Latest IRS changes for filing Form 941 and Schedule B

Here we go again! IRS has set the wheels in motion for revisions of Form 941 and its instructions – plus, the Schedule B instructions. Make sure Payroll has the updated info for filing employment tax returns for the first quarter of 2022.

According to the IRS drafts, the revision dates will be March 2022. The current revision dates are:

• Form 941 (June 2021) & instructions (December 2021), and
• Schedule B (January 2017) & instructions (December 2021).

What’s in the drafts

As for the draft 941 instructions, they state that some employers may be able to claim the COBRA premium assistance credit when filing first quarter employment tax returns. That’s the case even though the credit is limited to periods of coverage beginning on or after April 1, 2021, and ending on or before Sept. 30, 2021.

Here’s why: Generally under COBRA, employers have 60 days to provide notice. Then, individuals have 60 days from the date of the notice to elect continuation coverage. That could push some employees into 2022.

Employers should use Line 11e of Form 941 for the portion of the COBRA premium assistance credit that’s nonrefundable and Line 13f of the 941 for the refundable portion.

Also, the draft 941 instructions explain how to handle qualified sick leave and qualified family leave wages paid in 2022 under two laws:

1. Families First Coronavirus Response Act (FFCRA). If someone took leave after March 31, 2020, and before April 1, 2021, the Social Security tax rate is 6.2% for the employee portion only. Include these wages on Form 941 on lines 5a(i) and 5a(ii), as well as on lines 11b and 13c.
2. American Rescue Plan Act (ARPA). If someone took leave after March 31, 2021, and before October 1, 2021, the Social Security tax rate is 6.2% each for the employee and employer portion. Include these wages on Form 941 on Line 5(a), as well as on lines 11d and 13e.

Finally, the draft Schedule B instructions remind semiweekly schedule depositors to account for nonrefundable credits claimed on Form 941, lines 11a, 11b, 11d and 11e.