Instructions For Form 941 - Employer'S Quarterly Federal Tax Return

5d. Total social security and Medicare taxes. Add the

4. If no wages, tips, and other

social security tax, social security tips tax, and Medicare tax.

compensation on line 2 are subject to social

security or Medicare tax . . .

line 5a (column 2)

line 5b (column 2)

If no wages, tips, and other compensation on line 2 are

line 5c (column 2)

subject to social security or Medicare tax, check the box on

line 5d

line 4. If this question does not apply to you, leave the box

blank. For more information about exempt wages, see

6. Total taxes before adjustments

section 15 of Pub. 15 (Circular E) and section 4 of Pub.

Add the total federal income tax withheld from wages, tips,

15-A, Employer’s Supplemental Tax Guide.

and other compensation and total social security and

If you are a government employer, wages that you

Medicare taxes before adjustments.

pay are not automatically exempt from social security

and Medicare taxes. Your employees may be

line 3

CAUTION

covered by law or by a voluntary Section 218 Agreement

line 5d

line 6

with SSA. For more information, see Pub. 963,

Federal-State Reference Guide.

7. TAX ADJUSTMENTS

5. Taxable social security and Medicare

Enter tax amounts on lines 7a – 7g that result from current

wages and tips

or prior period adjustments. Use a minus sign (if possible) to

5a. Taxable social security wages. Report the total

show an adjustment that decreases the total taxes shown on

wages, sick pay, or fringe benefits subject to social security

line 6. Do not enter an amount on line 7f or line 7g unless

taxes that you paid to your employees during the quarter.

the IRS has sent you a notice instructing you to do so.

For this purpose, sick pay includes payments made by an

Current period adjustments. In certain cases, you must

insurance company to your employees for which you

adjust the amounts you reported as social security and

received timely notice from the insurance company. See

Medicare taxes in column 2 of lines 5a, 5b, and 5c to figure

Section 6 in Pub. 15-A for more information about sick pay

your correct tax liability for this quarter’s Form 941. See

reporting.

section 13 of Pub. 15 (Circular E). Do not attach Form 941c

Enter the amount before deductions. Do not include tips

or an equivalent statement for current period adjustments.

on this line. For information on types of wages subject to

If you need to adjust any amount previously reported on

social security taxes, see section 5 of Pub. 15 (Circular E).

lines 7a – 7c, use line 7e to report the adjustment and attach

The rate of social security tax on taxable wages is 6.2

Form 941c or an equivalent statement with an explanation.

percent (.062) each for the employer and employee or 12.4

7a. Current quarter’s fractions of cents. Enter

percent (.124) for both. Stop paying social security tax on

adjustments for fractions of cents (due to rounding) relating

and reporting an employee’s wages on line 5a when the

to the employee share of social security and Medicare taxes

employee’s taxable wages (including tips) reach $94,200

withheld. The employee share (one-half) of amounts shown

during 2006. However, continue to withhold income and

in column 2 of lines 5a – 5c may differ slightly from amounts

Medicare taxes for the whole year on wages and tips even

actually withheld from employees’ paychecks due to the

when the social security wage base of $94,200 has been

rounding of social security and Medicare taxes based on

reached.

statutory rates.

line 5a (column 1)

7b. Current quarter’s sick pay. Enter the adjustment

.124

for the employee share of social security and Medicare

line 5a (column 2)

taxes that were withheld by your third-party sick pay payer.

7c. Current quarter’s adjustments for tips and

5b. Taxable social security tips. Enter all tips your

group-term life insurance. Enter adjustments for:

employees reported to you during the quarter until the total

•

any uncollected employee share of social security and

of the tips and wages for an employee reach $94,200 in

Medicare taxes on tips and

2006. Do this even if you were unable to withhold the

•

the uncollected employee share of social security and

employee tax of 6.2%.

Medicare taxes on group-term life insurance premiums paid

An employee must report cash tips to you, including tips

for former employees.

you paid the employee for charge customers, totaling $20 or

Prior period adjustments. Use lines 7d – 7g to adjust

more in a month by the 10th of the next month. Employees

amounts reported on previous returns. If you need to

may use Form 4070, Employee’s Report of Tips to

report both an increase and a decrease for the same line,

Employer, or submit a written statement or electronic tip

show only the difference.

record.

Adjustments you report here change your tax liability and

Do not include allocated tips on this line. Instead, report

your tax deposits. You will have to take these adjustments

them on Form 8027, Employer’s Annual Information Return

into account on line 15 as Tax liability: Month 1; Month 2;

of Tip Income and Allocated Tips. Allocated tips are not

Month 3 or on Schedule B (Form 941). You must explain

reportable on Form 941 and are not subject to withholding of

any prior period adjustments that you make on Form

federal income, social security, or Medicare taxes.

941c, Supporting Statement to Correct Information, or in an

line 5b (column 1)

equivalent statement.

.124

Form 941c is not an amended return but is a statement

line 5b (column 2)

providing the necessary information and certifications for

adjustments shown on lines 7d – 7g. Do not file Form 941c

5c. Taxable Medicare wages and tips. Report all

separately from Form 941. See also section 13 of Pub. 15

wages, tips, sick pay, and taxable fringe benefits that are

subject to Medicare tax. Unlike social security wages, there

(Circular E).

is no limit on the amount of wages subject to Medicare tax.

7d. Current year’s income tax withholding. Enter

Include all tips your employees reported during the

adjustments for the current year’s federal income tax

quarter, even if you were unable to withhold the employee

withholding. For example, if you made a mistake when

tax of 1.45%.

withholding federal income tax from wages that were paid in

earlier quarters of the same calendar year, adjust it here.

line 5c (column 1)

However, see the CAUTION below for adjustment of a prior

.029

year’s “administrative error” also shown on line 7d.

line 5c (column 2)

You cannot adjust or claim a refund or credit for any

For more information, see section 6 of Pub. 15

overpayment of federal income tax that you withheld or

(Circular E).

deducted from your employees in a previous year because

-5-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2006 Page 5

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