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Instructions for Schedule B
(Form 941)
(Rev. December 2021)
Use with the January 2017 revision of Schedule B (Form 941)
Report of Tax Liability for Semiweekly Schedule Depositors
Department of the Treasury Internal Revenue Service
Section references are to the Internal Revenue Code unless otherwise noted.
Future Developments
For the latest information about developments related to Schedule B and its instructions, such as legislation enacted after they were published, go to IRS.gov/ Form.
What’s New
The Infrastructure Investment and Jobs Act (Infrastructure Act) amends section 3134 of the Internal Revenue Code, as enacted under the American Rescue Plan Act of 2021 (the ARP), to limit the availability of the employee retention credit in the fourth quarter of 2021 to employers that are recovery startup businesses, as defined in section 3134(c)(5).Thus, for wages paid after September 30, 2021, and before January 1, 2022, only the wages paid by recovery startup businesses can be qualified wages as described in these instructions.
If you're no longer eligible to claim the employee retention credit for the fourth quarter of 2021, but you already reduced your employment tax deposits in anticipation of claiming the employee retention credit for the fourth quarter of 2021, you must deposit the amounts initially retained in anticipation of the employee retention credit on or before the due date of the deposit for wages paid on December 31, 2021 (regardless of whether wages are actually paid on that date), based on how you choose to report the tax liability resulting from the termination of the employee retention credit on Schedule B. In order to obtain the relief under Notice 2021-65 and avoid a failure-to-deposit (FTD) penalty, employers must deposit the amounts in accordance with the due date or dates of the applicable day or days the tax liabilities resulting from the termination of the employee retention credit are reported on Schedule B. However, this relief doesn't apply to deposit payments that were untimely due to any circumstance other than the change in eligibility for the employee retention credit or to employers who reduced deposits after December 20, 2021. See Notice 2021-65, 2021-51 I.R.B. 880, available at IRS.gov/irb/ 2021-51_IRB#NOT-2021-65 for more information.
Adjusting tax liability for nonrefundable credits claimed on Form 941, lines 11a, 11b, 11c, 11d, and 11e. See Adjusting Tax Liability for Nonrefundable Credits Claimed on Form 941, Lines 11a, 11b, 11c, 11d, and 11e , later, for instructions on how to report on
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Schedule B adjustments to your tax liabilities for the qualified small business payroll tax credit for increasing research activities; the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021; the nonrefundable portion of the employee retention credit for wages paid after March 31, 2021, and before July 1, 2021; the nonrefundable portion of the employee retention credit for wages paid after June 30, 2021, and before January 1, 2022; the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021; and the nonrefundable portion of the COBRA premium assistance credit.
Reminders
Schedule B is filed with Form 941 or Form 941-SS. References to Form 941 in these instructions also apply to Form 941-SS, Employer’s QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands), unless otherwise noted. Reporting prior period adjustments. Prior period adjustments are reported on Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund, and aren’t taken into account when figuring the tax liability for the current quarter. When you file Schedule B with your Form 941, Employer’s QUARTERLY Federal Tax Return, don’t change your current quarter tax liability by adjustments reported on any Form 941-X or 944-X. Amended Schedule B. If you have been assessed an FTD penalty, you may be able to file an amended Schedule B. See Correcting Previously Reported Tax Liability , later.
General Instructions
Purpose of Schedule B
These instructions tell you about Schedule B. To determine if you’re a semiweekly schedule depositor, see section 11 of Pub. 15, Employer's Tax Guide, or section 8 of Pub. 80, Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
Federal law requires you, as an employer, to withhold certain taxes from your employees’ pay. Each time you
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pay wages, you must withhold—or take out of your employees’ pay—certain amounts for federal income tax, social security tax, and Medicare tax. You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Under the withholding system, taxes withheld from your employees are credited to your employees in payment of their tax liabilities.
Federal law also requires employers to pay any liability for the employer share of social security and Medicare taxes. This share of social security and Medicare taxes isn’t withheld from employees.
On Schedule B, list your tax liability for each day. Your tax liability is based on the dates wages were paid. Your liability includes:
- The federal income tax you withheld from your employees' pay, and
- Both the employer and employee share of social security and Medicare taxes.
Don’t use Schedule B to show federal tax deposits. The IRS gets deposit data from electronic funds transfers.
The IRS uses Schedule B to determine if you’ve deposited your federal employment tax liabilities on time. If you're a semiweekly schedule depositor and you don’t properly complete and file your Schedule B with Form 941, the IRS may propose an “averaged” FTD penalty. See Deposit Penalties in section 11 of Pub. 15 or section 8 of Pub. 80 for more information.
Who Must File?
File Schedule B if you’re a semiweekly schedule depositor. You’re a semiweekly schedule depositor if you reported more than $50,000 of employment taxes in the lookback period or accumulated a tax liability of $100, or more on any given day in the current or prior calendar year. If you became a semiweekly schedule depositor during the quarter, you must complete Schedule B for the entire quarter. See section 11 of Pub. 15 or section 8 of Pub. 80 for more information. The $100,000 tax liability threshold requiring a next-day deposit is determined before you consider any reduction of your liability for nonrefundable credits. For more information, including an example, see frequently asked question 17 at IRS.gov/ ETD.
Don’t complete Schedule B if you have a tax liability on Form 941, line 12, that is less than $2,500 during the quarter.
When Must You File?
Schedule B is filed with Form 941. Therefore, the due date of Schedule B is the same as the due date for the applicable Form 941. In some situations, Schedule B may be filed with Form 941-X. See Form 941-X , later, for details.
Don’t file Schedule B as an attachment to Form 944, Employer's ANNUAL Federal Tax Return. Instead, if you’re a semiweekly schedule depositor that is required to file a report of tax liability with Form 944, use Form 945-A, Annual Record of Federal Tax Liability.
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Specific Instructions
Completing Schedule B
Enter Your Business Information
Carefully enter your employer identification number (EIN) and name at the top of the schedule. Make sure that they exactly match the name of your business and the EIN that the IRS assigned to your business and also agree with the name and EIN shown on the attached Form 941 or Form 941-X.
Calendar Year
Enter the calendar year that applies to the quarter checked.
Check the Box for the Quarter
Under Report for this Quarter at the top of Schedule B, check the appropriate box of the quarter for which you’re filing this schedule. Make sure the quarter checked on the top of the Schedule B matches the quarter checked on your Form 941 or Form 941-X.
Enter Your Tax Liability by Month
Schedule B is divided into the 3 months that make up a quarter of a year. Each month has 31 numbered spaces that correspond to the dates of a typical month. Enter your tax liabilities in the spaces that correspond to the dates you paid wages to your employees, not the date payroll liabilities were accrued or deposits were made.
For example, if your payroll period ended on March 31, 2021, and you paid the wages for that period on April 2, 2021, you would:
- Go to Month 1 (because April is the first month of the quarter), and
- Enter your tax liability on line 2 (because line 2 represents the second day of the month). Make sure you have checked the appropriate box in Part 2 of Form 941 to show that you’re a semiweekly schedule depositor.
Example 1. Cedar Co. is a semiweekly schedule depositor that pays wages for each month on the last day of the month. On December 24, 2021, Cedar Co. also paid its employees year-end bonuses (subject to employment taxes). Cedar Co. must report employment tax liabilities on Schedule B for the fourth quarter (October, November, December) as follows.
Month Lines for dates wages were paid 1 (October) line 31 (pay day, last day of the month) 2 (November) line 30 (pay day, last day of the month) 3 (December) line 24 (bonus paid December 24, 2021) 3 (December) line 31 (pay day, last day of the month)
Example 2. Fir Co. is a semiweekly schedule depositor that pays employees every other Friday. Fir Co. accumulated a $20,000 employment tax liability on each of these pay dates: April 2, 2021; April 16, 2021; April 30, 2021; May 14, 2021; May 28, 2021; June 11, 2021; and
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carried forward and treated as a payroll tax credit for the first quarter of 2022.
Nonrefundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 (Form 941, line 11b). The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021, is limited to the employer share of social security tax on wages paid in the quarter that is remaining after that share is first reduced by any credit claimed on Form 941, line 11a, for the qualified small business payroll tax credit for increasing research activities; any credit to be claimed on Form 5884-C, line 11, for the work opportunity credit for qualified tax- exempt organizations hiring qualified veterans; and/or any credit to be claimed on Form 5884-D for the disaster credit for qualified tax-exempt organizations. In completing Schedule B, you take into account the entire quarter's nonrefundable portion of the credit for qualified sick and family leave wages against the liability for the first payroll payment of the quarter, but not below zero. Then reduce the liability for each successive payroll payment in the quarter until the nonrefundable portion of the credit is used. Any credit for qualified sick and family leave wages for leave taken before April 1, 2021, that is remaining at the end of the quarter because it exceeds the employer share of social security tax for the quarter is claimed on Form 941, line 13c, as a refundable credit. The refundable portion of the credit doesn’t reduce the liability reported on Schedule B. For more information about the credit for qualified sick and family leave wages, including the dates for which the credit may be claimed, go to IRS.gov/PLC.
Example. Maple Co. is a semiweekly schedule depositor that pays employees every other Friday. In the second quarter of 2021, Maple Co. had pay dates of April 2, April 16, April 30, May 14, May 28, June 11, and June
- Maple Co. paid qualified sick and family leave wages on April 2 and April 16 for leave taken before April 1,
- The nonrefundable portion of the credit for qualified sick and family leave wages for the quarter is $10,000. On Schedule B, Maple Co. will use the $10,000 to reduce the liability for the April 2 pay date, but not below zero. If any nonrefundable portion of the credit remains, Maple Co. applies it to the liability for the April 16 pay date, then the April 30 pay date, and so forth until the entire $10,000 is used.
Nonrefundable portion of employee retention credit for wages paid after March 31, 2021, and before July 1, 2021 (Form 941, line 11c). The nonrefundable portion of the employee retention credit is limited to the employer share of social security tax on wages paid in the quarter that is remaining after that share is first reduced by any credit claimed on Form 941, line 11a, for the qualified small business payroll tax credit for increasing research activities; any credit to be claimed on Form 5884-C, line 11, for the work opportunity credit for qualified tax- exempt organizations hiring qualified veterans; any credit to be claimed on Form 5884-D for the disaster credit for qualified tax-exempt organizations; and/or any credit claimed on Form 941, line 11b, for the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021. In completing Schedule B, you take into account the entire quarter's
nonrefundable portion of the employee retention credit against the liability for the first payroll payment of the quarter, but not below zero. Then reduce the liability for each successive payroll payment in the quarter until the nonrefundable portion of the credit is used. Any employee retention credit that is remaining at the end of the quarter because it exceeds the employer share of social security tax for the quarter is claimed on Form 941, line 13d, as a refundable credit. The refundable portion of the credit doesn’t reduce the liability reported on Schedule B. For more information about the employee retention credit, including the dates for which the credit may be claimed, go to IRS.gov/ERC. Example. Maple Co. is a semiweekly schedule depositor that pays employees every other Friday. In the second quarter of 2021, Maple Co. had pay dates of April 2, April 16, April 30, May 14, May 28, June 11, and June
- Maple Co. paid qualified wages for the employee retention credit on May 14 and May 28. The nonrefundable portion of the employee retention credit for the quarter is $10,000. On Schedule B, Maple Co. will use the $10,000 to reduce the liability for the April 2 pay date, but not below zero. If any nonrefundable portion of the credit remains, Maple Co. applies it to the liability for the April 16 pay date, then the April 30 pay date, and so forth until the entire $10,000 is used. The Infrastructure Act amends section 3134 of the Internal Revenue Code, as enacted under the ARP, to limit the availability of the employee retention credit in the fourth quarter of 2021 to employers that are recovery startup businesses, as defined in section 3134(c)(5). Thus, for wages paid after September 30, 2021, and before January 1, 2022, only the wages paid by recovery startup businesses can be qualified wages as described in these instructions.
If you're no longer eligible to claim the employee retention credit for the fourth quarter of 2021, but you already reduced your employment tax deposits in anticipation of claiming the employee retention credit for the fourth quarter of 2021, you must deposit the amounts initially retained in anticipation of the employee retention credit on or before the due date of the deposit for wages paid on December 31, 2021 (regardless of whether wages are actually paid on that date), based on how you choose to report the tax liability resulting from the termination of the employee retention credit on Schedule B. In order to obtain the relief under Notice 2021-65 and avoid an FTD penalty, employers must deposit the amounts in accordance with the due date or dates of the applicable day or days the tax liabilities resulting from the termination of the employee retention credit are reported on Schedule B. Nonrefundable portion of employee retention credit for wages paid after June 30, 2021, and before Janu- ary 1, 2022 (Form 941, line 11c). The nonrefundable portion of the employee retention credit is limited to the employer share of Medicare tax on wages paid in the quarter that is remaining after that share is first reduced by any credit claimed on Form 941, line 11d, for the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021.
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In completing Schedule B, you take into account the entire quarter's nonrefundable portion of the employee retention credit against the liability for the first payroll payment of the quarter, but not below zero. Then reduce the liability for each successive payroll payment in the quarter until the nonrefundable portion of the credit is used. Any employee retention credit that is remaining at the end of the quarter because it exceeds the employer share of Medicare tax for the quarter is claimed on Form 941, line 13d, as a refundable credit. The refundable portion of the credit doesn't reduce the liability reported on Schedule B. For more information about the employee retention credit, including the dates for which the credit may be claimed, go to IRS.gov/ERC.
Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021 (Form 941, line 11d). The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021, is limited to the employer share of Medicare tax on wages paid in the quarter. In completing Schedule B, you take into account the entire quarter's nonrefundable portion of the credit for qualified sick and family leave wages against the liability for the first payroll payment of the quarter, but not below zero. Then reduce the liability for each successive payroll payment in the quarter until the nonrefundable portion of the credit is used. Any credit for qualified sick and family leave wages that is remaining at the end of the quarter because it exceeds the employer share of Medicare tax for the quarter is claimed on Form 941, line 13e, as a refundable credit. The refundable portion of the credit doesn't reduce the liability reported on Schedule B. For more information about the credit for qualified sick and family leave wages, including the dates for which the credit may be claimed, go to IRS.gov/PLC.
Nonrefundable portion of COBRA premium assis- tance credit (Form 941, line 11e). The nonrefundable portion of the COBRA premium assistance credit is limited to the employer share of Medicare tax on wages paid in the quarter that is remaining after that share is first reduced by any credit claimed on Form 941, line 11d, for the nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021; and/or any credit claimed on Form 941, line 11c, for the nonrefundable portion of the employee retention credit for wages paid after June 30, 2021, and before January 1,
- In completing Schedule B, you take into account the entire quarter's nonrefundable portion of the COBRA premium assistance credit against the liability for the first payroll payment of the quarter, but not below zero. Then reduce the liability for each successive payroll payment in the quarter until the nonrefundable portion of the credit is used. Any credit for COBRA premium assistance that is remaining at the end of the quarter because it exceeds the employer share of Medicare tax for the quarter is claimed on Form 941, line 13f, as a refundable credit. The refundable portion of the credit doesn't reduce the liability reported on Schedule B.
You may reduce your deposits by the amount of the nonrefundable and refundable portions of the credit for qualified sick and family leave wages,
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the nonrefundable and refundable portions of the employee retention credit, and the nonrefundable and refundable portions of the COBRA premium assistance credit. For more information on reducing deposits, see Notice 2020-22, 2020-17 I.R.B. 664, available at IRS.gov/irb/2020-17_IRB#NOT-2020-22; Notice 2021-24, 2021-18 I.R.B. 1122, available at IRS.gov/irb/ 2021-18_IRB#NOT-2021-24; and Notice 2021-65.
Correcting Previously Reported Tax Liability
Semiweekly schedule depositors. If you’ve been assessed an FTD penalty for a quarter and you made an error on Schedule B and the correction won’t change the total liability for the quarter you reported on Schedule B, you may be able to reduce your penalty by filing an amended Schedule B. Example. You reported a liability of $3,000 on day 1 of month 1. However, the liability was actually for month 3. Prepare an amended Schedule B showing the $3, liability on day 1 of month 3. Also, you must enter the liabilities previously reported for the quarter that didn’t change. Write “Amended” at the top of Schedule B. The IRS will refigure the penalty and notify you of any change in the penalty. Monthly schedule depositors. You can file a Schedule B if you have been assessed an FTD penalty for a quarter and you made an error on the monthly tax liability section of Form 941. When completing Schedule B for this situation, only enter the monthly totals. The daily entries aren’t required.
Where to file. File your amended Schedule B, or, for monthly schedule depositors, your original Schedule B at the address provided in the penalty notice you received. If you're filing an amended Schedule B, you don’t have to submit your original Schedule B.
Form 941-X
You may need to file an amended Schedule B with Form 941-X to avoid or reduce an FTD penalty. Tax decrease. If you’re filing Form 941-X for a quarter, you can file an amended Schedule B with Form 941-X if both of the following apply.
- You have a tax decrease.
- You were assessed an FTD penalty.
File your amended Schedule B with Form 941-X. The total liability for the quarter reported on your amended Schedule B must equal the corrected amount of tax reported on Form 941-X. If your penalty is decreased, the IRS will include the penalty decrease with your tax decrease. Tax increase—Form 941-X filed timely. If you’re filing a timely Form 941-X showing a tax increase, don’t file an amended Schedule B, unless you were assessed an FTD penalty caused by an incorrect, incomplete, or missing Schedule B. If you’re filing an amended Schedule B, don’t include the tax increase reported on Form 941-X. Tax increase—Form 941-X filed late. If you owe tax and are filing a late Form 941-X, that is, after the due date of the return for the return period in which you discovered
Instructions for Schedule B (Form 941) (Rev. 12-2021) (^) -5-
