941 Worksheet 1 Employee Retention Credit

To make sure the worksheet 1 will populate when opening form 941 you should claim a credit under the family first coronavirus response act ffcra.

941 worksheet 1 employee retention credit. This amount then flows to form 941 line 11c. Thus any employer who files the quarterly employment tax form to the irs under cares act and employees retention credit should use this worksheet. Form 941 worksheet 1 is designed to accompany the newly revised form 941 for the second quarter of 2020 and beyond. 1 accessing federal employment taxes including withheld taxes that are required to be deposited with the irs and 2 requesting an advance of the credit from the irs for the amount of the.

Employers enter the nonrefundable portion of the employee retention credit from worksheet 1 step 3 line 3j. For quarter 2 only the credit includes 50 of the qualified wages paid between march 13 2020 and march 31 2020. The form 941 is used to report income and social security and medicare taxes withheld by the employer from employee wages as well as the employer s share of social security and medicare tax. On line 11c enter the nonrefundable portion of the employee retention credit erc from worksheet 1 step 3 line 3h if applicable.

In anticipation of receiving the employee retention credit eligible employers can fund qualified wages by. In order to claim the new employee retention credit eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns which will be form 941 for most employers beginning with the second quarter. You will find this worksheet in the form 941 instructions. The maximum amount of qualified wages that may be taken into account with respect to each employee is 10 000 i e the maximum credit is 5 000 per employee.

These credits along with other items on form 941 serve to reduce the employer s liability on form 941 part 1. An employer would use worksheet 1 to calculate the amount of the employee retention credit for which it is eligible with respect to the reported quarter. If you paid qualified sick leave family leave and have qualified wages for the employee retention program you will fill out all three parts of this worksheet. The erc is 50 of the qualified wages you paid to your employees in the quarter.

Line 11c nonrefundable portion of employee retention credit from worksheet 1. The employer would further use the worksheet to determine the portion of the credit that is nonrefundable and this amount identified in line 3j of the worksheet would be reported in line 11c of form 941. The employee retention credit is 50 of the qualified wages paid to employees in the quarter. The credit is taken against the employer s share of social security tax but the excess is refundable under normal procedures.

The employee retention credit allows a refundable tax credit equal to 50 of qualified wages including qualified health plan expenses paid to employees by an eligible employer. For the second quarter only the credit will include 50 of the qualified wages paid between march 13 2020 and march 31 2020. For worksheet 1 there are three steps to determine the nonrefundable and refundable credits to apply to the form 941. Form 941 worksheet 1 if you are an employer who files the quarterly employment tax form to the irs you should be aware of worksheet 1.