3 Unique Forms 941 for Employers to Navigate, Reconcile, and File in 2020

by | Nov 24, 2020

Article written by Suzanne Stricker, CPP, Manager of Senior Consulting

As a result of the COVID-19 Global Pandemic, employers in the United States find themselves navigating a new Form 941 almost quarterly in 2020. The Form 941 which employers filed for 2019 and first quarter 2020 was consistent and employers’ payroll tax departments were poised for success until the pandemic hit the United States. However, those same payroll tax departments now face new challenges due to the frequently changing payroll tax landscape.

In this unprecedented year, employers face navigating three unique Forms 941 to complete within the same calendar year. The unique challenges that payroll tax departments face to stay current are at an all-time high. The Coronavirus Aid, Relief, and Economic Security (CARES) Act and The Families First Coronavirus Response Act (FFCRA) has provided both relief and created more recordkeeping for employers. 

The second version of Form 941 released for 2020 included 18 additional lines to accommodate the reporting of data pertaining to Coronavirus-related employment tax relief. The Internal Revenue Service estimated an additional 7 hours of work to complete the 2019 Form 941 compared to the July 2020 version. It should be noted that the second version of Form 941 should only be utilized for the second quarter 2020.

A third version of Form 941 for 2020 was released on September 30, 2020 to accommodate reporting of data regarding deferrals of the employee portion of Social Security tax established by an executive order in early August, after the second version of Form 941 for 2020 was released. Specifically, four reporting lines were revised and should only be utilized to file for the third and fourth quarters of 2020. 

Actions to Consider: Reconciliations and Preview W-2s

Payroll best practices suggest reconciliation of taxable earnings and employee taxes withheld each pay period. Now is a good time to review the reconciliations, ensure they have been completed and ensure month-to-date, quarter-to-date, and year-to-date amounts are reconciled. 

Consider including the following practices:

  • Validate the reconciliations include qualified sick leave wages and family leave wages paid to employees
  • Review and add lines to support Worksheet 1 which contain credit for Sick and Family Leave Wages and the Employee Retention Credit; understand the difference between the refundable portion and the non-refundable portion of credit
  • If the employer elected to defer Social Security tax and employees have elected to defer Social Security tax that the employer includes those amounts in recordkeeping.
  • Request preview W-2s from the payroll provider to ensure all wages, taxes and deferrals are reporting as required

How Can PayTech Help?

PayTech Consultants have on average, over 20 years’ expertise in Human Resources, Payroll and Human Capital Management systems. We bring a collaborative, relationship-building approach to identify opportunities for effective solutions specific to the needs of our clients. PayTech’s Consultants are positioned to help clients reconcile Forms 941 by identifying out of balance reports and identify solutions to resolve the root cause issues.  We are here to ensure our clients are prepared to handle the current payroll tax landscape and we can help navigate through these changing times.

Skilled Professional Guidance

By partnering with PayTech, you can concentrate on what you do best while our experts handle, execute, and train your staff how to manage these complex payroll responsibilities.

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