The IRS has released an updated Form 941 for the second quarter of 2021! On May 25, 2021, the IRS put out a draft, warning employers about changes prompted by the American Rescue Plan Act of 2021 (ARP). Now, the final form is out, and employers can start filing Form 941 for their second quarter.
The IRS has updated 23 lines on Form 941 and released 4 new worksheets for the second quarter. Here is what you need to know about new COVID-19 tax credits and Form 941 changes.
The American Rescue Plan Act of 2021 (ARP) Prompts Form 941 Update
The American Rescue Plan Act of 2021 (ARP) introduced some new COVID-19 tax credits and modified others. Qualified sick and family leave wages are now optional and have been extended to cover COVID-19 vaccination, testing, and recovery. Employee retention credit covers up to 70% of wages, with a $7,000 maximum. The ARP also rolled out COBRA premium assistance, a new tax credit that allows employers to recover premiums for eligible individuals.
What Does This Mean for Form 941 for the 2nd Quarter?
Since the ARP has expanded COVID-19 relief, the IRS is changing how employers calculate tax credits. The four new worksheets for 2021 and the updated Worksheet 1 help employers calculate refundable and non refundable portions of sick and family leave wages, employee retention credit, and COBRA premium assistance.
The IRS has also added lines to Form 941 for COBRA premium assistance. Other lines have been revised and reordered to reflect changes to the existing COVID-19 tax credits and new calculation methods for the 2nd Quarter of 2021. Visit this blog for more on the ARP.
New Lines on Form 941 for Quarter 2, 2021
Line 11e
Enter the non refundable portion of COBRA premium assistance that you provided for the quarter. These credits can be calculated using Worksheet 5.
Line 11f
Report the number of individuals who were provided COBRA premium assistance for the quarter.
Line 11g
To report total nonrefundable credits, add together lines 11a, 11b, 11c, 11d, and 11e, and enter the total on line 11g.
Line 13f
Enter the refundable portion of COBRA premium assistance credit from Worksheet 1.
Line 24
Report qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2021.
Line 25
Enter collectively bargained defined benefit pension plan contributions and collectively bargained apprenticeship program contributions allocable to qualified sick leave wages for leave taken after March 31, 2021.
Line 26
Enter qualified family leave wages paid to your employees for leave taken after March 31, 2021.
Line 27
Provide your qualified health plan expenses allocable to qualified family leave wages.
Line 28
Use this line to report on the collectively bargained defined benefit pension plan contributions and collectively bargained apprenticeship program contributions allocable to qualified family leave wages for leave taken after March 31, 2021
Updated Lines on Form 941
Line 5a, 5a(i) and 5a(ii)
Report the total wages, including qualified sick and family leave wages, paid to your employees after March 31, 2020. Also report qualified taxable sick and family leave wages for leave taken before April 1, 2021.
Line 11b
Enter the non refundable portion of qualified sick and family leave wages for leave taken before April 1, 2021. You can calculate these credits on Worksheet 1.
Line 11d
Enter the non refundable portion of credits for qualified sick and family leave wages for leave taken before March 31, 2021. These credits can be calculated using Worksheet 3.
Line 13c
To report on the refundable portion of credits for qualified sick and family leave wages for leave taken before April 1, 2021, enter the amount from Worksheet 1.
Line 13e
Enter the refundable portion of credits for qualified sick and family leave wages for leave taken after March 31, 2021 from Worksheet 3.
Line 13g
To report the total deposits and refundable credits, add lines 13a, 13c, 13d, 13e, and 13f and enter the total on line 13g
Line 13h
Enter the total advances that you received by filing Form 7200 for the quarter.
Line 13i
To report total deposits and refundable credits, minus advances, subtract line 13h from line 13g and enter the result on line 13i.
Line 14
To report your balance due, if line 12 is more than line 13i, enter the difference on line 14.
Line 15
This line calculates overpayment. If line 13i is more than line 12, subtract and enter the difference on line 15.
Line 18b
Check the box on this line if your business is eligible for employee retention credit only because your business is a recovery startup business.
Line 19
Enter your qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021.
Line 20
Report your qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021.
Line 23
Enter any qualified sick leave wages you paid your employees for leave taken after March 31, 2021.
E-file Form 941 for the 2nd Quarter of 2021 in minutes
Employers need to file Form 941 by August 2, 2021. There are a lot of IRS changes to adjust to for the second quarter deadline, so be sure to give yourself plenty of time to file.
ExpressEfile is proud to support the most up-to-date version of Form 941. Users get access to U.S.-based email support, instant notifications, and error checks.
E-file Form 941 today and keep your business IRS compliant for the second quarter of 2021!
