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Instructions for Schedule B (Form 941)

16:18 - 10-FEB-2006

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Instructions for Schedule B

(Form 941)

Department of the Treasury

Internal Revenue Service

(Rev. January 2006)

Report of Tax Liability for Semiweekly Schedule Depositors

General Instructions:

See $100,000 Next-Day Deposit Rule in section 11 of

Pub. 15 (Circular E) for important details.

Purpose of Schedule B (Form 941)

Do not complete Schedule B (Form 941) if you have a

tax liability that is less than $2,500 (after you subtract

CAUTION any advance earned income credit (EIC) payment)

during the quarter and you pay in full with a return that you file

on time.

!

These instructions tell you about Schedule B (Form 941),

Report of Tax Liability for Semiweekly Schedule Depositors. To

determine if you are a semiweekly depositor, visit the IRS

website at www.irs.gov and type “semiweekly depositor” in the

search box. Also see Pub. 15 (Circular E), Employer’s Tax

Guide, or Pub. 80 (Circular SS), Federal Tax Guide for

Employers in the U.S. Virgin Islands, Guam, American Samoa,

and the Commonwealth of the Northern Mariana Islands.

What Is Schedule B (Form 941)?

Federal law requires you, as an employer, to withhold taxes

from your employees’ paychecks. Each time you pay wages,

you must withhold – or take out of your employees’ paychecks

– certain amounts for federal income tax, social security tax,

and Medicare tax (payroll taxes). Under the withholding system,

taxes withheld from your employees are credited to your

employees in payment of their tax liabilities.

Federal law also requires employers to pay any liability for

the employer’s portion of social security and Medicare taxes.

This portion of social security and Medicare taxes is not

withheld from employees.

Schedule B (Form 941) accompanies Form 941, Employer’s

QUARTERLY Federal Tax Return, or Form 941-SS, Employer’s

QUARTERLY Federal Tax Return (American Samoa, Guam,

the Commonwealth of the Northern Mariana Islands, and the

U.S. Virgin Islands), that you use to report your payroll taxes

and adjustments. (Do not use Schedule B (Form 941) as an

attachment to Form 944, Employer’s ANNUAL Federal Tax

Return, or Form 944-SS, Employer’s ANNUAL Federal Tax

Return. Instead use Form 945-A, Annual Record of Federal Tax

Liability.)

On Schedule B (Form 941), list your tax liability for each

day.

Include:

• the federal income tax you withheld from your employees’

paychecks and

• both employee and employer Medicare and social security

taxes.

Note. Subtract any advance earned income credit payments

from your tax liability.

Do not use the Schedule B (Form 941) to show federal tax

deposits. Deposit information is taken from your deposit

coupons (Form 8109, Federal Tax Deposit Coupon) or from the

Electronic Federal Tax Payment System (EFTPS).

IRS uses Schedule B (Form 941) to determine if you

have deposited your federal employment tax liabilities

CAUTION on time. If you do not properly complete and file your

Schedule B (Form 941) with Form 941 or Form 941-SS, IRS

may propose an “averaged” failure-to-deposit penalty. See

Deposit Penalties in section 11 of Pub. 15 (Circular E) for more

information.

!

Who Must file Schedule B (Form 941)?

When Must You File?

Attach your Schedule B (Form 941) to your Form 941 or Form

941-SS and file it every quarter when that Form 941 or Form

941-SS is due. For more information, see section 12 of Pub. 15

(Circular E), the Instructions for Form 941, or the Instructions

for Form 941-SS.

Specific Instructions:

Completing Schedule B (Form 941)

Fill in Your Business Information

Carefully fill in your employer identification number (EIN) and

name at the top of the schedule. Make sure that they exactly

match the name of your business and the EIN that IRS

assigned to your business and also agree with the name and

EIN shown on the attached Form 941 or Form 941-SS.

Always be sure the EIN on the schedule you file exactly

matches the EIN that IRS assigned to your business. Do

CAUTION not use your social security number on forms that ask

for an EIN. Filing a Schedule B (Form 941) with an incorrect

EIN, or using the EIN of another business, may result in

penalties and delays in processing your return.

!

Calendar year

Show the calendar year that applies to the quarter checked.

See Check the Box for the Quarter below.

Check the Box for the Quarter

In the box at the top of the schedule, check the appropriate box

of the quarter for which you are filing this schedule. Make sure

that the quarter checked on the top of the Schedule B (Form

941) matches the quarter checked on your Form 941 or Form

941-SS.

Fill in Your Tax Liability by Month

Schedule B (Form 941) is divided into the 3 months that make

up a quarter of a year. Each month has 31 numbered spaces

that correspond to the dates of a typical month. Write your tax

liabilities in the spaces that correspond to the dates you paid

wages to your employees, not the date payroll deposits were

made.

For example, if your payroll period ended on

December 31, 2005, and you paid the wages for that period on

January 6, 2006, you would:

• go to Month 1 (because January is the first month of the

quarter) and

• write your tax liability on line 6 (because line 6 represents the

sixth day of the month).

File Schedule B (Form 941) if you are:

• a semiweekly schedule depositor or

• a monthly schedule depositor who accumulated a tax liability

Make sure you have checked the appropriate box on

TIP line 15 of Form 941 or Form 941-SS to show that you

of $100,000 or more on any given day in the reporting period.

Cat. No. 38683X

are a semiweekly schedule depositor.

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Instructions for Schedule B (Form 941)

16:18 - 10-FEB-2006

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• If the adjustment corrects an overreported liability, use the

Total Liability for the Quarter

adjustment amount to offset subsequent liabilities until it is used

up.

Example. On 1/20/06, Employer D discovered that social

security tax was over-reported by $10,000 on a prior quarter

return. Employer D paid wages on 1/13/06, 1/20/06, 1/27/06,

and 2/3/06 and had a $5,000 tax liability for each of those pay

dates. On Schedule B (Form 941), Employer D must report a

$5,000 liability on 1/13/06 for Month 1 using line 13. Since the

adjustment for the $10,000 over-reported liability offsets the

1/20/06 and 1/27/06 liability, Employer D does not deposit or

report these two $5,000 liabilities on Schedule B (Form 941).

Employer D must report the $5,000 liability for 2/3/06 on Month

2 using line 3. (See section 13 of Pub. 15 (Circular E) for details

on reporting adjustments to correct errors on prior period

returns.)

To find your total liability for the quarter, add your monthly tax

liabilities.

Tax Liability for Month 1

+ Tax Liability for Month 2

+ Tax Liability for Month 3

Total Liability for the Quarter

Your total liability for the quarter must equal line 10 on Form 941 or line

8 on Form 941-SS.

Here are some examples.

• Employer A is a semiweekly schedule depositor who pays

wages for each month on the last day of the month. On

December 22, 2006, Employer A also paid its employees

year-end bonuses (subject to employment taxes). Because

Employer A is a semiweekly schedule depositor, Employer A

must record employment tax liabilities on Schedule B (Form

941). For the 4th quarter (October, November, December),

Employer A should report tax liability in this way —

Month

Lines for dates wages were paid

1 (October)

2 (November)

3 (December)

line 31 (pay day, last day of the month)

line 30 (pay day, last day of the month)

lines 22 (bonus paid) + 31 (pay day)

How to Order Forms and Publications

from the IRS

Call 1-800-829-3676

Visit the IRS website at www.irs.gov

• Employer B is a semiweekly schedule depositor who pays

employees every other Friday. Employer B accumulated a

$20,000 employment tax liability on each of these pay dates:

1/13/06, 1/27/06, 2/10/06, 2/24/06, 3/10/06, and 3/24/06. Since

Employer B is a semiweekly schedule depositor, Employer B

must record tax liabilities on Schedule B (Form 941) in this

way —

Month

Lines for dates wages were paid

1 (January)

2 (February)

3 (March)

lines 13 and 27

lines 10 and 24

lines 10 and 24

Other IRS Products You May Need

• Form 941, Employer’s QUARTERLY Federal Tax Return

• Form 941-SS, Employer’s QUARTERLY Federal Tax Return

(American Samoa, Guam, the Commonwealth of the Northern

Mariana Islands, and the U.S. Virgin Islands)

• Pub. 15 (Circular E), Employer’s Tax Guide

• Pub. 80 (Circular SS), Federal Tax Guide for Employers in

the U.S. Virgin Islands, Guam, American Samoa, and the

Commonwealth of the Northern Mariana Islands.

Paperwork Reduction Act Notice

• Employer C is a new business and monthly schedule

depositor for 2006. Employer C pays wages every Friday and

has accumulated a $2,000 employment tax liability on

1/13/06 and a $110,000 liability on 1/20/06 and on every

subsequent Friday during 2006. Under the deposit rules,

employers become semiweekly schedule depositors on the

day after any day they accumulate $100,000 or more of tax

liability in a deposit period. (See section 11 of Pub. 15

(Circular E) or section 8 of Pub. 80 (Circular SS) for details.)

Because Employer C accumulated $112,000 on 1/20/06,

Employer C became a semiweekly schedule depositor on the

next day and must complete Schedule B (Form 941) and file it

with Form 941 or Form 941-SS. Employer C should record tax

liabilities in this way —

Month

1 (January)

1 (January)

2 (February)

3 (March)

Dates wages were paid

line 13

lines 20, 27

lines 3, 10, 17, 24

lines 3, 10, 17, 24

We ask for the information on Schedule B (Form 941) to carry

out the Internal Revenue laws of the United States. You are

required to give us the information. We need it to ensure that

you are complying with these laws and to allow us to figure and

collect the right amount of tax.

You are not required to provide the information requested on a

form that is subject to the Paperwork Reduction Act unless the

form displays a valid OMB control number. Books or records

relating to a form or its instructions must be retained as long as

their contents may become material in the administration of any

Internal Revenue law. Generally, tax returns and return

information are confidential, as required by Code section 6103.

Amount to record

The time needed to complete and file Schedule B (Form 941)

will vary depending on individual circumstances. The estimated

average time is 2 hours, 53 minutes.

$2,000

$110,000

$110,000

$110,000

If you have comments concerning the accuracy of this time

estimate or suggestions for making Schedule B (Form 941)

simpler, we would be happy to hear from you. You can write to:

Internal Revenue Service, Tax Products Coordinating

Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave.

NW, IR-6406, Washington, DC 20224.

Prior Period Adjustments

On Schedule B (Form 941), you must take into account

adjustments to correct errors on prior period returns. See lines

7d-7g on post-2004 versions of Forms 941; lines 7e and 7g on

post-2004 versions of Forms 941-SS. (For pre-2005 Forms 941

and 941-SS, see lines 4 and 9.)

• If the adjustment corrects an underreported liability in a prior

quarter, include the adjustment amount in the total liability

reported for the entry space that corresponds to the date you

discovered the error.

Do not send the Schedule B (Form 941) to this address.

Instead, see Where Should You File? in the Form 941 or Form

941-SS instructions.

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