941 2008-1

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people

The 941What is it and what is it for?

Season 2008

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Intuit Proprietary & Confidential

941EmployersQuarterlytax return

Clickable forms Hivearticle:

Hive KB ID 10612

Clickable forms linkfor trouble shooting:

Clickable Forms

Federal forms library:

Hive KB ID 11037
http://support.quickbooks.intuit.com/support/helpcenter/clickableforms/Default.aspxhttp://support.quickbooks.intuit.com/support/helpcenter/clickableforms/Default.aspx

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941Page 2

EmployersQuarterlytax return

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Hive KB ID 10612

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The 941 is a quarterly federal tax form filed by all employers

who have withheld wages. The 941 Form is designed to reportAdvanced Earned Income tax credit, Federal Withholding,Social Security and Medicare.

Wage Base Wage Base is the total amount of employee wages or earnings which a payroll

tax is calculated. An employees wage base can be different from his or her

total gross wages. If their is an annual wage limit has reached the SocialSecurity wage base limit of $102,000, taxes will not be taken out for the restof the year.

Tax Tracking Type The Tax Tracking Type is what QuickBooks uses to populate forms and is

chosen in the Payroll Item Setup. Each type will give you summary the effectit has on forms.

Federal Income Tax Also referred to as Federal Withholding or FIT

Medicare Also referred to as Medi or Med or MC

Social Security

Also referred to as SS or Social

The 941Definitions and Terminology

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The 941As an Employer

The Federal law requires you to withhold taxes from your employeespaychecks each time they are paid. You are responsible for withholdingthe Federal income tax, Social Security, and Medicare. These taxes willthen be credited to your employees in payment of their tax liabilities.You are also responsible for paying any liability of the employers partof social security and Medicare.

You use the 941 form to report:A. Paid wagesB. Tips any of your employees have receivedC. Federal Income Tax withheld by youD. Shares of Social Security and Medicare from both the employee and

employerE. Advance Earned Income Credit if any

We will define A - D further in the next few slides

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A through E definitions

A. Paid wagesThese are the wages any employer pays out to an employee

that is taxable by Medicare, Social Security and Federal

Income tax, such as:

* Compensation

* Reported Tips* SEC 457 Distribution

* Non-qual. Plan Distr

* Fringe Benefits

* Other Moving Expenses

* Taxable Grp Trm Life* SCorp Pd Med Premium

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A through E definition continued

B. Tips any of your employees have received.Employees who customarily receive tips are required to report

their cash tips to their employers at least monthly, if they

receive $20 or more in the month. Cash tips are tips received

directly in cash or by check, and charged tips.

You have a liability to withhold and pay Social Security and

Medicare tax on your employees' reported tips, to the extent

that wages or other employee funds are available. If the

employee does not report tips to you, it places you at risk of

possible assessment of the employers share of the Social

Security and Medicare taxes on the unreported tips.

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B. continuedIf you are a large food or beverage establishment (more than

10 employees on a typical day and food or beverages

consumed on the premises), you are required to allocate tips

if the total tips reported to you are less than 8% of gross

sales. Allocated tips are tips assignedby the company if thereis a shortfall between the required 8% of sales and actual tips

declared. Report the allocated amount on the employee's W-2

at the end of the year.

Beginning January 01, 2007, IRS is offering a three-year-pilot program, "The

Attributed Tip Income Program (ATIP), for food and beverage employers. This

reduces industry recordkeeping burdens, has simple enrollment requirementsand promotes reporting tips on Federal Income tax returns. This benefits both

the employer and employee.

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C. Federal Income Tax withheld by you.In the United States income tax system, employers are

required to withhold a portion of each employee's income and

pay it directly to the U.S. Internal Revenue Service. This

withholding acts as a prepayment of tax they will owe at the

end of the year, as well as a direct payment of certain othertaxes.

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C. continuedThe amount of a person's federal income taxwithholding depends on several factors such as:

the taxpayer's marital status

the number of children or dependents the taxpayer has

whether or not the taxpayer is an employee IRC 3401

if the taxpayer wants to claim child tax credits

if the taxpayer holds two or more jobs

if the taxpayer plans to itemize

any tax exemptions from withholding that the taxpayer wants

to claim

any additional amount the taxpayer wants to withhold

A taxpayer will get a tax refund if the withholding for the yearwas greater than the income tax actually owed

!
http://en.wikisource.org/wiki/Internal_Revenue_Code_3401http://en.wikipedia.org/wiki/Tax_creditshttp://en.wikipedia.org/wiki/Itemized_deductionhttp://en.wikipedia.org/wiki/Tax_exemptionhttp://en.wikipedia.org/wiki/Tax_refundhttp://en.wikipedia.org/wiki/Tax_refundhttp://en.wikipedia.org/wiki/Tax_exemptionhttp://en.wikipedia.org/wiki/Itemized_deductionhttp://en.wikipedia.org/wiki/Tax_creditshttp://en.wikisource.org/wiki/Internal_Revenue_Code_3401

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D. Shares of Social Security and Medicare from

both the employee and employerWhen you work for an employer, 6.2% of your wages are

withheld. Your employer deposits the withholding, along with

6.2% of their matching contribution to the government for

the social security programs. In 2008, the employee tax and

matching contribution stop after the first $102,000 of wages.

In addition if you work for an employer, 1.45% of your wages

is withheld and the employer makes a matching 1.45%

contribution to the Medicare program, making the total

withholdings at 7.65% (6.2% OASDI and 1.45% Medicare).

However, all wages are subject to the Medicare tax; there isno ceiling.

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A through E concluded

E. Advance Earned Income Credit if any.The earned income credit is a refundable credit for certain

qualified workers. It is intended to help offset some of the

increases in living expenses and social security taxes. This

credit reduces the amount of tax owed, if any, and may result

in a refund to the taxpayer. To qualify, employees areexpected to meet other specific requirements, which are

explained on Form W-5, Earned Income Credit Advance

Payment Certificate, and in more detail in Publication 596,

Earned Income Credit.!
http://www.unclefed.com/IRS-Forms/2006/p596.pdfhttp://www.unclefed.com/IRS-Forms/2006/p596.pdf

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941 Line by line defined.

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The 941Part 1

LINE #1 - Number of Employees

What this means

IRS tracks number of employees in the third month of each

quarter for the pay period including the 12th day

The customer can edit this line, it is mainly for census purposes

Do not include household and farm employees, pensioners, and

active members of the Armed forces

This is the only number on the 941 form influenced by the payperiod

Example:

If Sally Smith took an unpaid vacation during the week of the 12 th

and therefore did not receive a paycheck covering that date, theywill NOT be included in that total count.

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The 941Part 1

LINE #2 Wages, Tips, and other compensation

What this means

TOTAL paid wages for any given quarter that is taxable by eitherFederal taxes, Medicare taxes, Social Security taxes or all of them.QuickBooks totals for the quarter all the payroll items that aretaxable by any of these three taxes.

QuickBooks has the ability to set up any payroll item to be taxed andyou determine what taxes will affect it. In the case of the 941 formand what reports in line 2, it would be any payroll items or wagesearned that are taxable by SS, Medi and FIT. QB payroll items

(additions or deductions or wages) that you create have the option toassign a tax tracking type and it will state in the description if itaffects line 2. This means that not only is this item taxable by thosetaxes but QB will now reflect or track these taxes on any forms thatyou need them to show up on, IE the 941.

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The 941Part 1

LINE #3 Total income tax withheldWhat this means Enter the federal income tax you withheld (or were required to

withhold) from your employees on this quarter's wages, tips, taxablefringe benefits, and supplemental unemployment compensationbenefits

This number is influenced by the employee set of the marital status

and deductions (W-4 Form)

Do not include any income tax withheld by a third-party payer of sickpay even if you reported it on Form W-2. You will reconcile thisdifference on Form W-3. Also include here any excise taxes you wererequired to withhold on golden parachute payments (section 4999).

If you are a third-party payer of sick pay, enter the federal incometax you withheld (or were required to withhold) on third-party sickpay here

QuickBooks adds the total for the quarter of the Federal Withholdingfrom the paychecks

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The 941Part 1

LINE # 4 If no wages, tips and other compensationare subject to Social Security or Medicare.

What this means

If any wages, tips or other compensation on are not subject to

social security or Medicare tax, check the box and go to line 6

If this question does not apply to you, leave the box blank!

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The 941Part 1

LINE #5 Taxable social security and Medicare wagesand tips.

5A Column 1 Taxable social security wages

QuickBooks pulls 5a column 1 from the wage base of the SocialSecurity minus the wage base tips. Column 2 is a calculated amount.

What this means is that QB is showing you the amount of alltaxable wages, additions, compensation payroll items you have setup in Quickbooks as taxable specifically by Social Security.

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The 941Part 1

LINE #5 - Taxable social security and Medicare wages

and tips.5B Column 1 Taxable social security tips

Enter all tips your employees reported to you during the quarter untilthe total of the tips and wages for an employee reach $102,000. Thetax tracking type in Quickbooks would be reported tips so it will

show on this line.

Do not include allocated tips on this box. Allocated tips are notreportable on Form 941 and are not subject to withholding of federalincome, social security, or Medicare taxes. Allocated tips are tipsassignedby the company if there is a shortfall between the required

8% of sales and actual tips declared. Allocated tips have their ownbox on the W-2 form (Box 8) and must be assigned BEFORE theprinting of W-2s.

QuickBooks pulls column one from the wage base tips of the Social

Security. Column two is a calculated amount.

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The 941Part 1

LINE #5 - Taxable social security and Medicare wagesand tips.

5C Column 1 Taxable Medicare wages and tips

QuickBooks pulls the number for 5c column 1 from the wage base ofthe Medicare. Column 2 is a calculated amount.

What this means is that QB is showing you the amount of alltaxable wages, additions, compensation payroll items you have setup in QuickBooks as taxable specifically by Medicare.

The calculations are done directly on the form using the x.124 and

x.029 and not pulled over from the QB company data.

The results of these numbers are what you see in column 2.

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The 941Part 1

LINE #5 - Taxable social security and Medicare wagesand tips

LINE #5D Total social security and Medicare taxes

Adds up the social security tax, social security tips tax, and Medicare

tax to a total amount.

QuickBooks adds column 2 together for boxes 5a, 5b, 5c

LINE #6 Total taxes before adjustments

Add the total federal income tax withheld from wages, tips and othercompensation (box 3) and total social security and Medicare taxesbefore adjustments (box 5d).

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The 941Part 1

LINE #7 TAX ADJUSTMENTS

LINE #7A - Current quarter's fractions of cents

If the difference between your net taxes (Line 10) and our totalliability for the quarter (Line 15) is within $1.00, QuickBooksautomatically places the adjustment in the Fractions of Cents field(Line 7a). If necessary, you can change this amount by overwriting.

LINE #7B Current quarters sick pay

Enter the adjustment for the employee share of social security andMedicare taxes that were withheld by your third-party sick paypayer. QuickBooks does not fill in any of these numbers; they mustbe filled in by the user.

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The 941Part 1

Enter the adjustment for: any uncollected employee share of socialsecurity and Medicare taxes on tips and the uncollected employee

share of social security and Medicare taxes on group-term lifeinsurance premiums paid for former employees.

Enter the adjustment for: any uncollected employee share of socialsecurity and Medicare taxes on tips and the uncollected employeeshare of social security and Medicare taxes on group-term lifeinsurance premiums paid for former employees.

LINE #7 TAX ADJUSTMENTSLine #7C - Current quarter's adjustments for tipsand group-term life insurance.

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LINE #7E Prior quarters social security and Medicaretaxes

Prior quarter's social security and Medicare taxes. Enteradjustments for prior quarters' social security and Medicare taxes.

For example, if you made a mistake when reporting social securityand Medicare taxes on previously filed Forms 941, adjust it here.If you need to report both an underpayment and an overpayment,show only the net difference. QuickBooks does not fill in any ofthese numbers; they must be filled in by the user.

The 941Part 1

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The 941Part 1


LINE #7F Special additions to federal income tax

These boxes are reserved for employers with special circumstances.

Use these boxes only if the IRS has sent you a notice instructing youto do so. You must attach Form 941c explaining the tax increase.

LINE #7G Special additions to social security andMedicare

These boxes are reserved for employers with special circumstances.Use these boxes only if the IRS has sent you a notice instructing youto do so. You must attach Form 941c explaining the tax increase.

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The 941Part 1


LINE #7H - Special additions to federal income tax andSpecial additions to social security and Medicare.

These boxes are reserved for employers with special circumstances.Use these boxes only if the IRS has sent you a notice instructing

you to do so. You must attach Form 941c explaining the taxincrease.

Combine all adjustments shown on boxes 7a through 7g and enterthe result here.

LINE #8 Total taxes after adjustments

This is the total of all the taxes in line 6 minus or adding anyadjustments in the line #7 sections.

The 941

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The 941Part 1

LINE #9 Advanced earned income credit (EIC)payments made to employees

Enter the amount of the advance earned income credit (EIC)payments that you made to your employees. Eligible employees maychoose to receive part of the EIC as an advance payment. Those whoexpect to have a qualifying child must give you a completed Form W-5stating they expect to qualify for the EIC. Once the employee gives

you a signed and completed Form W-5 you must make the advanceEIC payments starting with the employee's next wage payment.Advance EIC payments are generally made from withheld federalincome tax and employee and employer social security and Medicaretaxes.

If the amount of your advance EIC payments is more than your totaltaxes after adjustments (box 8) for the quarter, you may claim arefund of the overpayment or elect to have a credit applied to yourreturn for the next quarter. This would be a question and answersession they would want to have with their financial advisor.

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The 941Part 1

LINE #10 Total taxes after adjustment for advance EIC

This is the total of all the taxes in line 8 minus any Earned IncomeCredit amounts. This is calculated directly on the form. This numberis NOT pulled from QB.

LINE #11 Total Deposits for this quarter, includingoverpayment applied from prior quarter

Enter your deposits for this quarter, including any deposits that youwere required to make to cover prior period liabilities resulting fromadjustments shown on box 7. Also include in the amount shown anyoverpayment from a previous period that you applied to this return.

If you need to include a prior quarter's overpayment you will have toright click and override the amount listed to add the overpayment.

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The 941Part 1

LINE #12 Balance Due

This is the amount that is owed to the IRS as payment and it takesinto account all the payments made or credits listed in QuickBooks.

LINE #13 Overpayment

If box 11 is more than box 10, write the difference in box 13.

Never make an entry in both boxes 12 and 13

If you deposited more than the correct amount for the quarter, youcan choose to have the IRS either refund the overpayment or apply it

to your next return. Check the appropriate box in box 13. If you donot check either box, we will automatically refund the overpayment.We may apply the overpayment to any past due tax account that isshown in our records under your EIN.

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The 941Part 2

Line #14

In the spaces provided, write the two-letter U.S. Postal Serviceabbreviation for the state where you deposit your taxes using Form8109 or initiate EFTPS transfers

IRS uses the state shown to determine banking days for purposes of

deposit due dates. Official state holidays for the state shown are notcounted as banking days.

If you deposit in multiple states, enter "MU" in the spaces provided

When you deposit in multiple states, IRS cannot determine whatportion of your liability was affected by a state holiday and maypropose a deposit penalty for one or more of the states where youmade deposits

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The 941Part 2

Line # 15 If box 10 is less than $2,500, check the appropriate box in box 15

and go to Part 3

If you reported $50,000 or less in taxes during the look back period(see below), you are a monthly schedule depositor unless the$100,000 Next-Day Deposit Rule discussed in section 11 of Pub. 15(Circular E) applies. Check the appropriate box on box 15 and enteryour tax liability for each month in the quarter. Add the amounts for

each month. Enter the result in the Total liability for quarter box.Note that your total tax liability for the quarter must equal your totaltaxes shown on box 10. If it does not, your tax deposits andpayments may not be counted as timely.

You are a monthly schedule depositor for the calendar year if theamount of your Form 941 taxes reported for the look back period is

$50,000 or less. The look back period is the four consecutivequarters ending on June 30 of the prior year. For 2008, the look backperiod begins July 1, 2006, and ends June 30, 2007.

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The 941Part 2

LINE #15 Continued

CAUTION: This is a summary of your monthly tax liability, not asummary of deposits you made. If you do not properly report yourliabilities when required or if you are a semiweekly scheduledepositor and report your liabilities on box 15 instead of on ScheduleB (Form 941), you may be assessed an "averaged" failure-to-deposit(FTD) penalty. If you reported more than $50,000 of taxes for the

look back period (see above), you are a semiweekly scheduledepositor. Check the appropriate box on box 15. You must completeSchedule B (Form 941) and submit it with your Form 941. Do not useSchedule B (Form 941) if you are a monthly schedule depositor.

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Th 941

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The 941Part 2

LINE# 15 Continued

Reporting adjustments on box 15. If your tax liability for anymonth is negative (for example, if you are adjusting an overreported liability in a prior period), do not enter a negative amountfor the month. Instead, enter zero for the month and subtract thatnegative amount from your tax liability for the next month.

This number is pulled from Quickbooks and not calculated on theform. It is what has actually happened in the company filehistorically.

QuickBooks adds the total taxes accrued each day on paychecks

for Federal Withholding, Medicare Employee, Medicare Company,Social Security Employee and Social Security Company. This isNOT the amount of the tax deposits you've made. This is theamount of tax liabilities accrued.

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Th 941

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The 941Part 3

LINE #16 If your business has closed or you stopped

paying wages

If you go out of business or stop paying wages, you must file a finalreturn

To tell the IRS that a particular Form 941 is your final return, checkthe box on box 16 and enter the date you last paid wages in thespace provided

Th 941

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The 941Part 3

LINE # 17 Seasonal Employers

If you hire employees seasonally - such as for summer or winter only- check the box on box 17. Checking the box tells IRS not to expectfour Forms 941 from you throughout the year because you have notpaid wages regularly. Generally, we will not ask about unfilledreturns if you file at least one return showing tax due each year.

However, you must check the box every time you file a Form 941.

Also, when you fill out Form 941, be sure to check the box on top ofthe form that corresponds to the quarter reported

Th 941

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The 941Part 4

May we speak with our third-party designee?

If you want to allow an employee, a paid tax preparer, or anotherperson to discuss your Form 941 with the IRS, check the "Yes" box inPart 4. Then tell us the name, phone number, and the five-digitpersonal identification number (PIN) of the specific person to speakwith - not the firm who prepared your tax return. The designee maychoose any five numbers as his or her PIN.

By checking "Yes" you authorize the IRS to talk to the person younamed (your designee) about any questions we may have while weprocess your return. You also authorize your designee to: give us anyinformation that is missing from your return, call us for informationabout processing your return, and respond to certain IRS notices thatyou have shared with your designee about math errors and returnpreparation. The IRS will not send notices to your designee.

You are not authorizing your designee to bind you to anything(including additional tax liability) or to otherwise represent youbefore the IRS. If you want to expand your designee's authorization,see Pub. 947, Practice Before the IRS and Power of Attorney.

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The 941Part 5

Sign here. You MUST fill out both pages of the form andSIGN it.

Complete all information in Part 5 and sign Form 941 as follows.

Sole proprietorship The individual who owns the business

Corporation (including a limited liability company (LLC) treatedas a corporation) The president, vice president or other principalofficer

Partnership (including an LLC treated as a partnership) orunincorporated organization - A responsible and duly authorizedmember or officer having knowledge of its affairs

Single member LLC treated as a disregarded entity - The ownerof the LLC

Trust or estate The fiduciary

Form 941 may also be signed by a duly authorized agent of thetaxpayer if a valid power of attorney has been filed

Alternative signature method Corporate officers or dulyauthorized agents (but not paid preparer's) may sign Form 941 byrubber stamp, mechanical device, or computer software program

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The 941Part 6

For paid preparers only (Optional)

You may complete Part 6 if you were paid to prepare Form941 and are not an employee of the filing entity. Sign in thespace provided. Give the employer the return to file with theIRS and include a copy of the return for the employer'srecords.

If you are a paid preparer, write your SSN or you Preparer TaxIdentification Number (PTIN) in the space provided. Includeyour complete address. If you work for a firm, write the firm'sname and the EIN of the firm. You can apply for a PTIN usingForm W-7P, Application for Preparer Tax IdentificationNumber. You cannot use your PTIN in place of the EIN of thetax preparation firm.

Do not complete Part 6 if you are filing the return as areporting agent and have a valid Form 8655, Reporting AgentAuthorization, on file with the IRS.

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Intuit Proprietary & Confidential39

941 The Schedule B.

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Refer toExample

Details forEmployer B Clickable forms

Hive article:

Hive KB ID 10612

Clickable forms linkfor trouble

shooting: Link tothe Hive article forthe clickable forms

Federal formslibrary: Hive KB

ID 11037
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Refer toExampleDetails

forEmployer

C

Clickable formsHive article:

Hive KB ID10612

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shooting:

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Federal formslibrary:

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941 Schedule B For Semi-weekly and Monthly

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y yDepositors

File Schedule B (Form 941) if you are: A semiweekly schedule depositor A monthly schedule depositor who accumulated a tax liability of

$100,000 or more on any given day in the reporting period. See$100,000 Next-Day Deposit Rule in section 11 of Pub 15 (Circular E)for important details.

Fill in Your Tax Liability by Month Schedule B (Form 941) is divided into the 3 months that make up a

quarter of a year. Each month has 31 numbered spaces thatcorrespond to the dates of a typical month. Write your tax liabilities in

the spaces that correspond to the dates you paid wages to youremployees, not the date of the payroll deposits.

Example A With Corresponding Semi-weekly deposits Employer A is a semiweekly schedule depositor who pays wages for

each month on the last day of the month. On December 22,2006,Employer A also paid its employees year-end bonuses subject toemployment taxes). Because Employer A must record employmenttax liabilities on the Schedule B (Form 941). For the 4th quarter (Oct,Nov, Dec), Employer A should report tax liability in this way

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) lines 22 (bonus paid) + 31 (pay day)

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941 Schedule BFor Semi-weekly and Monthly Depositors cont

Example B Corresponding semi-weekly deposits

Employer B is a semiweekly schedule depositor who pays employeesever other Friday. Employer B accumulated a $20,000 employmenttax liability on each of these pay dates: 1/13/06, 1/27/06, 2/10/06,2/24/06, 3/10/06 and 3/24/06.

Employer B is a semiweekly schedule depositor, Employer B must

record the tax liabilities on the Schedule B in this way:

Month Lines for dates wages were paid

1 January Lines 13 and 27

2 February Lines 10 and 24

3 March Lines 10 and 24

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941 Schedule BFor Semi-weekly and Monthly Depositors cont

Example CEmployer C is a new business and monthly schedule depositor for

2006. Employer C pays wages every Friday and has accumulated a$2,000 employment tax liability on 1/13/06 and a $110,000 liabilityon 1/26/06 and on ever subsequent Friday during 2006. Under thedeposit rules, employers become semiweekly schedule depositors onthe day after any day they accumulate $100,000 or more of taxliability in a deposit period.

Because Employer C accumulated $112,000 on 1/20/06, Employer Cbecame a semiweekly schedule depositor on the next day and mustcomplete scheduled B(941) and file it with the 941 form.Employer C should record tax liabilities this way:

Month Dates wages were paid Amount to record

1 Jan Line 13 $2,000 1 Jan Line 20, 27 $110,000 2 Feb Line 3, 10, 17, 24 $110,000 3 Mar Line 3, 10, 17, 24 $110,000 On Schedule B (Form 941), you must take into account adjustments

to correct errors on prior period returns. See lines 4 and 9

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The Relationships of Federal Forms.

What areas on the 940, 941 and W3sshould match and why?

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Form Data Comparison

Quarterly 941 Annual W3 Annual 940

The 941 only reports quarterly

data for the company

The 941 line 2 will match the

W3 line 1

The 941 line 3 will match theW3 line 2

The 941 line 5a column 2will match the W3 line 4

The 941 line 5c column 2will match the W3 line 6

The 941 line 5b column 1will match the W3 line 7

The W3 reports annual data

for the company

The W3 line 1 will match

the 941 line 2

The W3 line 2 will matchthe 941 line 3

The W3 line 4 will matchthe 941 line 5a column 2

The W3 line 6 will matchthe 941 line 5c column 2

The W3 line 7 will matchthe 941 line 5b column 1

The 940 reports annual data

however it does not relate to

either the W3 or the 941 on

any line.

The 940 is specific in the

data that it reports to the

IRS

It reports:

Gross wages paid to allemployees

total unemployment

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