Form 941 2020: COVID-19 changes

Alerts and notices

The IRS has released an updated version of Form 941 for the 2nd through 4th quarters of 2020. Below is a summary of the new fields on the form and how Accounting CS populates those fields. Anything not listed below can be found in the article for the 2019 and prior Form 941.

3rd quarter changes

These changes will be available with the 2020.3.0 release, currently scheduled for September 30, 2020.

  • The selection box for quarters 1 and 2 are unavailable.
  • Line 13b now reports the FICA-SS amounts for both employees and employers from the open liabilities for the period that have a deferred status.
  • Line 24 now reports the employee FICA-SS amount from the open liabilities for the period that have a deferred status.

2nd quarter changes

The selection box for quarter 1 is unavailable.

With the addition of new lines, some lines were moved to a different page.

The sum of the values in column 2 of lines 5a, 5a(i), 5a(ii), 5b, 5c, and 5d.

Subtracts line 11d from line 10.

If you have overrides on the form and this line isn't calculating correctly, you may need to refresh or print preview the form.

If line 12 is greater than line 13g, line 14 shows the difference of those. If line 12 is less than line 13g, this is left blank.

If line 13g is greater than line 12, line 15 shows the difference of those. If line 13g is less than line 12, this is left blank.

Monthly (or daily, whichever applies) liabilities will be reduced by the value in line 11d (see below) in chronological order.

New lines added for the 2nd quarter

Worksheet 1 is available on page 13 of the instructions for Form 941. We've put together a spreadsheet to help you with the calculations the program performs behind the scenes.

With the 2020.2.3 update, we've added informational diagnostics for Worksheet 1.

Accounting CS calculates the amount in Column 1 from employee pay items that are set up with the special type COVID-19 self-care and COVID-19 Other Care. This amount only includes amounts from the selected quarter up to the FICA-SS wage limit. This is 6.2% only as taxed only on Employee portion.

Notes:

  • If the Employee FICA-SS taxable wages per payroll check are less than the amount in column 1, the smaller value is placed in column 1 and the difference is used in Worksheet 1.
  • An information diagnostic referencing Worksheet Line 2a(i) displays if there is a difference between total COVID-19 wages and FICA-SS taxable wages.
  • You can filter the Wages Register report to show only the COVID-19 self-care and Other care pay items for the quarter.
  • You can filter the Payroll Journal with taxable wages to show the employees with COVID-19 self-care or COVID-19 Other care wages. This report is helpful to see which checks use the FICA-SS taxable amount.

Column 2 is the amount from column 1 multiplied by 0.062. Accounting CS performs this calculation for you.

Accounting CS calculates the amount in Column 1 from employee pay items that are set up with the special type COVID-19 extended child care. This amount only includes amounts from the selected quarter up to the FICA-SS wage limit. This is 6.2% only as taxed only on Employee portion.

Column 2 is the amount from column 1 multiplied by 0.062. Accounting CS performs this calculation for you.

This amount is the same as line 2j from Worksheet 1.

This amount is the same as line 3j from Worksheet 1.

If you override line 11c, 11d will factor this amount in, possibly making line 11d incorrect (does not equal half of the FICA-SS tax amount).

The sum of lines 11a, 11b, and 11c.

Accounting CS reports the ERFICA-SS amount from open liabilities from the processing period that have a status of Deferred.

You can see these liabilities on the Manage Payroll Liabilities screen. They'll have the Deferred column marked.

Quarter 1 deferrals will not be included because there wasn't a place to report it on the Q1 forms and they're not to be reported on the remainder of 2020 forms.

This amount is the same as line 2k from Worksheet 1.

This amount is the same as line 3k from Worksheet 1.

The sum of lines 13a, 13b, 13c, and 13d.

Enter this amount in the Form 7200 Payment Information grid on the COVID-19 Acts tab on the Setup > Clients screen. Accounting CS carries over the amount for the quarter to the 941.

Subtracts line 13f from line 13e.

Enter this amount in the Sick Leave Wages field for the quarter in the Federal 94X Information section on Setup > Clients > COVID-19 Acts tab. Accounting CS carries over the amount for the quarter to the 941.

Enter this amount in the Family Leave Wages field for the quarter in the Federal 94X Information section on Setup > Clients > COVID-19 Acts tab. Accounting CS carries over the amount for the quarter to the 941.

Accounting CS calculates this amount if there are any checkboxes marked in the Employee Retention Credit section in the COVID-19 Acts tab on the Setup > Clients screen. This amount is the total qualified ERFICA-SS taxable wages for that quarter under the $10,000 limit.

The first quarter qualifying period is only March 13 to March 31, 2020.

You can quickly verify this amount using the Employee Retention Credit Summary report in the Accounting CS Report Library.

Enter the amount of qualified health plan expenses allocable to the wages reported on line 21.

Note: You may need to reduce line 21 if qualified wages plus qualified health plan expenses reach the $10,000 limit for any employee. Accounting CS calculates up to the limit based on qualified wages; it does not account for the qualified health plan expenses.

Enter the amount from line 11 on Form 5884-C.

When processing the second quarter, Accounting CS calculates this amount if you have the First quarter checkbox marked in the Employee Retention Credit section on the COVID-19 Acts tab of the Setup > Clients screen.

Note: See line 21 for how this amount is calculated.

When processing the second quarter, enter the amount of qualified health plan expenses allocable to the wages reported on line 24.

Note: You may need to reduce line 24 if qualified wages plus qualified health plan expenses reach the $10,000 limit for any employee. Accounting CS calculates up to the limit based on qualified wages; it does not account for the qualified health plan expenses.

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