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

and tips even when the social security wage base of

is made by not including that employee or that employee’s

$106,800 has been reached.

wages on lines 6a – 6d and lines 12c – 12e. An election not to

apply the social security tax exemption for a qualified

line 5a (column 1)

employee may allow a qualified employer to claim the Work

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Opportunity Credit for that employee. A qualified employer

line 5a (column 2)

cannot apply both the social security tax exemption on Form

941 and claim the Work Opportunity Credit for the same

Do not reduce the amount reported on line 5a by any

employee. For more information, see Form 5884, Work

amount paid to qualified new employees. The social

Opportunity Credit.

security tax exemption on wages/tips will be figured

CAUTION

For more information about the employer’s social security

on lines 6c and 6d and will reduce the tax on line 6e.

tax exemption, visit IRS.gov and enter the keywords HIRE

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

Act in the search box.

employees reported to you during the quarter until the total

6a. Number of qualified employees first paid exempt

of the tips and wages for an employee reach $106,800

wages/tips this quarter. Enter on line 6a the number of

in 2010. Include all tips your employee reported to you even

qualified employees first paid wages/tips to which you

if you were unable to withhold the employee tax of 6.2%.

applied the social security tax exemption in this quarter. Do

An employee must report cash tips to you, including tips

not include on line 6a qualified employees that are included

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

on line12c.

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

A qualified employee is an employee who:

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

•

Begins employment with you after February 3, 2010, and

(available only in Pub. 1244, Employee’s Daily Record of

before January 1, 2011;

Tips and Report to Employer), or submit a written statement

•

Certifies by signed affidavit (Form W-11, Hiring Incentives

or electronic tip record.

to Restore Employment (HIRE) Act Employee Affidavit, or

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

similar statement) under penalties of perjury, that he or she

them on Form 8027, Employer’s Annual Information Return

has not been employed for more than 40 hours during the

of Tip Income and Allocated Tips. Allocated tips are not

60-day period (including 2009) ending on the date the

reportable on Form 941 and are not subject to withholding of

employee begins employment with you;

federal income, social security, or Medicare taxes.

•

Is not employed by you to replace another employee

unless the other employee separated from employment

line 5b (column 1)

voluntarily or for cause (including downsizing); and

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•

Is not related to you. An employee is related to you if he

line 5b (column 2)

or she is your child or a descendant of your child, your

sibling or stepsibling, your parent or ancestor of your parent,

Do not reduce the amount reported on line 5b by any

your stepparent, your niece or nephew, your aunt or uncle,

amount paid to qualified new employees. The social

or your in-law. An employee is also related to you if he or

security tax exemption on wages/tips will be figured

CAUTION

she is related to anyone who owns more than 50% of your

on lines 6c and 6d and will reduce the tax on line 6e.

outstanding stock or capital and profits interest or is your

5c. Taxable Medicare wages & tips. Report all wages,

dependent or a dependent of anyone who owns more than

tips, sick pay, and taxable fringe benefits that are subject to

50% of your outstanding stock or capital and profits interest.

Medicare tax. Unlike social security wages, there is no limit

If you are an estate or trust, see section 51(i)(1) and

on the amount of wages subject to Medicare tax.

section 152(d)(2) for more details.

Include all tips your employees reported during the

Exempt wages/tips are the wages/tips paid to qualified

quarter, even if you were unable to withhold the employee

employees for which the employer is exempt from paying

tax of 1.45%.

the employer’s 6.2% share of social security tax.

line 5c (column 1)

6b. Number of qualified employees paid exempt

.029

wages/tips this quarter. Enter on line 6b the total number

line 5c (column 2)

of qualified employees paid exempt wages/tips to which you

applied the social security tax exemption in this quarter.

For more information on tips, see section 6 of Pub. 15

Qualified employees included on line 6a will also be

(Circular E).

included on line 6b. For the second quarter of 2010,

Do not reduce the amount reported on line 5c by any

qualified employees included on line 12c may also be

amount paid to qualified new employees. The tax

included on line 6b. See the instructions for line 6a for the

exemption does not apply to Medicare tax.

definition of qualified employee.

CAUTION

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

6c. Exempt wages/tips paid to qualified employees

social security tax (line 5a), social security tips tax (line 5b),

this quarter. Enter the amount of exempt wages/tips paid

and Medicare tax (line 5c) and enter the result on line 5d.

this quarter to all qualified employees reported on line 6b.

See the instructions for line 6a for the definition of exempt

6. Employer’s social security tax exemption

wages/tips.

Complete lines 6a – 6d to figure the payroll tax exemption for

6d. Social security tax exemption. Multiply the

the employer’s share (6.2%) of social security tax on wages/

amount of exempt wages/tips reported on line 6c by .062

tips paid to one or more qualified employees.

and enter the result on line 6d. See the instructions for line

An employer must be a qualified employer to be eligible

17 for details about applying this exemption to your tax

for the employer’s social security tax exemption. A qualified

liability.

employer is any employer other than Federal, State, and

6e. Total taxes before adjustments. Add the total

any related government entities. All public institutions of

federal income tax withheld from wages, tips, and other

higher education and Indian tribal governments are also

compensation (line 3) and the total social security and

qualified employers.

Medicare taxes before adjustments (line 5d), and subtract

An employer may elect not to apply the social security tax

the qualified employer’s social security tax exemption (line

exemption with respect to a qualified employee. The election

6d). Enter the result on line 6e.

-6-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2010 Page 7

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