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

If you are adjusting an employee’s social security

an overreported liability in a prior period) and it exceeds

or Medicare wages or tips for a prior year, you

your total liability for the month, do not enter a negative

must file Form W-2c, Corrected Wage and Tax

amount for the month. Instead, enter “-0-” for the month

CAUTION

Statement, with Form W-3c, Transmittal of Corrected

and carry over the unused portion of the adjustment to

Wage and Tax Statements.

the next month.

For example, Pine Co. discovered on February 6,

Line 12—Advance Earned Income Credit

2004, that it overreported social security tax on a prior

(EIC) Payments Made to Employees

quarter return by $2,500. Its Form 941 taxes for the 1st

Enter any advance EIC payments that you made to your

quarter of 2004 were: January $2,000, February $2,000,

employees. Your eligible employees may elect to receive

March $2,000. Pine Co. should enter “$2,000” in column

part of the EIC as an advance payment. Eligible

(a), “-0-” in column (b), “$1,500” in column (c), and the

employees must expect to have a qualifying child and

total, “$3,500,” in column (d). The prior period adjustment

must give you a completed Form W-5 stating that they

($2,500) offsets the $2,000 liability for February and the

qualify for the EIC. Once the employee gives you a

excess $500 must be used to offset March liabilities.

signed and completed Form W-5, you must make the

Since the error was not discovered until February, it does

appropriate advance EIC payments. Advance EIC

not affect January liabilities reported in column (a).

payments are generally made from withheld income tax

If excess negative adjustments are carried forward to

and employee and employer social security and

the next quarter, do not show those excess adjustments

Medicare taxes. See section 10 of Circular E (Pub. 15)

on lines 4 or 9 because line 17 column (d) must equal

and Pub. 596.

line 13. Instead, on your next quarter’s Form 941, report

If the amount of your advance EIC payments exceeds

the excess negative adjustments on lines 4 or 9 and

your total taxes (line 11) for the quarter, you may claim a

adjust (but not below zero) your line 17(a) liability.

refund of the overpayment or elect to have the credit

applied to your return for the next quarter. Provide a

Third-Party Designee. If you want to allow any

statement with your return identifying the amount of

individual, corporation, firm, organization, or partnership

excess payment(s) and the pay period(s) in which it was

to discuss your Form 941 with the IRS, check the “Yes”

paid. See section 10 of Circular E (Pub. 15).

box in the Third-Party Designee section of the return.

Also, enter the name, phone number, and any five

Line 15—Balance Due

numbers that the designee chooses as his or her

You do not have to pay if line 15 is under $1.

personal identification number (PIN). The authorization

Generally, you should show a balance due on line 15

applies only to the tax form upon which it appears.

only if your net tax liability for the quarter (line 13) is less

By checking the “Yes” box, you are authorizing the

than $2,500. However, see section 11 of Circular E

IRS to call the designee to answer any questions relating

(Pub. 15) regarding payments made under the accuracy

to the information reported on your tax return. You are

of deposits rule. (Make certain that the entity area

also authorizing the designee to:

above line A on Form 941 is properly completed).

•

Exchange information concerning your tax return with

If you fail to make deposits as required and

the IRS and

•

instead pay the taxes with Form 941, you may be

Request and receive written tax return information

subject to a penalty.

relating to your tax return including copies of specific

CAUTION

notices, correspondence, and account transcripts.

Line 16—Overpayment

You are not authorizing the designee to receive any

If you deposited more than the correct amount for a

refund check, bind you to anything (including additional

quarter, you can have the overpayment refunded or

tax liability), or otherwise represent you before the IRS. If

applied to your next return by checking the appropriate

you want to expand the designee’s authorization or

box. If you do not check either box, your overpayment will

desire automatic issuances of copies of notices, see

be applied to your next return. The IRS may apply your

Pub. 947, Practice Before the IRS and Power of

overpayment to any past due tax account under your

Attorney.

EIN. If line 16 is under $1, the amount will be refunded or

The Third-Party Designee authorization automatically

applied to your next return only on written request.

expires one year from the due date (without regard to

extensions) for filing your Form 941. If you or your

Line 17—Monthly Summary of Federal Tax

designee desire to terminate the authorization, a written

Liability

statement conveying your wish to revoke the

Note: This is a summary of your monthly tax liability, not

authorization should be submitted to the IRS service

of deposits made. If line 13 is less than $2,500, do not

center where the return was processed.

complete line 17 or Schedule B (Form 941).

Who Must Sign

Complete line 17 only if you were a monthly

•

Sole proprietorship —The individual owning the

schedule depositor for the entire quarter and line 13 is

business.

$2,500 or more. (See section 11 of Circular E (Pub. 15)

•

Corporation (including an LLC treated as a

for details on the deposit rules.) You are a monthly

corporation)— The president, vice president, or other

schedule depositor for the calendar year if the total

principal officer.

amount of your Form 941 taxes (line 11) reported for the

•

Partnership (including an LLC treated as a

lookback period is not more than $50,000.

partnership) or unincorporated organization —A

The lookback period is the four consecutive quarters

responsible and duly authorized member or officer having

ending on June 30 of the prior year. The 2004 lookback

knowledge of its affairs.

•

period begins July 1, 2002, and ends June 30, 2003.

Single member limited liability company (LLC)

treated as a disregarded entity —The owner of the

If you were a semiweekly schedule depositor

limited liability company.

during any part of the quarter, do not complete

•

Trust or estate —The fiduciary.

columns (a) through (d) of line 17. Instead,

CAUTION

complete Schedule B (Form 941).

The return may also be signed by a duly authorized

Reporting adjustments on line 17. If your net

agent of the taxpayer if a valid power of attorney has

been filed.

adjustment during a month is negative (e.g., correcting

-4-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2004 Page 4

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