It’s no secret that Form 941 has undergone a lot of changes the past few quarters. For the second quarter of 2021, the IRS has updated Form 941 and added 4 new worksheets to reflect new COVID-19 relief. Here is what you need to know about COVID-19 tax credits and Form 941 worksheets for 2021.
COVID-19 Tax Credits Under ARP
The American Rescue Plan Act of 2021 (2021) has expanded COVID-19 tax credits, and Form 941 is being updated to reflect those changes. Under the ARP, sick and family leave wages have been amended to include time off for vaccinations and recovery. Employee retention credit now allows employers to claim up to 70% of employee wages, up to $7,000.
The ARP also announced COBRA premium assistance. This 100% COBRA subsidy allows employers to recover premiums for eligible employees who elected COBRA coverage after reduction of hours or involuntary termination.
With all the changes to COVID-19 tax credits, the IRS has thankfully added some new schedules to help employers figure everything out.
Form 941 Worksheets for the 2nd Quarter of 2021
In addition to Revised Form 941 for the second quarter, the IRS has released 4 new Form 941 worksheets for 2021. These worksheets are used to calculate refundable and non-refundable tax credits for sick and family leave wages, employee retention credit, and COBRA premium assistance.
Worksheet 1 Changes
The IRS has updated Form 941 Worksheet 1 to allow employers to calculate credit for qualified sick and family leave wages for leave taken before April 1, 2021 and paid after April 1st.
Worksheet 2 allows employers to calculate employee retention credit for wages paid between March 31, 2021 and July 1, 2021. This worksheet will probably just be in use for the second quarter of 2021.
Employers can use Worksheet 3 to determine non-refundable and refundable portions of credits for sick and family leave wages. This worksheet is used for wages paid for leave taken after April 1, 2021.
Employers will be able to use Worksheet 4 to calculate employee retention credit for the third and fourth quarters of 2021.
Lastly, the IRS has added Form 941 Worksheet 5. Employers can use this worksheet to calculate non-refundable and refundable portions of COBRA premium assistance.
Complete Form 941 Worksheets Easily with ExpressEfile
When you e-file Form 941, it’s easy to complete all your worksheets and transmit all the correct information to the IRS. ExpressEfile is an e-file provider that offers built-in error checks and U.S.-based email support to help you navigate all the new Form 941 worksheets.
Stay ahead of IRS changes and file Form 941 for your second quarter or 2021!