Draft Version of New Quarterly Form 941 and Instructions Takes Into Account COVID-19 Employment Tax Credits

The IRS has issued a draft version of the new 2020 Form 941 (Employer’s Quarterly Federal Tax Return). This revised 941 will be used beginning with the second quarter return (April 1 to June 30) due July 31st.

The form is being substantially revised to take into account the following employment tax credits included in the CARES Act and Families First Coronavirus Response Act (FFCRA) which are related to COVID-19 tax legislation:

  • Refundable tax credits that reimburse employers for the cost of providing paid sick and family leave wages.
  • Employee retention credit for 50% of qualified wages paid to employees during the specified period.
  • Deferral of deposit and payment of the employer’s share of Social Security taxes.

The new version of Form 941 will be three pages (currently, two pages). The instructions for the updated version are now 17 pages compared to 12 pages of instructions for the current version. The draft instructions include a worksheet (Worksheet 1) to help with the computations. Only certain steps of the worksheet will need to be completed depending on which type of qualified wages the employer paid during the quarter.

If you are taking advantage of any of these credits, we recommend that you click here to review the draft sample form dated April 29, 2020 on the IRS website.




DISCLAIMER:  The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.