Given that most US employers are required to file quarterly federal tax returns, 2022 Form 941, the Employer’s Quarterly Tax Form, is an essential tax form for businesses. It is used by employers to report federal income taxes, Social Security tax or Medicare tax withholding from employees’ paychecks. Employers have to submit this form four times per year by the scheduled filing dates to avoid penalties.
The Internal Revenue Service (IRS) has released several new versions of Form 941 since the second quarter of 2020. These changes to wage reporting are a result of COVID-19 relief provisions, including Qualified Sick and Family Leave, the Employee Retention Credit, deferred Social Security tax, and, most recently, the COBRA Premium Assistance Credit. Therefore, employers need to be careful to use the most recent version of 2022 Form 941 as well as Form 941-X.
2022 Form 941 for the Second Quarter
On June 23, the IRS released an updated Form 941 for the second quarter of 2022, with a few notable changes that employers need to be aware of. The tax relief programs that were passed under the American Rescue Plan Act are continuing to expire and 2022 Form 941 for the second quarter reflects these changes. Accordingly, the IRS cautioned employers not to use earlier versions of the form.
One of the most visible changes to the 2022 Form 941 for the second quarter of 2022 is the removal of lines that gathered information related to the COBRA Premium Assistance Credit. Those lines were reserved for future use because the first quarter of 2022 was the last quarter in which most employers were eligible to claim the credit.
Also, now that many of the COVID-19 programs have ended and tax credits can no longer be claimed in advance, the IRS has reduced the number of Worksheets needed to file 2022 Form 941. As a result, for the second quarter of 2022, there will only be two Worksheets to help employers calculate the refundable and non-refundable portions of their remaining COVID-19 tax credits. Worksheet 3, COBRA Premium Assistance Credit, is no longer included.
Updates to 2022 Form 941 for the second quarter of 2022 include the following lines:
- Line 11e – Reserved for future use;
- Line 11f – Reserved for future use;
- Line 11g – Total nonrefundable credits. The IRS instructs adding lines 11a, 11b and 11d.
- Line 13f – Reserved for future use;
- Line 13g – Total deposits and refundable credits. The IRS instructs adding lines 13a, 13c and 13e.
In general, any employer who withholds taxes from employee payroll checks is required to fill out Form 941 four times a year, even if they have no taxes to report. The main exceptions are employers with household employees and agricultural employers. Employers who have seasonal employees only fill out Form 941 for those quarters in which they had paid wages.
Mandatory filing deadlines for 2022 Form 941 are:
- Quarter 1 – May 2, 2022;
- Quarter 2 – August 1, 2022;
- Quarter 3 – October 31, 2022; and
- Quarter 4 – December 31, 2022.
Employers have ten more days after the due date to file Form 941 for the quarter, provided they made complete payroll tax deposits for the quarter on time.
2022 Form 941 can be filed either electronically or by mail and employers choose one of these methods. The IRS e-file allows them to file the form online, and the Electronic Federal Tax Payment System (EFTPS) is a free service provided by the U.S. Department of the Treasury to make online payments.
As a federal tax regulator, the IRS monitors the filings and the tax owed by taxpayers and imposes penalties if they fail to file information returns by the prescribed due date or neglect to file them at all. If employers fail to file 2022 Form 941 by or on the due date, a standard 5% of the unpaid tax amount will be levied as the penalty for delayed Form 941 filing. This amount will continue to accrue interest every month until the unpaid tax amount is paid in full by the filer and Form 941 has been submitted.
While payroll tax penalties can be a common business expense whether due to incorrect calculations, missed deadlines or improper reporting, employers can implement certain procedures to minimize these expensive mistakes. The IRS regularly publishes news releases and instructions, making it imperative that employers pay close attention to these updates as well as tax announcements in states where they employ people. This is especially important in light of the expiring legislation passed in response to the COVID-19 pandemic.
In addition to this, employers can outsource payroll tax processing and ensure that all compensation paid to employees and all taxes withheld from wages are remitted and reported to government agencies on time. As a result, they can effortlessly meet the necessary deadlines, reduce costly mistakes and stay up to date with IRS updates.