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Form 941 Q2 2020

As many of you who deal with this form on a regular basis probably know, due to Covid 19 form 941 has been modified. Question....On Worksheet 1 Step 3 line 3a the question being asked about qualified wages is regarding the employee retention credit and cross references to form 941 Part 3 line 21. Does this refer to only qualified wages paid in Q2 or 3/13/2020 thru 6/30/2020? I assumed it was only Q2 qualified wages because on Worksheet 1 Step 3 line 3c the form requests qualified wages paid 3/13-3/31. Just want to be sure. Thank you


  • If you look at step three of the worksheet, the amount on line 3e is the sum of lines 3a, 3b, 3c. and 3d. If you include the 3/13/2020-3/31/2020 amount on line 3a as well as on line 3c, it will be double counted twice in calculating the amount of retention credit on line 3f. On that basis, for the second quarter, the qualified wages from the second quarter are reported on Form 941 part 3 line 21 while the qualified wages for 3/13/2020-3/31/2020 are reported on Form 941 part 3 line 24. Form 941 Part 3 in informational and provides certain significant numbers from Worksheet 1.

    Note that qualified retention credit wages for the quarter are included in Form 941 line 5a Taxable Social Security wages along with wages that do not qualify for any credit. The qualified retention credit wages for March (3/13 - 3/31) were included in line 5a on the first quarter 941 and are not part of the quarter 2 tax computation. Qualified sick leave wages and qualified family leave wages are reported on lines 5a(i) and 5a(ii) respectively and are not included in line 5a so that the employer share of Social Security taxes on them is not included in the tax liability computation.

    From the wage and qualified health plan expense information reported on the 941, the IRS should be able to reconcile the tax liability and tax credit amounts reported.