IRS Releases Draft Revised Tax Form for Reporting Covid-19 Credits (1)

An expanded quarterly employer income tax return draft for 2020, with 23 new data entry fields to allow additional reporting for three payroll credits related to the coronavirus outbreak, was released on April 29 by the Internal Revenue Service.

The agency has also published draft instructions.

The revised Form 941, Quarterly Federal Employer Tax Return, should be used starting in the second quarter of 2020 to report amounts of employment taxes that have been withheld by employers instead of being filed. in anticipation of refundable payroll tax credits. The draft form, which has been extended to three pages instead of two, is also to be used to report advances claimed on Form 7200, Prepayment of Employer Credits Due to COVID-19.

Private sector employers with fewer than 500 employees may be eligible for refundable wage tax credits for the payment of qualified sick leave wages and qualified family leave wages under Family First. Coronavirus Response Act, which was enacted on March 18. Both paid leave credits are available for qualified paid leave with pay from April 1 to December 31, 2020.

A third refundable credit, the employee loyalty credit, was established by the CARES (Coronavirus Aid Relief and Economic Security) law, promulgated on March 27. The credit amount for 2020 is equivalent to half of the eligible salary paid for each employee as of March. December 13 to 31, 2020, the amount of salary per employee being limited to $ 10,000 when it is recognized in the credit. Based on the calculation, the retention credit for each eligible employee is limited to $ 5,000.

Draft forms and publications are not final and may be updated.

Revisions to Form 941

The draft form, which was announced on April 16 by the IRS, includes 23 data fields that have been added to the three parts of the quarterly form or previous positions have been changed.

In Part 1, new fields have been included for allowable wages for sick leave and family leave; taxable social security tips; Health insurance salaries and tips; and the non-refundable portions of the credits, as calculated on a spreadsheet in the instructions, for eligible sick and family leave and employee retention credit.

Part 1, which covers the first two pages of the form, added six data fields related to deposits, deferrals and refundable credits: deferred amount from the employer of social security tax; refundable portion of credits for eligible wages for sick leave and family leave and employee retention credit; the total advances received from filing 7200 forms for the quarter; and the total of deposits, deferrals and refundable credits, less advances.

Part 3, which begins on page 3, begins by asking if the employer’s business has closed or stopped paying wages. Eight data fields follow and require information on qualified health plan expenditures attributable to eligible sick leave and family leave wages; salary eligible for the employee retention credit; Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations that Hire a Qualified Veteran; eligible salaries paid from March 13 to March 31, 2020, for the employee retention credit; and eligible health insurance plan expenses attributable to salaries.

Comments on the revised Form 941 can be sent to

More FAQs

The list of 94 frequently asked questions and answers on a range of topics related to employee retention credit under the CARES Act has also been released by the IRS. The refundable tax credit is 50% of a maximum of $ 10,000 of salary paid to an employee by an eligible employer whose business has been financially affected by COVID-19, a respiratory disease caused by the new coronavirus. .

Topics covered in the FAQ include skilled salaries and health plan expenses, employment taxes, determining a full or partial suspension of a business, essential versus non-essential businesses, order government to shut down a business, employee retention credit claim and reaction. with other credits, defining a significant drop in gross receipts, and the use of third-party payroll providers.

The FAQ includes a number of examples.

A list of 67 frequently asked questions and answers on coronavirus-related tax credits for paid vacation was released on April 17 by the agency. The FAQ dealt with tax credits for small and medium-sized businesses that provide paid time off required under the Families First Coronavirus Response Act (Pub. L. 116-127).

(Updated to include publication of draft instructions for Form 941.)

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