future use. The IRS may bring it back for another purpose at some point, but for now, filers can skip it.

Line 24 was for reporting the employee portion of the deferred amount reported on Line 13b. Now, this line is reserved for future use.

Updated Schedule B and the New Form 941 Worksheet 1

Along with Form 941 updates, Schedule B has also been updated to reflect the end of the deferral period. Not all businesses are required to file Schedule B, but semiweekly tax depositors use this schedule to report employment taxes over $50,000 or liabilities over $100,000 for current or past tax years. The amounts reported on Schedule B should be equal to Line 12 on Form 941.

For the 2021 first quarter, the IRS has also released a new Form 941 Worksheet 1. This worksheet will help employers calculate refundable and nonrefundable portions of qualified sick, family leave, and employee retention credits this quarter.

Just like Form 941, there are a series of changes on the new Worksheet 1. For example, last year, employee retention credit was 50% of the wages paid to employees while this year that percentage is 70%. Line 3d has been updated to reflect this change.

In other Form 941 news, the IRS is giving year-round employers who did not pay employees during the 2021 first quarter the option to report zero taxes on Form 941.

Form 941 Deadlines for 2021

This month, employers are preparing to meet the April 30, 2021 first-quarter Form 941 deadline. This due date marks the first of the quarterly deadlines for 2021. Here are the due dates for the rest of the year:

  • 1st Quarter Form 941 Deadline: April 30, 2021
  • 2nd Quarter Form 941 Deadline: August 2, 2021
  • 3rd Quarter Form 941 Deadline: November 1, 2021
  • 4th Quarter Form 941 Deadline: January 31, 2022

Deadlines that fall on holidays or weekends are postponed to the next business day.

How to File Form 941 for 2021

As businesses adjust to IRS changes and prepare for their Form 941 deadline, it is important to decide on a filing method. E-filing is the IRS recommendation for meeting the Form 941 deadline.

Working with an IRS-authorized e-file provider is a great way to avoid penalties and make deadlines less stressful. E-filing solutions like ExpressEfile make Form 941 filing easy for small businesses. Employers simply enter their business’s information, resolve any mistakes, and transmit their returns directly to the IRS.

Remember to file the most up-to-date version of Form 941 to keep your business IRS-compliant this year!

Gabrielle Girard | Marketing

Gabrielle Girard is a content writer for ExpressEfile, a SPAN Enterprises product supporting Form 941, W-2, 1099, and 2290 for the lowest price in the industry. Employers can visit ExpressEfile.com to meet their IRS requirements easily and get all the support they need.

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