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

5. Taxable social security and Medicare

6. Total taxes before adjustments

wages and tips

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

other compensation and total social security and Medicare

5a. Taxable social security wages. Report the total

taxes before adjustments.

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

line 3

taxes that you paid to your employees during the quarter.

line 5d

For this purpose, sick pay includes payments made by an

line 6

insurance company to your employees for which you

received timely notice from the insurance company. See

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

7. Adjustments

reporting.

Current period adjustments. In certain cases, you must

Enter the amount before deductions. Do not include tips

adjust the amounts you reported as social security and

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

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

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

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

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

The rate of social security tax on taxable wages is 6.2

or an equivalent statement for current period adjustments.

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

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

If you need to adjust any amount previously reported on

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

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

employee’s taxable wages (including tips) reach $90,000

Form 941c or an equivalent statement with an explanation.

during 2005. However, continue to withhold income and

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

Medicare taxes for the whole year on wages and tips even

adjustments for fractions of cents (due to rounding) relating

when the social security wage base of $90,000 has been

to the employee share of social security and Medicare taxes

reached.

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

line 5a (column 1)

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

.124

actually withheld from employees’ paychecks due to the

line 5a (column 2)

rounding of social security and Medicare taxes based on

statutory rates.

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

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

employees reported to you during the quarter until the total

for the employee share of social security and Medicare

of the tips and wages for an employee reach $90,000 in

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

2005. Do this even if you were unable to withhold the

employee tax of 6.2%.

7c. Current quarter’s adjustments for tips and

group-term life insurance. Enter adjustments for:

An employee must report cash tips to you, including tips

•

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

any uncollected employee share of social security and

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

Medicare taxes on tips and

•

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

the uncollected employee share of social security and

Employer, or submit a written statement or electronic tip

Medicare taxes on group-term life insurance premiums paid

record.

for former employees.

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

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

them on Form 8027, Employer’s Annual Information Return

amounts reported on previous returns. If you need to

of Tip Income and Allocated Tips. Allocated tips are not

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

reportable on Form 941 and are not subject to withholding of

show only the difference.

income, social security, or Medicare taxes.

Adjustments you report here change your tax liability and

line 5b (column 1)

your tax deposits. You will have to take these adjustments

.124

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

line 5b (column 2)

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

any adjustments that you make on Form 941c, Supporting

5c. Taxable Medicare wages and tips. Report all

Statement to Correct Information, or in an equivalent

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

statement.

subject to Medicare tax. Unlike social security wages, there

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

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

providing the necessary information and certifications for

Include all tips your employees reported during the

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

quarter, even if you were unable to withhold the employee

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

tax of 1.45%.

(Circular E).

line 5c (column 1)

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

.029

adjustments for the current year’s income tax withholding.

line 5c (column 2)

For example, if you made a mistake when withholding

income tax from wages that were paid in earlier quarters

For more information, see section 6 of Pub. 15

of the same calendar year, adjust it here. However, see

(Circular E).

the CAUTION below for adjustment of a prior year’s

“administrative error” that may also be shown on line 7d.

5d. Total social security and Medicare taxes. Add

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

You cannot adjust or claim a refund or credit for any

overpayment of income tax that you withheld or deducted

line 5a (column 2)

from your employees in a previous year because employees

line 5b (column 2)

use the amount shown on Form W-2 as a credit when they

line 5c (column 2)

file their income tax returns.

line 5d

-5-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2005 Page 5

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