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

If you were a semiweekly schedule depositor

Line 10—Adjusted total of social security

during any part of the quarter, do not complete

and Medicare taxes

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

CAUTION

Add line 9 to line 8 if line 9 is positive (i.e., the net

complete Schedule B (Form 941).

adjustment increases your tax liability). Subtract line 9

from line 8 if line 9 is negative.

Reporting adjustments on line 17. If the net

Line 12—Advance earned income credit

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

an overreported liability in a prior period) and it exceeds

(EIC) payments made to employees

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

Enter advance EIC payments made to employees. Your

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

eligible employees may elect to receive part of the EIC as

and carry over the unused portion of the adjustment to

an advance payment. Eligible employees who have a

the next month. For example, Pine Co. discovered on

qualifying child must give you a completed Form W-5

February 6, 2002, that it overreported social security tax

stating that they qualify for the EIC. Once the employee

on a prior quarter return by $2,500. Its Form 941 taxes

gives you a signed and completed Form W-5, you must

for the 1st quarter of 2002 were: January $2,000,

make the advance EIC payments. Advance EIC

February $2,000, March $2,000. Pine Co. should enter

payments are generally made from withheld income tax

$2,000 in column (a), -0- in column (b), $1,500 in column

and employee and employer social security and

(c), and the total, $3,500, in column (d). The prior period

Medicare taxes. See section 10 of Circular E and Pub.

adjustment ($2,500) offsets the $2,000 liability for

596.

February and the excess $500 must be used to offset

If the amount of your advance EIC payments exceeds

March liabilities. Since the error was not discovered until

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

February, it does not affect January liabilities reported in

refund of the overpayment or elect to have the credit

column (a).

applied to your return for the next quarter. Provide a

If excess negative adjustments are carried forward to

statement with your return identifying the amount of

the next quarter, do not show these excess adjustments

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

on lines 4 or 9. Line 17, column (d), must equal line 13.

paid. See section 10 of Circular E.

Who Must Sign

Line 15—Balance due

•

Sole proprietorship. The individual owning the

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

business.

•

Generally, you should have a balance due only if your net

Corporation. The president, vice president, or other

tax liability for the quarter (line 13) is less than $2,500.

principal officer.

•

(However, see section 11 of Circular E regarding

Partnership or unincorporated organization. A

payments made under the accuracy of deposits rule). If

responsible and duly authorized member or officer having

line 13 is $2,500 or more and you have deposited all

knowledge of its affairs.

•

taxes when due, the amount shown on line 15 (balance

Trust or estate. The fiduciary.

due) should be zero.

The return may also be signed by a duly authorized

If you fail to make deposits as required and

agent of the taxpayer if a valid power of attorney has

instead pay the taxes with Form 941, you may be

been filed.

subject to a penalty.

CAUTION

Third Party Designee. If you want to allow an

employee or an individual paid preparer to discuss your

Form 941 with the IRS, check the “Yes” box in the Third

Line 16—Overpayment

Party Designee section of the return. Also, enter that

If you deposited more than the correct amount for a

designee’s name, phone number, and any five numbers

quarter, you can have the overpayment refunded or

the designee chooses as his or her personal identification

applied to your next return by checking the appropriate

number (PIN). The designation must specify an individual

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

and may not refer to a tax preparation firm.

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

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

overpayment to any past due tax account under your

IRS to call the designee to answer any questions that

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

may arise during the processing of your return. You are

applied to your next return only on written request.

also authorizing the designee to:

•

Give the IRS any information that is missing from your

Line 17—Monthly Summary of Federal Tax

return.

Liability

•

Call the IRS for information about the processing of

your return, and

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

•

a summary of deposits made. If line 13 is less than

Respond to certain IRS notices that you have shared

$2,500, do not complete line 17 or Schedule B (Form

with the designee about math errors and return

941).

preparation. The notices will not be sent to the designee.

You are not authorizing the designee to bind you to

Complete line 17 only if you were a monthly schedule

anything (including additional tax liability), or otherwise

depositor for the entire quarter (see section 11 of Circular

represent you before the IRS. If you want to expand the

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

designee’s authorization, see Pub. 947, Practice Before

schedule depositor for the calendar year if the amount of

the IRS and Power of Attorney.

your Form 941 taxes reported for the lookback period is

The designee authorization cannot be revoked.

not more than $50,000. The lookback period is the four

However, the authorization applies only to issues that

consecutive quarters ending on June 30 of the prior year.

arise during the processing of this return and will expire 1

For 2002, the lookback period begins July 1, 2000, and

year after the due date of the return.

ends June 30, 2001.

-4-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2002 Page 7

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