Instructions for Schedule B (2023)

Instructions for Schedule B

(Form 941)

Department of the Treasury

Internal Revenue Service

(Rev. March 2023)

Use with the January 2017 revision of Schedule B (Form 941)

Report of Tax Liability for Semiweekly Schedule Depositors

Section references are to the Internal Revenue Code

unless otherwise noted.

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

Islands), unless otherwise noted.

Future Developments

Adjusting tax liability for nonrefundable credits

claimed on Form 941, lines 11a, 11b, and 11d. See

Adjusting Tax Liability for Nonrefundable Credits Claimed

on Form 941, Lines 11a, 11b, and 11d, later, for

instructions on how to report on Schedule B adjustments

to your tax liabilities for the qualified small business

payroll tax credit for increasing research activities; the

nonrefundable portion of the credit for qualified sick and

family leave wages paid this quarter of 2023 for leave

taken after March 31, 2020, and before April 1, 2021; and

the nonrefundable portion of the credit for qualified sick

and family leave wages paid this quarter of 2023 for leave

taken after March 31, 2021, and before October 1, 2021.

For the latest information about developments related to

Schedule B and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form941.

What’s New

Qualified small business payroll tax credit for increasing research activities. For tax years beginning

before January 1, 2023, a qualified small business may

elect to claim up to $250,000 of its credit for increasing

research activities as a payroll tax credit. The Inflation

Reduction Act of 2022 (the IRA) increases the election

amount to $500,000 for tax years beginning after

December 31, 2022. The payroll tax credit election must

be made on or before the due date of the originally filed

income tax return (including extensions). The portion of

the credit used against payroll taxes is allowed in the first

calendar quarter beginning after the date that the qualified

small business filed its income tax return. The election

and determination of the credit amount that will be used

against the employer’s payroll taxes are made on Form

6765, Credit for Increasing Research Activities. The

amount from Form 6765, line 44, must then be reported

on Form 8974, Qualified Small Business Payroll Tax

Credit for Increasing Research Activities.

Starting in the first quarter of 2023, the payroll tax credit

is first used to reduce the employer share of social

security tax up to $250,000 per quarter and any remaining

credit reduces the employer share of Medicare tax for the

quarter. Any remaining credit, after reducing the employer

share of social security tax and the employer share of

Medicare tax, is then carried forward to the next quarter.

Form 8974 is used to determine the amount of the credit

that can be used in the current quarter. For more

information about the payroll tax credit, see IRS.gov/

ResearchPayrollTC. Also see Adjusting Tax Liability for

Nonrefundable Credits Claimed on Form 941, Lines 11a,

11b, and 11d, later.

Reminders

Schedule B is filed with Form 941 or Form 941-SS.

References to Form 941, Employer's QUARTERLY

Federal Tax Return, in these instructions also apply to

Form 941-SS, Employer’s QUARTERLY Federal Tax

Return (American Samoa, Guam, the Commonwealth of

Feb 22, 2023

Reporting prior period adjustments. Prior period

adjustments are reported on Form 941-X, Adjusted

Employer's QUARTERLY Federal Tax Return or Claim for

Refund, or Form 944-X, Adjusted Employer's ANNUAL

Federal Tax Return or Claim for Refund, and aren’t taken

into account when figuring the tax liability for the current

quarter.

When you file Schedule B with your Form 941, don’t

change your current quarter tax liability by adjustments

reported on any Form 941-X or 944-X.

Amended Schedule B. If you have been assessed a

failure-to-deposit (FTD) penalty, you may be able to file an

amended Schedule B. See Correcting Previously

Reported Tax Liability, later.

General Instructions

Purpose of Schedule B

These instructions tell you about Schedule B. To

determine if you’re a semiweekly schedule depositor, see

section 11 of Pub. 15, Employer's Tax Guide, or section 8

of Pub. 80, Federal Tax Guide for Employers in the U.S.

Virgin Islands, Guam, American Samoa, and the

Commonwealth of the Northern Mariana Islands.

Federal law requires you, as an employer, to withhold

certain taxes from your employees’ pay. Each time you

pay wages, you must withhold—or take out of your

employees’ pay—certain amounts for federal income tax,

social security tax, and Medicare tax. You must also

withhold Additional Medicare Tax from wages you pay to

an employee in excess of $200,000 in a calendar year.

Under the withholding system, taxes withheld from your

employees are credited to your employees in payment of

their tax liabilities.

Cat. No. 38683X

Federal law also requires employers to pay any liability

for the employer share of social security and Medicare

taxes. This share of social security and Medicare taxes

isn’t withheld from employees.

exactly match the name of your business and the EIN that

the IRS assigned to your business and also agree with the

name and EIN shown on the attached Form 941 or Form

941-X.

On Schedule B, list your tax liability for each day. Your

tax liability is based on the dates wages were paid. Your

liability includes:

• The federal income tax you withheld from your

employees' pay, and

• Both the employer and employee share of social

security and Medicare taxes.

Calendar Year

Enter the calendar year that applies to the quarter

checked.

Check the Box for the Quarter

Under Report for this Quarter at the top of Schedule B,

check the appropriate box of the quarter for which you’re

filing this schedule. Make sure the quarter checked on the

top of the Schedule B matches the quarter checked on

your Form 941 or Form 941-X.

Don’t use Schedule B to show federal tax deposits. The

IRS gets deposit data from electronic funds transfers.

The IRS uses Schedule B to determine if you’ve

deposited your federal employment tax liabilities

CAUTION on time. If you're a semiweekly schedule

depositor and you don’t properly complete and file your

Schedule B with Form 941, the IRS may propose an

“averaged” FTD penalty. See Deposit Penalties in section

11 of Pub. 15 or section 8 of Pub. 80 for more information.

!

Enter Your Tax Liability by Month

Schedule B 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. Enter your

tax liabilities in the spaces that correspond to the dates

you paid wages to your employees, not the date payroll

liabilities were accrued or deposits were made.

Who Must File?

For example, if your payroll period ended on December

31, 2022, and you paid the wages for that period on

January 6, 2023, you would:

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

the quarter), and

• Enter your tax liability on line 6 (because line 6

represents the sixth day of the month).

File Schedule B if you’re a semiweekly schedule

depositor. You’re a semiweekly schedule depositor if you

reported more than $50,000 of employment taxes in the

lookback period or accumulated a tax liability of $100,000

or more on any given day in the current or prior calendar

year. If you became a semiweekly schedule depositor

during the quarter, you must complete Schedule B for the

entire quarter. See section 11 of Pub. 15 or section 8 of

Pub. 80 for more information. The $100,000 tax liability

threshold requiring a next-day deposit is determined

before you consider any reduction of your liability for

nonrefundable credits. For more information, including an

example, see frequently asked question 17 at IRS.gov/

ETD.

Make sure you have checked the appropriate box

TIP in Part 2 of Form 941 to show that you’re a

semiweekly schedule depositor.

Example 1. Cedar Co. is a semiweekly schedule

depositor that pays wages for each month on the last day

of the month. On December 24, 2023, Cedar Co. also

paid its employees year-end bonuses (subject to

employment taxes). Cedar Co. must report employment

tax liabilities on Schedule B for the fourth quarter

(October, November, December) as follows.

Don’t complete Schedule B if you have a tax

liability on Form 941, line 12, that is less than

CAUTION $2,500 during the quarter.

!

When Must You File?

Month

1 (October)

2 (November)

3 (December)

3 (December)

Schedule B is filed with Form 941. Therefore, the due date

of Schedule B is the same as the due date for the

applicable Form 941. In some situations, Schedule B may

be filed with Form 941-X. See Form 941-X, later, for

details.

Lines for dates wages were paid

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

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

line 24 (bonus paid December 24, 2023)

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

Example 2. Fir Co. is a semiweekly schedule depositor

that pays employees every other Friday. Fir Co.

accumulated a $20,000 employment tax liability on each

of these pay dates: January 6, 2023; January 20, 2023;

February 3, 2023; February 17, 2023; March 3, 2023;

March 17, 2023; and March 31, 2023. Fir Co. must report

employment tax liabilities on Schedule B as follows.

Don’t file Schedule B as an attachment to Form 944,

Employer's ANNUAL Federal Tax Return. Instead, if

you’re a semiweekly schedule depositor that is required to

file a report of tax liability with Form 944, use Form 945-A,

Annual Record of Federal Tax Liability.

Specific Instructions

Completing Schedule B

Month

1 (January)

2 (February)

3 (March)

Enter Your Business Information

Carefully enter your employer identification number (EIN)

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

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Lines for dates wages were paid

lines 6 and 20

lines 3 and 17

lines 3, 17, and 31

Instructions for Schedule B (Form 941) (Rev. 3-2023)

any remaining credit is then used to reduce the employer

share of Medicare tax for the quarter until it reaches zero.

In completing Schedule B, you take into account the

payroll tax credit against the liability for the employer

share of social security tax starting with the first payroll

payment of the quarter that includes payments of wages

subject to social security tax to your employees until you

use up to $250,000 of credit against the employer share of

social security tax and you then take into account any

remaining payroll tax credit against the liability for the

employer share of Medicare tax starting with the first

payroll payment of the quarter that includes payments of

wages subject to Medicare tax to employees. Consistent

with the entries on Schedule B, the payroll tax credit

should be taken into account in making deposits of

employment tax. If any payroll tax credit is remaining at

the end of the quarter that hasn't been used completely

because it exceeds $250,000 of the employer share of

social security tax and the employer share of Medicare tax

for the quarter, the excess credit may be carried forward

to the succeeding quarter and allowed as a payroll tax

credit for the succeeding quarter. The payroll tax credit

may not be taken as a credit against income tax

withholding, the employee share of social security tax, or

the employee share of Medicare tax. Also, the remaining

payroll tax credit may not be carried back and taken as a

credit against wages paid from preceding quarters. For

more information about the payroll tax credit, go to

IRS.gov/ResearchPayrollTC.

Example 3. Elm Co. is a new business and monthly

schedule depositor for 2023. Elm Co. paid wages every

Friday and accumulated a $2,000 employment tax liability

on January 20, 2023. On January 27, 2023, and on every

subsequent Friday during 2023, Elm Co. accumulated a

$110,000 employment tax liability. Under the deposit

rules, employers become semiweekly schedule

depositors on the day after any day they accumulate

$100,000 or more of employment tax liability in a deposit

period. Elm Co. became a semiweekly schedule depositor

on January 28, 2023, because Elm Co. had a total

accumulated employment tax liability of $112,000 on

January 27, 2023. For more information, see section 11 of

Pub. 15 or section 8 of Pub. 80.

Elm Co. must complete Schedule B as shown next and

file it with Form 941. Elm Co. won’t check the second box

on Form 941, line 16, even though Elm Co. was a monthly

schedule depositor until January 28, 2023. Instead, Elm

Co. must check the third box on Form 941, line 16.

Month

1 (January)

1 (January)

2 (February)

3 (March)

Lines for dates wages were paid

line 20

line 27

lines 3, 10, 17, and 24

lines 3, 10, 17, 24, and 31

Amount to report

$2,000

$110,000

$110,000

$110,000

Total Liability for the Quarter

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

tax liabilities.

Example. Rose Co. is an employer with a calendar tax

year that filed its timely 2022 income tax return on April

18, 2023. Rose Co. elected to take the qualified small

business payroll tax credit for increasing research

activities on Form 6765. The third quarter of 2023 is the

first quarter that begins after Rose Co. filed the income tax

return making the payroll tax credit election. Therefore,

the payroll tax credit applies against Rose Co.'s share of

social security tax (up to $250,000) and Medicare tax on

wages paid to employees in the third quarter of 2023.

Rose Co. is a semiweekly schedule depositor. Rose Co.

completes Schedule B by reducing the amount of liability

entered for the first payroll payment in the third quarter of

2023 that includes wages subject to social security tax by

the lesser of (1) its share of social security tax (up to

$250,000) on the wages, or (2) the available payroll tax

credit. If the payroll tax credit elected is more than Rose

Co.'s share of social security tax on the first payroll

payment of the quarter, the excess payroll tax credit

would be carried forward to succeeding payroll payments

in the third quarter until it is used against up to $250,000

of Rose Co.'s share of social security tax for the quarter. If

the amount of the payroll tax credit exceeds Rose Co.'s

share of social security tax (up to $250,000) on wages

paid to its employees in the third quarter, any remaining

credit is used against Rose Co.'s share of Medicare tax on

the first payroll payment of the quarter and then the

excess payroll tax credit would be carried forward to

succeeding payroll payments in the third quarter until it is

used against Rose Co.'s share of Medicare tax for the

quarter. If Rose Co. still has credit remaining after

reducing its share of social security tax (up to $250,000)

and Medicare tax for the third quarter, the remainder

would be treated as a payroll tax credit against its share of

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 12 on Form 941; therefore, don't reduce your

CAUTION total liability reported on Schedule B by the

refundable portion of the credit for qualified sick and

family leave wages.

!

Adjusting Tax Liability for Nonrefundable

Credits Claimed on Form 941, Lines 11a, 11b,

and 11d

Semiweekly schedule depositors must account for

nonrefundable credits claimed on Form 941, lines 11a,

11b, and 11d, when reporting their tax liabilities on

Schedule B. The total tax liability for the quarter must

equal the amount reported on Form 941, line 12. Failure to

account for the nonrefundable credits on Schedule B may

cause Schedule B to report more than the total tax liability

reported on Form 941, line 12. Don't reduce your daily tax

liability reported on Schedule B below zero.

Qualified small business payroll tax credit for increasing research activities (Form 941, line 11a).

Beginning with the first quarter of 2023, the qualified small

business payroll tax credit for increasing research

activities is first used to reduce the employer share of

social security tax (up to $250,000) for the quarter and

Instructions for Schedule B (Form 941) (Rev. 3-2023)

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remaining after that share is first reduced by any credit

claimed against the employer share of Medicare tax on

Form 8974, line 16, for the qualified small business payroll

tax credit for increasing research activities. In completing

Schedule B, you take into account the entire quarter's

nonrefundable portion of the credit for qualified sick and

family leave wages paid this quarter of 2023 against the

liability for the first payroll payment of the quarter, but not

below zero. Then reduce the liability for each successive

payroll payment in the quarter until the nonrefundable

portion of the credit is used. Any credit for qualified sick

and family leave wages paid this quarter of 2023 for leave

taken after March 31, 2021, and before October 1, 2021,

that is remaining at the end of the quarter because it

exceeds the employer share of Medicare tax for the

quarter is claimed on Form 941, line 13e, as a refundable

credit. The refundable portion of the credit doesn't reduce

the liability reported on Schedule B. For more information

about the credit for qualified sick and family leave wages,

go to IRS.gov/PLC.

social security tax (up to $250,000) and Medicare tax on

wages paid in the fourth quarter. If the amount of the

payroll tax credit remaining exceeded Rose Co.'s share of

social security tax (up to $250,000) and Medicare tax on

wages paid in the fourth quarter, it could be carried

forward and treated as a payroll tax credit for the first

quarter of 2024.

Nonrefundable portion of credit for qualified sick and

family leave wages for leave taken after March 31,

2020, and before April 1, 2021 (Form 941, line 11b).

The nonrefundable portion of the credit for qualified sick

and family leave wages paid this quarter of 2023 for leave

taken after March 31, 2020, and before April 1, 2021, is

limited to the employer share of social security tax on

wages paid in the quarter that is remaining after that share

is first reduced by any credit claimed against the employer

share of social security tax on Form 8974, line 12, for the

qualified small business payroll tax credit for increasing

research activities; any credit to be claimed on Form

5884‐C, line 11, for the work opportunity credit for

qualified tax‐exempt organizations hiring qualified

veterans; and/or any credit to be claimed on Form 5884-D

for the disaster credit for qualified tax-exempt

organizations. In completing Schedule B, you take into

account the entire quarter's nonrefundable portion of the

credit for sick and family leave wages against the liability

for the first payroll payment of the quarter, but not below

zero. Then reduce the liability for each successive payroll

payment in the quarter until the nonrefundable portion of

the credit is used. Any credit for qualified sick and family

leave wages paid this quarter of 2023 for leave taken after

March 31, 2020, and before April 1, 2021, that is

remaining at the end of the quarter because it exceeds the

employer share of social security tax for the quarter is

claimed on Form 941, line 13c, as a refundable credit. The

refundable portion of the credit doesn’t reduce the liability

reported on Schedule B. For more information about the

credit for qualified sick and family leave wages, go to

IRS.gov/PLC.

You may reduce your deposits by the amount of

TIP the nonrefundable and refundable portions of the

credit for qualified sick and family leave wages.

For more information on reducing deposits, see Notice

2020-22, 2020-17 I.R.B. 664, available at IRS.gov/irb/

2020-17_IRB#NOT-2020-22; and Notice 2021-24,

2021-18 I.R.B. 1122, available at IRS.gov/irb/

2021-18_IRB#NOT-2021-24.

Correcting Previously Reported Tax Liability

Semiweekly schedule depositors. If you’ve been

assessed an FTD penalty for a quarter and you made an

error on Schedule B and the correction won’t change the

total liability for the quarter you reported on Schedule B,

you may be able to reduce your penalty by filing an

amended Schedule B.

Example. You reported a liability of $3,000 on day 1 of

month 1. However, the liability was actually for month 3.

Prepare an amended Schedule B showing the $3,000

liability on day 1 of month 3. Also, you must enter the

liabilities previously reported for the quarter that didn’t

change. Write “Amended” at the top of Schedule B. The

IRS will refigure the penalty and notify you of any change

in the penalty.

Example. Maple Co. is a semiweekly schedule

depositor that pays employees every other Friday. In the

first quarter of 2023, Maple Co. had pay dates of January

6, January 20, February 3, February 17, March 3, March

17, and March 31. Maple Co. paid qualified sick and

family leave wages on January 6 and January 20 for leave

taken after March 31, 2020, and before April 1, 2021. The

nonrefundable portion of the credit for qualified sick and

family leave wages for the quarter is $10,000. On

Schedule B (Form 941), Maple Co. will use the $10,000 to

reduce the liability for the January 6 pay date, but not

below zero. If any nonrefundable portion of the credit

remains, Maple Co. applies it to the liability for the

January 20 pay date, then the February 3 pay date, and

so forth until the entire $10,000 is used.

Monthly schedule depositors. You can file a

Schedule B if you have been assessed an FTD penalty for

a quarter and you made an error on the monthly tax

liability section of Form 941. When completing

Schedule B for this situation, only enter the monthly totals.

The daily entries aren’t required.

Where to file. File your amended Schedule B, or, for

monthly schedule depositors, your original Schedule B at

the address provided in the penalty notice you received. If

you're filing an amended Schedule B, you don’t have to

submit your original Schedule B.

Nonrefundable portion of credit for qualified sick and

family leave wages for leave taken after March 31,

2021, and before October 1, 2021 (Form 941,

line 11d). The nonrefundable portion of the credit for

qualified sick and family leave wages paid this quarter of

2023 for leave taken after March 31, 2021, and before

October 1, 2021, is limited to the employer share of

Medicare tax on wages paid in the quarter that is

Form 941-X

You may need to file an amended Schedule B with Form

941-X to avoid or reduce an FTD penalty.

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Instructions for Schedule B (Form 941) (Rev. 3-2023)

Tax decrease. If you’re filing Form 941-X for a quarter,

you can file an amended Schedule B with Form 941-X if

both of the following apply.

1. You have a tax decrease.

2. You were assessed an FTD penalty.

Paperwork Reduction Act Notice. We ask for the

information on Schedule B to carry out the Internal

Revenue laws of the United States. You’re required to

give us the information. We need it to ensure that you’re

complying with these laws and to allow us to figure and

collect the right amount of tax.

File your amended Schedule B with Form 941-X. The total

liability for the quarter reported on your amended

Schedule B must equal the corrected amount of tax

reported on Form 941-X. If your penalty is decreased, the

IRS will include the penalty decrease with your tax

decrease.

You’re 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.

Tax increase—Form 941-X filed timely. If you’re filing a

timely Form 941-X showing a tax increase, don’t file an

amended Schedule B, unless you were assessed an FTD

penalty caused by an incorrect, incomplete, or missing

Schedule B. If you’re filing an amended Schedule B, don’t

include the tax increase reported on Form 941-X.

The time needed to complete and file Schedule B will

vary depending on individual circumstances. The

estimated average time is 2 hours, 53 minutes.

Tax increase—Form 941-X filed late. If you owe tax

and are filing a late Form 941-X, that is, after the due date

of the return for the return period in which you discovered

the error, you must file an amended Schedule B with Form

941-X. Otherwise, the IRS may assess an “averaged”

FTD penalty.

The total tax reported on the “Total liability for the

quarter” line of the amended Schedule B must match the

corrected tax (Form 941, line 12, combined with any

correction reported on Form 941-X, line 23) for the

quarter, less any previous abatements and interest-free

tax assessments.

Instructions for Schedule B (Form 941) (Rev. 3-2023)

If you have comments concerning the accuracy of this

time estimate or suggestions for making Schedule B

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

send us comments from IRS.gov/FormComments. Or you

can send your comments to Internal Revenue Service,

Tax Forms and Publications Division, 1111 Constitution

Ave. NW, IR-6526, Washington, DC 20224. Don’t send

Schedule B to this address. Instead, see Where Should

You File? in the Form 941 instructions.

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