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

If you are a third-party payer of sick pay, enter the federal

Include all tips your employees reported during the

income tax you withheld (or were required to withhold) on

quarter, even if you were unable to withhold the employee

third-party sick pay here.

tax of 1.45%.

4. If no wages, tips, and other

line 5c (column 1)

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compensation are subject to social security

line 5c (column 2)

or Medicare tax . . .

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

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

(Circular E).

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

5d. Total social security and Medicare taxes. Add

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

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

blank. For more information about exempt wages, see

5b), and Medicare tax (line 5c) and enter the result on line

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

5d.

Pub. 15-A.

6. Total taxes before adjustments

If you are a government employer, wages you pay

are not automatically exempt from social security

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

and Medicare taxes. Your employees may be

and other compensation (line 3) and the total social security

CAUTION

covered by law or by a voluntary Section 218 Agreement

and Medicare taxes before adjustments (line 5d).

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

7. TAX ADJUSTMENTS

Federal-State Reference Guide.

Enter tax amounts on lines 7a through 7c that result from

5. Taxable social security and Medicare

current quarter adjustments. Use a minus sign (if possible)

wages and tips

to show an adjustment that decreases the total taxes shown

on line 6 instead of parentheses. Doing so enhances the

5a. Taxable social security wages. Report the total

accuracy of our scanning software. For example, report

wages, sick pay, and fringe benefits subject to social

“-10.59” instead of “(10.59).” However, if your software only

security taxes you paid to your employees during the

allows for parentheses in reporting negative amounts, you

quarter. For this purpose, sick pay includes payments made

may use them.

by an insurance company to your employees for which you

Current quarter’s adjustments. In certain cases, you

received timely notice from the insurance company. See

must adjust the amounts you reported as social security and

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

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

reporting.

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

Enter the amount before deductions. Do not include tips

section 13 of Pub. 15 (Circular E).

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

Prior quarter’s adjustments. If you need to adjust any

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

amount reported on lines 7a, 7b, or 7c from a previously

The rate of social security tax on taxable wages is 6.2

filed Form 941, complete and file Form 941-X. Form 941-X

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

is an adjusted return and is filed separately from Form 941.

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

See section 13 of Pub. 15 (Circular E).

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

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

employee’s taxable wages (including tips) reach $106,800

adjustments for fractions of cents (due to rounding) relating

during 2010, unchanged from 2009. However, continue to

to the employee share of social security and Medicare taxes

withhold income and Medicare taxes for the whole year on

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

wages and tips even when the social security wage base of

in column 2 of lines 5a, 5b, and 5c may differ slightly from

$106,800 has been reached.

amounts actually withheld from employees’ paychecks due

to the rounding of social security and Medicare taxes based

line 5a (column 1)

on statutory rates.

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line 5a (column 2)

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

for the employee share of social security and Medicare

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

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

employees reported to you during the quarter until the total

7c. Current quarter’s adjustments for tips and

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

group-term life insurance. Enter adjustments for:

in 2010. Do this even if you were unable to withhold the

•

Any uncollected employee share of social security and

employee tax of 6.2%.

Medicare taxes on tips and

•

An employee must report cash tips to you, including tips

The uncollected employee share of social security and

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

Medicare taxes on group-term life insurance premiums paid

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

for former employees.

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

7d. TOTAL ADJUSTMENTS. Combine all adjustments

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

shown on lines 7a through 7c and enter the result here.

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

or electronic tip record.

Total taxes after adjustments

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

Combine the amounts shown on lines 6 and 7d and enter

them on Form 8027, Employer’s Annual Information Return

the result here.

of Tip Income and Allocated Tips. Allocated tips are not

9. Advance earned income credit (EIC)

reportable on Form 941 and are not subject to withholding of

payments made to employees

federal income, social security, or Medicare taxes.

Enter the amount of the advance earned income credit (EIC)

line 5b (column 1)

payments that you made to your employees. Eligible

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employees may choose to receive part of the EIC as an

line 5b (column 2)

advance payment. Those who expect to have a qualifying

5c. Taxable Medicare wages & tips. Report all

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

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

expect to qualify for the EIC. Once the employee gives you

subject to Medicare tax. Unlike social security wages, there

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

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

advance EIC payments starting with the employee’s next

-5-

Instructions For Form 941 - Employer'S Quarterly Federal Tax Return - 2010 Page 6

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