IRS directions

If you are not using a preprinted Form 941, type or print your EIN, name, and address in the spaces provided. Also enter your name and EIN on the top of page 2. Do not use your social security number (SSN) or individual taxpayer identification number (ITIN). Generally, enter the business (legal) name you used when you applied for your EIN on Form SS-4, Application for Employer Identification Number. For example, if you are a sole proprietor, enter “Haleigh Smith” on the “Name” line and “Haleigh’s Cycles” on the “Trade name” line. Leave the “Trade name” line blank if it is the same as your “Name.”

QuickBooks behavior

QuickBooks pulls the information for the “Name” of the company from the “Legal Name” in the Company information. The “Trade Name” is the name given your company in the “Name” section of the company information.

How to verify your QuickBooks result

To change the information in this section, choose Company Information from the Company menu. Make the necessary changes, and click OK.

IRS directions

Under “Report for this Quarter of 2010” at the top of the form, check the appropriate box of the quarter for which you are filing. Make sure the quarter checked is the same as shown on any attached Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors.

QuickBooks behavior

QuickBooks uses the quarter end date that has most recently passed unless you specify a different date.

IRS directions

Enter the number of employees on your payroll for the pay period including March 12, June 12, September 12, or December 12, for the quarter indicated at the top of Form 941. Do not include:

• Household employees,
• Employees in nonpay status for the pay period,
• Farm employees,
• Pensioners, or
• Active members of the Armed Forces.

QuickBooks behavior

If you had any employees with a pay period that included the date of March 12 (for Q1), June 12 (for Q2), September 12 (for Q3) or December 12 (for Q4), 2010, they are counted here.

How to verify your QuickBooks result

It is not unusual to see a number that is less than the total number of employees who were paid this year if some of your employees were not paid in the period that included March 12 (for Q1), June 12 (for Q2), September 12 (for Q3), or December 12 (for Q4), 2010.

It is also possible that the pay period on the check was entered incorrectly. If this is the case:

1. Make a note of the net amount of the check.
2. Double click the check in question, and click Paycheck Details.
3. Change the pay period. If you get a message asking you if you want to get time data for that period, click No.
4. Make sure that the net of the check did not change, and click Save and Close.

IRS directions

Enter amounts on line 2 that would also be included in box 1 of your employees' Forms W-2. Include sick pay paid by a third party if you were given timely notice of the payments and transferred liability for the employees' taxes.

If you are a third-party payer of sick pay, do not include sick pay that you paid to policyholders' employees here if you gave the policyholders timely notice of the payments.

QuickBooks behavior

QuickBooks totals, for the quarter, all the payroll items with a tax-tracking type that affects line 2.

How to verify your QuickBooks result

1. Run the Payroll Item Listing report.
2. Filter the report, and in the Columns, uncheck everything but the Payroll Item and Tax Tracking Type.
3. Print the report.
4. Put a checkmark next to any item that has a tax-tracking type of:
   Compensation
   Reported Tips
   Dependent Care FSA
   Section 457 Distribution
   Non-qual. Plan Distr
   Fringe Benefits
   Other Moving Expenses
   401(k)
   403(b)
   408(k)(6)SEP
   Elective 457(b)
   Simple IRA
   Taxable Grp Trm Life
   Med Care Flex Spend
   Premium Only/125
   SCorp Pd Med Premium
   HSA Co. (Taxable)
   HSA Emp. (Pretax)
5. Now run a Payroll Summary report for the quarter.
6. Click Modify Report.
7. Click the Filters tab.
8. Under Current filter choices, click Payroll Item. In the drop-down box in the middle, pick Multiple Payroll Items.
9. Check off all the payroll items you marked earlier. Line 2 is equal to the total of the Adjusted Gross Pay and Total Employer Taxes and Contributions.

If any of them should not track the way they are, then modify the payroll item:

1. Go to the Payroll Item List.
2. Double click the payroll item in question.
3. Click Next until you get to Tax Tracking Type.
4. Correct the tax-tracking type and click Next until you reach Finish. This will correct the form, but if the taxability changed, a Payroll Checkup should be run to correct the taxable wage bases.

IRS directions

Enter the federal income tax you withheld (or were required to withhold) from your employees on this quarter's wages, tips, taxable fringe benefits, and supplemental unemployment compensation benefits. Do not include any income tax withheld by a third-party payer of sick pay even if you reported it on Form W-2. You will reconcile this difference on Form W-3. Also include here any excise taxes you were required to withhold on golden parachute payments (section 4999).

If you are a third-party payer of sick pay, enter the federal income tax you withheld (or were required to withhold) on third-party sick pay here.

QuickBooks behavior

QuickBooks adds the total of the Federal Withholding from the paychecks for the quarter.

How to verify your QuickBooks result

Run a Payroll Summary for the quarter. The total of the Federal Withholding should equal line 3.

If an employee's federal withholding is incorrect, enter a liability adjustment for that employee. The amount of the adjustment may then need to be collected from or refunded to the employee.

To prevent this from occurring in the future:

1. Go to the Employee Center, and click the Employees Tab.
2. Double click the employee's name.
3. Change tabs to Payroll and Compensation Info.
4. Click Taxes.
5. Correct the filing status and allowances as necessary.

IRS directions

If no wages, tips, and other compensation on line 2 are subject to social security or Medicare tax, check the box on line 4. If this question does not apply to you, leave the box blank.

QuickBooks behavior

QuickBooks does not check this for you.

IRS directions

Report the total wages, sick pay, and fringe benefits subject to social security taxes you paid to your employees during the quarter. For this purpose, sick pay includes payments made by an insurance company to your employees for which you received timely notice from the insurance company.

Enter the amount before deductions. Do not include tips on this line.

The rate of social security tax on taxable wages is 6.2% (.062) each for the employer and employee or 12.4% (.124) for both. Stop paying social security tax on and reporting an employee's wages on line 5a when the employee's taxable wages (including tips) reach $106,800 during 2010 (unchanged from 2009). However, continue to withhold income and Medicare taxes for the whole year on wages and tips even when the social security wage base of $106,800 has been reached.

          line 5a (column 1)
        x   .124
        ---------
          line 5a (column 2)

Caution: Do not reduce the amount reported on line 5a by any amount paid to qualified new employees. The social security tax exemption on wages/tips will be figured on lines 6c and 6d and will reduce the tax on line 6e.

QuickBooks behavior

QuickBooks supplies Column 1 from the wage base for Social Security minus the wage base tips. Column 2 is a calculated amount.

How to verify your QuickBooks result

1. From the QuickBooks Reports menu, choose Employees & Payroll, and then Payroll Summary.
2. Click the Modify Report button.
3. Click the Display tab and select Last Calendar Quarter from the Dates drop-down list.
4. In the Display columns by drop-down list, select Total Only, and clear the Hours and Rate checkboxes.
5. Click the Filters tab.
6. Choose Payroll Item in the Filter drop-down list, and then choose Selected payroll items in the Payroll Item drop-down list.
7. In the Payroll Item window, select Federal Withholding, Medicare Company, Medicare Employee, Social Security Company, and Social Security Employee. Clear any other selected items, and click OK.
8. Click OK to return to the Payroll Summary report.
9. Double-click the "Social Security Employee Total" amount to display the Transactions by Payroll Item report.
   The Wage Base column total minus the Wage Base (Tips) column total should equal line 5a, Column 1.

Correcting line 5a, Column 1:
The wage base amount uses each paycheck and year-to-date adjustment entered into QuickBooks for the quarter. If the wage base amount is incorrect, your payroll items may be set up incorrectly. Verify the setup of all payroll items used in the calendar year by choosing Payroll Item List from the QuickBooks Lists menu, and then double-click each payroll item to review or correct it.

To locate and fix any incorrect employee wage bases, choose Run Payroll Checkup from the Employees menu. If any wage bases for the employees are fixed, QuickBooks will adjust Social Security and Medicare by the correct amounts on the next paycheck, if still in the same calendar year. If the calendar year has passed or amended Forms 941 need to be filed, contact your accountant.

Enter in any liability adjustments as needed. Keep in mind that adjusted amounts may need to be collected from or refunded to the employee.

IRS directions

Enter all tips your employees reported to you during the quarter until the total of the tips and wages for an employee reaches $106,800 in 2010. Include all tips your employees reported to you even if you were unable to withhold the employee tax of 6.2%.

An employee must report cash tips to you, including tips you paid the employee for charge customers, totaling $20 or more in a month by the 10th of the next month. Employees may use Form 4070, Employee's Report of Tips to Employer, or submit a written statement or electronic tip record.

Do not include allocated tips on this line. Instead, report them on Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Allocated tips are not reportable on Form 941 and are not subject to withholding of federal income, social security, or Medicare taxes.

          line 5b (column 1)
        x   .124
        ---------
          line 5b (column 2)

Caution: Do not reduce the amount reported on line 5b by any amount paid to qualified new employees. The social security tax exemption on wages/tips will be figured on lines 6c and 6d and will reduce the tax on line 6e.

QuickBooks behavior

QuickBooks supplies Column 1 from the wage base tips for Social Security. Column 2 is a calculated amount.

How to verify your QuickBooks result

1. From the QuickBooks Reports menu, choose Employees & Payroll, and then Payroll Summary.
2. Click the Modify Report button.
3. Click the Display tab and then select Last Calendar Quarter from the Dates drop-down list.
4. In the Display columns by drop-down list, select Total Only, and clear the Hours and Rate checkboxes.
5. Click the Filters tab.
6. Choose Payroll Item in the Filter drop-down list, and then choose Selected payroll items in the Payroll Item drop-down list.
7. In the Payroll Item window, select Federal Withholding, Medicare Company, Medicare Employee, Social Security Company, and Social Security Employee. Clear any other selected items and click OK.
8. Click OK to return to the Payroll Summary report.
9. Double-click the "Social Security Employee Total" amount to display the Transactions by Payroll Item report. The Wage Base (Tips) column total should equal line 5b, Column 1.

Correcting line 5b, Column 1:
The wage base amount uses each paycheck and year-to-date adjustment entered into QuickBooks for the quarter. If the wage base amount is incorrect, your payroll items may be set up incorrectly. Verify the setup of all payroll items used in the calendar year by choosing Payroll Item List from the QuickBooks Lists menu, and then double-click each payroll item to review or correct it.

To locate and fix any incorrect employee wage bases, choose Run Payroll Checkup from the Employees menu. If any wage bases require correction, review all 941 forms filed for the year to date. Once the wage bases for the employees are fixed, QuickBooks will adjust social security and Medicare by the correct amounts on the next paycheck, if still in the same calendar year. If the calendar year has passed or amended 941 forms need to be filed, contact your accountant.

Enter in any liability adjustments as needed. Keep in mind that adjusted amounts may need to be collected from or refunded to the employee.

IRS directions

Report all wages, tips, sick pay, and taxable fringe benefits that are subject to Medicare tax. Unlike social security wages, there is no limit on the amount of wages subject to Medicare tax.

Include all tips your employees reported during the quarter, even if you were unable to withhold the employee tax of 1.45%.

          line 5c (column 1)
        x   .029
        ---------
          line 5c (column 2)

Caution: Do not reduce the amount reported on line 5c by any amount paid to qualified new employees. The tax exemption does not apply to Medicare tax.

QuickBooks behavior

QuickBooks supplies the number for Column 1 from the wage base for Medicare. Column 2 is a calculated amount.

How to verify your QuickBooks result

1. From the QuickBooks Reports menu, choose Employees & Payroll, and then Payroll Summary.
2. Click the Modify Report button.
3. Click the Display tab and then select Last Calendar Quarter from the Dates drop-down list.
4. In the Display columns by drop-down list, select Total Only, and clear the Hours and Rate checkboxes.
5. Click the Filters tab.
6. Choose Payroll Item in the Filter drop-down list, and then choose Selected payroll items in the Payroll Item drop-down list.
7. In the Payroll Item window, select Federal Withholding, Medicare Company, Medicare Employee, Social Security Company, and Social Security Employee. Clear any other selected items, and click OK.
8. Click OK to return to the Payroll Summary report.
9. Double-click the "Medicare Employee Total" amount to display the Transactions by Payroll Item report. The Wage Base column total should equal line 5c, Column 1.

Correcting line 5c, Column 1:
The wage base amount uses each paycheck and year-to-date adjustment entered into QuickBooks for the quarter. If the wage base amount is incorrect, your payroll items may be set up incorrectly. Verify the setup of all payroll items used in the calendar year by choosing Payroll Item List from the QuickBooks Lists menu, and then double-click each payroll item to review or correct it.

To locate and fix any incorrect employee wage bases, choose Run Payroll Checkup from the Employees menu. If any wage bases require correction, review all 941 forms filed for the year to date. Once the wage bases for the employees are fixed, QuickBooks will adjust social security and Medicare by the correct amounts on the next paycheck, if still in the same calendar year. If the calendar year has passed or amended 941 forms need to be filed, contact your accountant.

Enter in any liability adjustments as needed. Keep in mind that adjusted amounts may need to be collected from or refunded to the employee.

IRS directions

Add the social security tax (line 5a), social security tips tax (line 5b), and Medicare tax (line 5c), and enter the result on line 5d.

QuickBooks behavior

QuickBooks adds together lines 5a, 5b, and 5c (Column 2).

How to verify your QuickBooks result

Use the troubleshooting steps for lines 5a, 5b, and 5c.

IRS directions

Complete lines 6a - 6d to figure the payroll tax exemption for the employer's share (6.2%) of social security tax on wages/tips paid to one or more qualified employees.

An employer must be a qualified employer to be eligible for the employer's social security tax exemption. A qualified employer is any employer other than Federal, State, or any related government entities. All public institutions of higher education and Indian tribal governments are also qualified employers.

An employer may elect not to apply the social security tax exemption with respect to a qualified employee. The election is made by not including that employee or that employee's wages on lines 6a - 6d and lines 12c - 12e. An election not to apply the social security tax exemption for a qualified employee may allow a qualified employer to claim the Work Opportunity Credit for that employee. A qualified employer cannot both apply the social security tax exemption on Form 941 and claim the Work Opportunity Credit for the same employee. For more information, see Form 5884, Work Opportunity Credit.

For more information about the employer's social security tax exemption, visit the IRS website at www.irs.gov and enter the keywords "HIRE Act" in the search box.

QuickBooks behavior

Beginning with payroll tax table update 21011, QuickBooks 2007 and later lets you designate qualified employees for the social security tax exemption provision of the HIRE Act. Beginning with payroll tax table update 21012, QuickBooks 2008 and later supports the revised (April 2010) Form 941.

For more information on designating qualified employees in QuickBooks, making appropriate liability adjustments for qualified employees you paid before you designated them in QuickBooks, and running reports to determine the values for the new lines on Form 941 (lines 6a, 6b, 6c, 12c, and 12d), see the HIRE Act Guide for QuickBooks.

IRS directions

Enter on line 6a the number of qualified employees first paid wages/tips to which you applied the social security tax exemption in this quarter. Do not include on line 6a qualified employees that are included on line 12c.

A qualified employee is an employee who:

• Begins employment with you after February 3, 2010, and before January 1, 2011;
• Certifies by signed affidavit (Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, or similar statement) under penalties of perjury, that he or she has not been employed for more than 40 hours during the 60-day period (including 2009) ending on the date the employee begins employment with you;
• Is not employed by you to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing); and
• Is not related to you. An employee is related to you if he or she is your child or a descendant of your child, your sibling or stepsibling, your parent or ancestor of your parent, your stepparent, your neice or nephew, your aunt or uncle, or your in-law. An employee is also related to you if he or she is related to anyone who owns more than 50% of your outstanding stock or capital and profits interest or is your dependent or a dependent of anyone who owns more than 50% of your outstanding stock or capital and profits interest.

Exempt wages/tips are the wages/tips paid to qualified employees for which the employer is exempt from paying the employer's 6.2% share of social security tax.

QuickBooks behavior

QuickBooks 2010 R7 and later supplies this value. If you have QuickBooks 2010, you should update to this release (R7) before completing Form 941.

Users with QuickBooks 2009 or earlier can use the verification steps to determine the appropriate value.

If you need additional assistance, refer to the HIRE Act Guide for QuickBooks.

How to verify your QuickBooks result

1. Be sure you have a list of all the employees you have designated as qualified in QuickBooks.
2. Determine the number of qualified employees you paid in the quarter being reported (by creating a modified Payroll Item Detail report as described below, with a date range starting with the first day of the quarter and ending with the last day of the quarter).
3. Determine how many of these qualified employees you also paid between March 19, 2010, and the last day of the quarter just prior to the reporting quarter (again, create a modified Payroll Item Detail report with the appropriate date range).
4. Subtract the number in step 3 from the number in step 2 and enter the result on line 6a.

To create the modified Payroll Item Detail reports:

1. From the Reports menu, choose Employees & Payroll > Payroll Item Detail.
2. Click the Modify Report button.
3. On the Display tab, set the date range for the report and choose Employee from the Total by drop-down.
4. On the Filters tab, choose the Payroll Item filter and set it to Social Security Company. Choose the Name filter, select Multiple names. . ., and check each qualified employee.
5. Click OK on the Modify Report window to run the report.
6. You may want to Memorize the report so that you can run it again. You should also Print the report or Export it to an Excel spreadsheet so that you will have copy to work with when preparing your Form 941.

IRS directions

Enter on line 6b the total number of qualified employees paid exempt wages/tips to which you applied the social security tax exemption in this quarter. Qualified employees included on line 6a will also be included on line 6b. Qualified employees included on line 12c may also be included on line 6b. (See line 6a for the definition of qualified employee.)

QuickBooks behavior

QuickBooks 2010 R7 and later supplies this value. If you have QuickBooks 2010, you should update to this release (R7) before completing Form 941.

Users with QuickBooks 2009 or earlier can use the verification steps to determine the appropriate value.

If you need additional assistance, refer to the HIRE Act Guide for QuickBooks.

How to verify your QuickBooks result

Use the modified Payroll Item Detail report you created in step 2 of the verification steps for line 6a to determine the number of qualified employees you paid in the quarter being reported and enter this number on line 6b.

IRS directions

Enter the amount of exempt wages/tips paid this quarter to all qualified employees reported on line 6b. (See line 6a for the definition of qualified employees.)

QuickBooks behavior

QuickBooks 2010 R7 and later supplies this value. If you have QuickBooks 2010, you should update to this release (R7) before completing Form 941.

Users with QuickBooks 2009 or earlier can use the verification steps to determine the appropriate value.

If you need additional assistance, refer to the HIRE Act Guide for QuickBooks.

How to verify your QuickBooks result

Use the modified Payroll Item Detail report you created in step 2 of the verification steps for line 6a to determine the total wages/tips you paid to qualified employees in the quarter being reported and enter this number on line 6c.

IRS directions

Multiply the amount of exempt wages/tips reported on line 6c by .062 and enter the result on line 6d. See the instructions for line 17 for details about applying this exemption to your tax liability.

QuickBooks behavior

QuickBooks calculates this amount by multiplying line 6c by .062.

IRS directions

Add the total federal income tax withheld from wages, tips, and other compensation (line 3) and the total social security and Medicare taxes before adjustments (line 5d), and subtract the qualified employer's social security tax exemption (line 6d). Enter the result on line 6e.

QuickBooks behavior

QuickBooks calculates this amount by adding line 3 and line 5d and then subtracting line 6d.

IRS directions

Enter adjustments for fractions of cents (due to rounding) relating to the employee share of social security and Medicare taxes withheld. The employee share (one-half) of amounts shown in column 2 of lines 5a, 5b, and 5c may differ slightly from amounts actually withheld from employee's paychecks due to rounding of social security and Medicare taxes based on statutory rates.

Use a minus sign (if possible) to show an adjustment that decreases the total taxes shown on line 6e instead of parentheses. Doing so enhances the accuracy of IRS scanning software. For example, report "-10.59" instead of "(10.59)." However, if your software only allows for parentheses in reporting negative amounts, you may use them.

Prior quarter's adjustments. If you need to adjust any amount reported on line 7a from a previously filed Form 941, complete and file Form 941-X. Form 941-X is an adjusted return and is filed separately from Form 941.

QuickBooks behavior

QuickBooks automatically calculates the fractions of cents (within one dollar) of difference between the net taxes amount and the quarter's liability amount.

IRS directions

Enter the adjustment for the employee share of social security and Medicare taxes that were withheld by your third-party sick pay provider.

Use a minus sign (if possible) to show an adjustment that decreases the total taxes shown on line 6e instead of parentheses. Doing so enhances the accuracy of IRS scanning software. For example, report "-10.59" instead of "(10.59)." However, if your software only allows for parentheses in reporting negative amounts, you may use them.

Prior quarter's adjustments. If you need to adjust any amount reported on line 7b from a previously filed Form 941, complete and file Form 941-X. Form 941-X is an adjusted return and is filed separately from Form 941.

QuickBooks behavior

QuickBooks does not supply this number.

IRS directions

Enter adjustments for:

• Any uncollected employee share of social security and Medicare taxes on tips, and
• The uncollected employee share of social security and Medicare taxes on group-term life insurance premiums paid for former employees.

Use a minus sign (if possible) to show an adjustment that decreases the total taxes shown on line 6e instead of parentheses. Doing so enhances the accuracy of IRS scanning software. For example, report "-10.59" instead of "(10.59)." However, if your software only allows for parentheses in reporting negative amounts, you may use them.

Prior quarter's adjustments. If you need to adjust any amount reported on line 7c from a previously filed Form 941, complete and file Form 941-X. Form 941-X is an adjusted return and is filed separately from Form 941.

QuickBooks behavior

QuickBooks does not supply this number.

IRS directions

Combine the amounts shown on lines 6e through 7c, and enter the result here.

QuickBooks behavior

QuickBooks calculates this by adding lines 6e, 7a, 7b, and 7c.

How to verify your QuickBooks result

Make sure that all entries for lines 6e and 7a through 7c are entered correctly.

IRS directions

Note: After December 31, 2010, advance payroll payments of EIC cannot be made to employees. However, employees may be eligible to claim EIC on their individual income tax returns.

Enter the amount of the advance EIC payments that you made to your employees. Eligible employees may choose to receive part of the EIC as an advance payment. Those who expect to have a qualifying child must give you a completed Form W-5 stating they expect to qualify for the EIC. Once the employee gives you a signed and completed Form W-5, you must make the advance EIC payments starting with the employee's next wage payment. Advance EIC payments are generally made from withheld federal income tax and employee and employer social security and Medicare taxes.

If the amount of your advance EIC payments is more than your total taxes after adjustments (line 8) for the quarter, you may claim a refund of the overpayment or elect to have the credit applied to your return for the next quarter. Attach a statement to Form 941 identifying the amount of excess payments and the pay periods in which you paid them.

QuickBooks behavior

QuickBooks adds together all the Advance Earned Income Credit (EIC) from all paychecks during the quarter.

How to verify your QuickBooks result

1. From the QuickBooks Reports menu, choose Employees & Payroll, and then Payroll Summary.
2. Click the Modify Report button.
3. Click the Display tab, and select Last Calendar Quarter from the Dates drop-down list.
4. In the Display columns by drop-down list, select Total Only, and clear the Hours and Rate checkboxes.
5. Click OK. Line 9 should equal the total of the Advanced Earned Income Credit.

Correcting line 9:
Double-click the Advance Earned Income Credit amount in the Payroll Summary report created above to display a Transactions by Payroll Item report, which summarizes all transactions affecting that total. You may edit the YTD adjustments for the employees, but the paychecks must remain in QuickBooks with the amounts originally recorded.

The advance earned income credit amounts from the paychecks should match the amounts on the original printed pay stubs and paychecks. If a paycheck in QuickBooks no longer matches the printed pay stub, the paycheck should be edited to match the printed historical record.

Enter liability adjustments as necessary. Keep in mind that adjusted amounts may need to be collected from or refunded to an employee.

IRS directions

Subtract line 9 from line 8 and enter the result on line 10.

• If line 10 is less than $2,500 or line 10 on the preceding quarterly return was less than $2,500 and you did not incur a $100,000 next-day deposit obligation during the current quarter. You may pay the amount with Form 941 or you may deposit the amount. To avoid a penalty, you must pay the amount in full with a timely filed return or you must deposit the amount timely.
  
• If line 10 is $2,500 or more and line 10 on the preceding quarterly return was $2,500 or more, or if you incurred a $100,000 next-day deposit obligation during the current quarter. You must make deposits according to your deposit schedule. The amount shown on line 10 must equal the "Total liability for quarter" shown on Form 941, line 17, or the "Total liability for the quarter" shown on Schedule B (Form 941).

QuickBooks behavior

QuickBooks calculates this amount by subtracting line 9 from line 8.

How to verify your QuickBooks result

Make sure that lines 8 and 9 are entered correctly by using the verification steps for those lines.

IRS directions

Enter your deposits for this quarter, including any overpayment that you applied from filing Form 941-X or Form 944-X in the current quarter. Also include in the amount shown any overpayment from a previous period that you applied to this return.

QuickBooks behavior

QuickBooks adds all the deposits for Federal Withholding, Medicare Employee, Medicare Company, Social Security Employee, and Social Security Company with a paid-through date that falls within the quarter. If you need to include a prior quarter's overpayment, right click and override the amount listed to add the overpayment.

How to verify your QuickBooks result

1. Run the Payroll Liabilities Balances report for the quarter.
2. Click Modify Report.
3. Change the Display columns to Total only.
4. Click the Filters tab
5. Click Payroll Item under Current Filter Choices. In the middle, click the drop-down next to Payroll Item, and select Multiple Payroll Items.
6. Check off only Federal Withholding, Medicare Employee, Medicare Company, Social Security Employee, and Social Security Company, and click OK.
7. Click the Transaction Type under Choose Filter on the left. In the middle, click the drop-down next to Transaction type, and choose Payroll Liability Check. Click OK.
8. The total balance should equal the amount of line 11. You can double-click this amount to see the transactions that contribute to the total. Double check that all deposits have been recorded.

If you know you've made a deposit but don't see it, expand your date range to see if the deposit appears. If it does, double-click that deposit and change the Paid Through date so that it falls within the quarter it's supposed to.

If the number on line 11 doesn't match the report, then a liability adjustment has been entered or a payment was entered incorrectly. To find a liability adjustment:

1. Click Modify Report and Filters.
2. Under Transaction Type, click Multiple Transaction Types, and from the list that pops up, click Liability Adjustment. This will show you any liability adjustments made within the quarter in addition to your payments. Double check that the liability adjustment is actually needed.

If you know you've recorded the deposit in QuickBooks, find the deposit and check that the type is specifically LIAB CHK and not just CHK.

If it is CHK, and it has been reconciled, a liability adjustment will need to be entered for the amount of the check that was entered. Then you will need to edit the amount of line 15.

If the transaction has not been reconciled, you can delete it and record it as a payroll liability check.

IRS directions

Report on this line 65% of the COBRA premiums for assistance-eligible individuals. Take the COBRA premium assistance credit on this line only after the assistance-eligible individual's 35% share of the premium has been paid. For COBRA coverage provided under a self-insured plan, COBRA premium assistance is treated as having been made for each assistance-eligible individual who pays 35% of the COBRA premium. Do not include the assistance-eligible individual's 35% of the premium in the amount entered on this line. For more information on the COBRA premium assistance credit, visit the IRS website at www.irs.gov and enter the keyword COBRA.

Caution: The amount reported on line 12a is treated as a deposit of taxes on the first day of your return period and must not be used to adjust line 17 or Schedule B.

If you provided premium assistance in a prior quarter of the current year and did not report the amount of that premium assistance on Form 941 for that quarter, you may include the amount of that premium assistance in the amount entered on this line, or file Form 941-X to report the amount for the prior quarter of the current year.

QuickBooks behavior

If you set up a COBRA Subsidy Credit payroll item and associated liability accounts and made appropriate liability adjustments in QuickBooks for COBRA subsidies, QuickBooks supplies the total COBRA premium assistance payments.

If this amount is incorrect, you can change it in the 941 interview. If you make changes, you must make corresponding adjustments in your QuickBooks records.

How to verify your QuickBooks result

If you receive an error on this field, complete the following steps:

1. Go to the Payroll Center in QuickBooks, and click the Transactions tab.
2. Click Liability Adjustments, and select the appropriate date range.
3. Look for liability adjustments associated with the Payroll item "COBRA Subsidy Credit."
4. Change any positive values to negative values.
5. Return to your filing process.

IRS directions

Enter the total number of assistance-eligible individuals provided COBRA premium assistance reported on line 12a. Count each assistance-eligible individual who paid a reduced COBRA premium in the quarter as one individual, whether or not the reduced premium was for insurance that covered more than on assistance-eligible individual. For example, if the reduced COBRA premium was for coverage for a former employee, spouse, and two children, you would include one individual in the number entered on line 12b for the premium assistance. Further, each individual is reported only once per quarter. For example, an assistance-eligible individual who made monthly premium payments during the quarter would only be reported as one individual.

QuickBooks behavior

QuickBooks does not supply this number.

IRS directions

Complete this line when filing Form 941 for the 2nd quarter of 2010 only. Enter on line 12c the number of qualified employees paid exempt wages/tips from March 19, 2010, through March 31, 2010. Include only qualified employees for which you are claiming the social security tax exemption. (For the definition of qualified employee, see the instructions for line 6a.)

QuickBooks behavior

QuickBooks does not supply this number, but you can determine the appropriate values for lines 12c and 12d using the verification steps below.

If you need additional assistance, refer to the HIRE Act Guide for QuickBooks.

How to verify your QuickBooks result

1. Be sure you have a list of all the employees you have designated as qualified in QuickBooks.
2. Determine the number of qualified employees you paid between March 19, 2010, and March 31, 2010 (by creating a modified Payroll Item Detail report as described below, with a date range starting with March 19, 2010, and ending with March 31, 2010).
3. Enter the result on line 12c.

To create the modified Payroll Item Detail reports:

1. From the Reports menu, choose Employees & Payroll > Payroll Item Detail.
2. Click the Modify Report button.
3. On the Display tab, set the date range for the report and choose Employee from the Total by drop-down.
4. On the Filters tab, choose the Payroll Item filter and set it to Social Security Company. Choose the Name filter, select Multiple names. . ., and check each qualified employee.
5. Click OK on the Modify Report window to run the report.
6. You should Print the report or Export it to an Excel spreadsheet so that you will have copy to work with when preparing your Form 941.

IRS directions

Complete this line when filing Form 941 for the 2nd quarter of 2010 only. Enter the amount of exempt wages/tips paid March 19, 2010, through March 31, 2010, to all qualified employees reported on line 12c. (For the definition of exempt wages/tips, see the instructions for line 6a.)

QuickBooks behavior

QuickBooks does not supply this number, but you can determine the appropriate values for lines 12c and 12d using the verification steps below.

If you need additional assistance, refer to the HIRE Act Guide for QuickBooks.

How to verify your QuickBooks result

Use the modified Payroll Item Detail report you created in the verification steps for line 12c to determine the total wages/tips you paid to qualified employees between March 19, 2010, and March 31, 2010, and enter this number on line 12d.

IRS directions

Multiply the amount of exempt wages/tips reported on line 12d by .062 and enter the result on line 12e.

Caution: The amount reported on line 12e is treated as a deposit of taxes on the April 1, 2010, and must not be used to adjust line 17 or Schedule B.

QuickBooks behavior

QuickBooks calculates this number by multiplying line 12d by .062.

IRS directions

Add lines 11, 12a, and 12e.

QuickBooks behavior

QuickBooks calculates this number by adding lines 11, 12a, and 12e.

How to verify your QuickBooks result

Be sure that lines 11, 12a, and 12e are correct using the verification steps for those lines.

IRS directions

If line 10 is more than line 13, write the difference in line 14. Otherwise, see line 15 instructions below. You do not have to pay if line 14 is under $1. Generally, you should have a balance due only if your total taxes after adjustment for advance EIC (line 10) for the current quarter or preceding quarter are less than $2,500, and you did not incur a $100,000 next-day deposit obligation during the current quarter. However, see section 11 of Pub. 15 (Circular E) for information about payments made under the accuracy of deposits rule.

You may pay the amount shown on line 14 using EFTPS, a credit or debit card, a check or money order, or electronic funds withdrawal (EFW). Do not use a credit or debit card or EFW to pay taxes that were required to be deposited. For more information on electronic payment options, visit the IRS website at www.irs.gov/e-pay.

If you pay by EFTPS, credit card, or EFW, file your return using the "Without a payment" address and do not file Form 941-V, Payment Voucher.

If you pay by check or money order, make it payable to the "United States Treasury." Enter your EIN, Form 941, and the tax period on your check or money order. Complete Form 941-V and enclose it with Form 941.

If line 10 is $2,500 or more and you have deposited all taxes when due, the balance on line 14 should be zero.

Caution: If you do not deposit as required and, instead, pay the taxes with Form 941, you may be subject to a penalty.

QuickBooks behavior

QuickBooks calculates this number by subtracting line 13 from line 10.

How to verify your QuickBooks result

Be sure that line 10 and line 13 are correct by using the verification steps listed for those lines.

IRS directions

If line 13 is more than line 10, write the difference in line 15. Never make an entry in both lines 14 and 15.

If you deposited more than the correct amount for the quarter, you can choose to have the IRS either refund the overpayment or apply it to your next return. Check only one box in line 15. If you do not check either box or if you check both boxes, generally we will apply the overpayment to your account. We may apply your overpayment to any past due tax account that is shown in our records under your EIN.

If line 15 is under $1, we will send a refund or apply it to your next return only if you ask us in writing to do so.

QuickBooks behavior

QuickBooks subtracts line 10 from line 13.

How to verify your QuickBooks result

Be sure that line 10 and line 13 are correct by using the verification steps for those lines.

IRS directions

In the spaces provided, write the two-letter U.S. Postal Service abbreviation for the bank branch in the state where you deposit your taxes using Form 8109 or initiate EFTPS transfers. The IRS uses the state shown to determine banking days for purposes of deposit due dates. Official state holidays for the state shown are not counted as banking days. If you deposit in multiple states, enter "MU" in the spaces provided.

When you deposit in multiple states, the IRS cannot determine what portion of your liability was affected by a state holiday and may propose a deposit penalty for one or more of the states where you made deposits. If you receive a notice and your deposit due date was extended because of a state bank holiday, respond to the notice citing the state bank holiday and the applicable deposit amount.

QuickBooks behavior

QuickBooks does not select the state for you.

IRS directions

• If line 10 is less than $2,500 or line 10 on the preceding quarterly return was less than $2,500, and you did not incur a $100,000 next-day deposit obligation during the current quarter, check the appropriate box in line 17 and go to Part 3.
  
• If you reported $50,000 or less in taxes during the lookback period, you are a monthly schedule depositor unless the $100,00 Next-Day Deposit Rule discussed in section 11 of Pub. 15 (Circular E) applies. Check the appropriate box on line 17 and enter your tax liability for each month in the quarter. Add the amounts for each month. Enter the result in the "Total liability for quarter" box.

  Note that your total tax liability for the quarter must equal your total taxes shown on line 10. If it does not, your tax deposits and payments may not be counted as timely. Do not change your tax liability on line 17 by adjustments reported on any

  You are a monthly schedule depositor for the calendar year if the amount of your Form 941 taxes reported for the lookback period is $50,000 or less. The lookback period is the four consecutive quarters ending on June 30 of the prior year. For 2010, the lookback period begins July 1, 2008, and ends June 30, 2009. If you filed Form 944 in either 2008 or 2009, your lookback period is the 2008 calendar year.

  Caution: The amounts reported on line 17 are a summary of your monthly tax liability, not a summary of deposits you made. If you do not properly report your liabilities when required or if you are a semiweekly schedule depositor and report your liabilities on line 17 instead of on Schedule B (Form 941), you may be assessed an "averaged" failure-to-deposit (FTD) penalty.

• If you reported more than $50,000 of taxes for the lookback period, you are a semiweekly schedule depositor. Check the appropriate box on line 17.

  You must complete Schedule B (Form 941) and submit it with your Form 941. Do not use Schedule B (Form 941) if you are a monthly schedule depositor.

  Do not change your tax liability on Schedule B (Form 941) by adjustments reported on any Forms 941-X.

Adjusting tax liability for employer's social security tax exemption reported on line 6d. Monthly schedule depositors and semiweekly schedule depositors must account for the employer's social security tax exemption (line 6d) when reporting their tax liabilities on line 17 or Schedule B (Form 941). The total liability for the quarter must equal the amount reported on line 10. Failure to account for the social security tax exemption on line 17 or Schedule B (Form 941) may cause line 10 to be less than the total tax liability reported on line 17 or Schedule B (Form 941). Do not reduce the tax liability reported on line 17 or Schedule B (Form 941) below zero.

QuickBooks behavior

QuickBooks adds the total taxes accrued each day on paychecks for Federal Withholding, Medicare Employee, Medicare Company, Social Security Employee, and Social Security Company. This is not the amount of the tax deposits you've made.

How to verify your QuickBooks result

1. From the QuickBooks Reports menu, choose Employees & Payroll, and then Payroll Summary.
2. Click the Modify Report button.
3. Click the Display tab and then select Last Calendar Quarter from the Dates drop-down list.
4. In the Display columns by drop-down list, select Month, and clear the Hours and Rate checkboxes.
5. Click the Filters tab.
6. Choose the Payroll Item in the Filter drop-down list, and then choose Selected payroll items in the Payroll Items drop-down list.
7. In the Payroll Item window, select Federal Withholding, Medicare Company, Medicare Employee, Social Security Company, and Social Security Employee. Clear any other selected items, and click OK.
8. Click OK to return to the Payroll Summary report.
9. Ignoring any negative signs, add up each column's amounts for Federal Withholding, Medicare Company, Medicare Employee, Social Security Company, and Social Security Employee taxes. The totals should correspond to the amounts in Month 1, Month 2, Month 3, and "Total liability for quarter" of line 17.

You can double-click any of the numbers on the report to see what transactions contribute to their amounts.

IRS directions

If you go out of business or stop paying wages, you must file a final return. To tell the IRS that a particular Form 941 is your final return, check the box on line 18 and enter the date you last paid wages in the space provided.

QuickBooks behavior

QuickBooks does not check this box for you.

IRS directions

If you hire employees seasonally--such as for summer or winter only--check the box on line 19. Checking the box tells the IRS not to expect four Forms 941 from you throughout the year because you have not paid wages regularly.

Generally, we will not ask about unfiled returns if you file at least one return showing tax due each year. However, you must check the box every time you file a Form 941.

Also, when you fill out Form 941, be sure to check the box on the top of the form that corresponds to the quarter reported.

QuickBooks behavior

QuickBooks does not check this box for you.

IRS directions

If you want to allow an employee, a paid tax preparer, or another person to discuss your Form 941 with the IRS, check the "Yes" box in Part 4. Then tell us the name, phone number, and the five-digit personal identification number (PIN) of the specific person to speak with--not the name of the firm who prepared your tax return. The designee may choose any five numbers as his or her PIN.

By checking "Yes," you authorize the IRS to talk to the person you named (your designee) about any questions we may have while we process your return. You also authorize your designee to:

• Give us any information that is missing from your return,
• Call us for information about processing your return, and
• Respond to certain IRS notices that you have shared with your designee about math errors and return preparation. The IRS will not send notices to your designee.

You are not authorizing your designee to bind you to anything (including additional tax liability) or to otherwise represent you before the IRS. If you want to expand your designee's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.

The authorization will automatically expire 1 year from the due date (without regard to extensions) for filing your Form 941. If you or your designee want to terminate the authorization, write to the IRS office for your locality using the "Without a payment" address.

QuickBooks behavior

QuickBooks does not supply any of this information.

IRS directions

Complete all information in Part 5 and sign Form 941 as follows.

• Sole proprietorship — The individual who owns the business.
• Corporation (including a limited liability company (LLC) treated as a corporation) — The president, vice president, or other principal officer duly authorized to sign.
• Partnership (including an LLC treated as a partnership) or unincorporated organization — A responsible and duly authorized member or officer having knowledge of its affairs.
• Single member LLC treated as a disregarded entity for federal income tax purposes - The owner of the LLC or principal officer duly authorized to sign.
• Trust or estate — The fiduciary.

Form 941 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.

Alternative signature method. Corporate officers or duly authorized agents may sign Form 941 by rubber stamp, mechanical device, or computer software program.

QuickBooks behavior

QuickBooks does not supply any of this information.

IRS directions

A paid preparer must sign Form 941 and provide the information here if the preparer was paid to prepare Form 941 and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give a copy of the return in addition to the copy to be filed with the IRS.

If you are a paid preparer, enter your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, write the firm's name and the EIN of the firm. You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application. You cannot use your PTIN in place of the EIN of the tax preparation firm.

Generally, do not complete this section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, advising the client on determining whether its workers are employees or independent contractors for federal tax purposes.

QuickBooks behavior

QuickBooks does not supply any of this information.