Part 2: Complete Your Employee Tax Returns
by Admin
Posted on 21-12-2022 02:09 PM
The updated form 941 (employer’s quarterly federal tax return) was released on june 19, 2020. The irs released two drafts of the 941 instructions and released the final instructions on june 26. The instructions are 19 pages long. The prior version was 12 pages. The instructions include a worksheet (worksheet 1) to help with the computations.
Only certain steps of the worksheet will be completed depending on which type of qualified wages the employer paid during the quarter: steps 1, 2, and 3 will be completed when an employer paid in the quarter both qualified sick and family leave wages, and qualified wages for purposes of the employee retention credit.
employers should consult with appropriate legal and tax advisors to determine whether the organization is eligible for the erc, noting the different rules that apply for 2020 and 2021. On december 27, 2020, the taxpayer certainty and disaster tax relief act (part of the consolidated appropriations act of 2021) was signed into law, providing further stimulus and support to those affected by the covid-19 pandemic. Section 206 of the taxpayer certainty and disaster tax relief act (the act) permits an eligible employer to take the employee retention credit (erc), even if the employer has received a paycheck protection program (ppp) loan.
➤ to qualify and be an eligible employer you must be able to prove that your business was negatively impacted in one or more of the following ways: your business experienced a partial or total shutdown during 2020 or 2021 (includes being limited by commerce, inability to travel, or restricted group meetings), or gross receipt reduction (a business may be eligible for one quarter and not another). 👉 see if you qualify ➤ to apply for the employee retention tax credit, employers must complete and file form 941-x, adjusted employer’s quarterly federal tax return or claim for refund, with their quarterly federal tax return.
Part 3: Enter Your Credits and Advance Requested
Make sure to select the right quarter. This is not for the current quarter but the quarter you’re going to request the advance payments of credits. With that out of the way, fill out form 7200 line by line with the following instructions. Part i – tell us about your employment tax return
line a – select the tax form that you’re filing form 7200 for the advance payments of employer credits due to covid-19. Line b – check yes if you’re a new business started on january 1, 2020 or later.
Line c – enter the total amount of wage, salary, and other compensation paid to employees reported on the most recent form 941—employer’s quarterly federal tax return.
Indicate your Third-Party Designee (If any)
There are only two deadlines: for all quarters in 2020, the deadline to apply for the erc is april 15, 2024, and for all quarters in 2021, the deadline is april 15, 2025. The erc can only be filed using an irs form 941-x , “adjusted employer’s quarterly federal tax return or claim for refund. ” a separate 941-x will be filed for each calendar quarter for which erc is being claimed. While original forms 941 are due by the last day of the month that follows the end of each quarter, and amendments to federal tax returns generally need to be filed within three years of the original due dates, 941-x amendments are a little different.
From the irs e-news for small business issue 2020-13 today, a note encouraging businesses to use a new fax line to file form 7200. The irs still is ramping up staff and catching up departments post-quarantine, so in order to get your advance payment as quickly as possible, please follow their instructions and use the dedicated fax line. (if you are working with a payroll company who is filing form 7200 for you, confirm they are taking care of it — do not simply assume. I’ve already come across two companies so far who won’t do it. Time to switch payroll companies, in my opinion.