941 Quarterly Federal Tax Return - Maintain Data - Part 1
Use the Part 1 tab on the 941 Quarterly Federal Tax Return page to prepare the quarterly federal employment tax return. It consolidates wage information, calculates tax liabilities, applies credits and adjustments, and determines the final amount due to or owed by the IRS.
During the data load process, the system automatically calculates all wage amounts, tax withholdings, and basic tax liabilities based on the payroll check history for the selected quarter. Fields requiring specific credit information or unusual adjustments are initialized to zero and must be manually entered by the user if applicable to their situation.
For more detailed information and the latest file layout specification, search for and refer to the current versions of the following documents on the IRS website:
Instructions for Form 941
General Instructions for Forms W-2 and W-3
Field descriptions
The following table describes the fields on the Part 1 tab on the 941 Quarterly Federal Tax Return page.
Line | Field | Description | Data source and Valid values |
|---|---|---|---|
1. | Number of employees who received wages, tips, or other compensation for the pay period including: Mar. 12 (Quarter 1), June 12 (Quarter 2), Sept. 12 (Quarter 3), or Dec. 12 (Quarter 4) | The count of distinct employees who received any form of compensation (wages, tips, or other compensation) during the pay period that includes the 12th day of the last month of the quarter. This count includes all employees who were issued checks during the specified quarter, regardless of the amount paid. | Calculated during the data load process. The system runs a database query to count the unique employee numbers in the check history table for the quarter. |
2. | Wages, tips, and other compensation | The total amount of all wages, tips, and other forms of compensation paid to employees during the quarter that are subject to federal income tax withholding. This is the gross federal taxable earnings accumulated from all checks issued during the quarter. | Calculated during the data load process. The system sums the federal taxable gross (tot_ftearn) from all payroll records within the specified check issue date range. |
3. | Federal income tax withheld from wages, tips, and other compensation | The total federal income tax withheld from employee paychecks during the quarter. This includes all federal tax withholdings from regular wages, tips, and other compensation. This amount should match the total federal income tax deposits made to the IRS. | Calculated during the data load process. The system accumulates the total federal tax deductions (tot_ftdeduct) from all checks processed during the quarter's date range. |
4. | If no wages, tips and other compensation are subject to social security or Medicare tax | Indicates whether any wages paid during the quarter are exempt from social security or Medicare taxes. When this option is selected, you can skip certain tax calculations and proceed to Line 6 (Total taxes before adjustments). This applies to situations where all compensation paid is exempt from FICA and Medicare taxes. | Not applicable |
5a. | Taxable social security wages | The total wages paid during the quarter that are subject to social security tax. This amount is subject to the annual social security wage base limit (e.g., $160,200 for 2023). | Calculated during the data load process. The system accumulates FICA earnings (tot_fiearn) from all checks processed during the quarter. Wages exceeding the annual wage base are automatically excluded from this total. Column 2 (Box 6) is also calculated and represents the total social security tax by multiplying Box 5 by the combined employee and employer social security tax rate (typically 12.4% - 6.2% employee + 6.2% employer). |
5a.(i) | Qualified sick leave wages | The amount of taxable social security wages that qualify as sick leave wages under the Families First Coronavirus Response Act (FFCRA). These are wages paid to employees for qualified sick leave that are subject to social security tax and may be eligible for employer tax credits. This field was used for leave taken before the expiration date of these provisions. | Not applicable |
5a.(ii) | Qualified family leave wages | The amount of taxable social security wages that qualify as family leave wages under the Families First Coronavirus Response Act (FFCRA). These are wages paid to employees for qualified family leave that are subject to social security tax and may be eligible for employer tax credits. This field was used for leave taken before the expiration date of these provisions. | Not applicable |
5b. | Taxable social security tips | The total amount of tips reported by employees who are subject to the social security tax. Column 1 contains the amount of taxable tips. | Column 2 is calculated during the data load process. Column 2 (Box 12) contains the calculated social security tax on those tips (tips multiplied by the combined employee and employer social security tax rate). |
5c. | Taxable Medicare wages & tips | The total wages and tips paid during the quarter that are subject to Medicare tax. Unlike Social Security wages, there is no wage base limit for the Medicare tax - all wages and tips are subject to it. The system accumulates Medicare earnings (tot_mdearn) from all checks processed during the quarter in Column 1. | Column 2 is calculated during the data load process. Column 2 (Box 14) contains the total Medicare tax by multiplying Box 13 by the combined employee and employer Medicare tax rate (typically 2.9% - 1.45% employee + 1.45% employer). |
5d. | Taxable wages & tips subject to Additional Medicare Tax withholding | The total wages and tips that exceed the Additional Medicare Tax threshold ($200,000 for single filers) and are subject to the additional 0.9% Medicare tax withholding. This is an employee-only tax (no employer match). | Calculated during the data load process. The system calculates the Additional Medicare earnings (tot_mdadd_earn) by identifying wages that exceed the threshold limit configured in the system settings and displays the amount in Column 1. Column 2 (Box 16) is also calculated and represents the Additional Medicare Tax withheld by multiplying Box 15 by the additional Medicare tax rate (0.9%). |
5e. | Total social security and Medicare taxes | The combined total of all social security and Medicare taxes for the quarter. This includes:
| Calculated during the data load process. The system calculates this as: Box 6 + Box 8 + Box 10 + Box 12 + Box 14 + Box 16. |
5f. | Section 3121(q) Notice and Demand-Tax due on unreported tips | The social security and Medicare taxes due on tips that were allocated to employees but not reported to the employer during the year. This applies when the IRS issues a Notice and Demand for payment of these unreported tip taxes under Section 3121(q) of the Internal Revenue Code. | Not applicable |
6. | Total taxes before adjustments | The total tax liability before any adjustments are applied. This is the sum of:
| Calculated during the data load process. The system calculates this as: Box 3 + Box 17 + Box 18. This represents the gross tax liability for the quarter before accounting for rounding adjustments, sick pay adjustments, or other corrections. |
7. | Current quarter's adjustment for fractions of cents | The adjustment for rounding differences that occur when calculating social security and Medicare taxes throughout the quarter. When taxes are calculated on individual paychecks and rounded, minor discrepancies can accumulate. This adjustment ensures the total reported matches the actual amount withheld and remitted. | Not applicable |
8. | Current quarter's adjustment for sick pay | The adjustments related to sick pay. This typically applies when third-party payers (such as insurance companies) pay sick pay to employees, and there are differences between the taxes withheld initially by the third party and those that should have been withheld under the employer's records. | Not applicable |
9. | Current quarter's adjustments for tips and group-term life insurance | The adjustments for:
| Not applicable |
10. | Total taxes after adjustments | The total tax liability after applying adjustments for:
| Calculated during the data load process. The system calculates this as: Box 19 + Box 20 + Box 21 + Box 22. During the initial data load, boxes 20, 21, and 22 are typically set to zero unless there are known adjustments. Users can manually edit these adjustment fields later if needed, and Box 23 will be recalculated. |
11a. | Qualified small business payroll tax credit for increasing research activities | The nonrefundable credit available to qualified small businesses for increasing research activities. Eligible small businesses can claim this credit against their portion of social security taxes rather than against income taxes. This is part of the research and development tax credit provisions. | Not applicable |
11b. | Nonrefundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 | The nonrefundable portion of the tax credit for qualified sick and family leave wages paid under the Families First Coronavirus Response Act (FFCRA) for leave taken from April 1, 2020, through March 31, 2021. This credit offsets the employer's portion of the Social Security tax owed. | Not applicable |
11c. | Reserved for future use | Not applicable | Not applicable |
11d. | Nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021 | The nonrefundable portion of the tax credit for qualified sick and family leave wages paid under the extended provisions of the American Rescue Plan Act (ARPA) for leave taken from April 1, 2021, through September 30, 2021. This credit offsets the employer's portion of the Social Security tax owed. | Not applicable |
11e. | Reserved for future use | Not applicable | Not applicable |
11f. | Reserved for future use | Not applicable | Not applicable |
11g. | Total nonrefundable credits | The sum of all nonrefundable tax credits that can offset the employer's tax liability. This includes:
| Calculated during the data load process. The system calculates this as: Box 24 + Box 25 + Box 27. During the initial data load, these credits are typically set to zero. Employers must manually enter these amounts if they qualify for the credits, as the system cannot automatically determine eligibility from standard payroll data. |
12 | Total taxes after adjustments and nonrefundable credits | The total tax liability after applying all adjustments (fractions of cents, sick pay, tips, and group-term life insurance) and subtracting all nonrefundable credits. | Calculated during the data load process. The system calculates this as: Total taxes after adjustments (Line 10) minus Total nonrefundable credits (Line 11g). |
13a. | Total deposits for this quarter, including overpayment applied from a prior quarter and overpayments applied from Form 941-X, 941-X (PR), 944-X or 944-X (SP) filed in the current quarter | The total amount of federal tax deposits made for the quarter, including:
| Not applicable |
13b. | Reserved for future use | Not applicable | Not applicable |
13c. | Refundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021 | The refundable portion of the tax credit for qualified sick and family leave wages paid for leave taken from April 1, 2020, through March 31, 2021. This is the amount of the credit that exceeds the employer's social security tax liability and can be refunded to the employer or applied to future liabilities. | Not applicable |
13d. | Reserved for future use | Not applicable | Not applicable |
13e. | Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021 | The refundable portion of the tax credit for qualified sick and family leave wages paid for leave taken from April 1, 2021, through September 30, 2021. This is the amount of the credit that exceeds the employer's social security tax liability and can be refunded to the employer or applied to future liabilities. | Not applicable |
13f. | Reserved for future use | Not applicable | Not applicable |
13g. | Total deposits and refundable credits | The total amount of deposits and credits available to offset the tax liability for the quarter. | Calculated during the data load process. The system calculates this as: Total deposits (Box 13a) plus Refundable portion of sick leave credit before April 1, 2021 (Box 13c) plus Refundable portion of sick leave credit after March 31, 2021 (Box 13e). This total is compared with the total tax liability to determine whether a balance is due or an overpayment. |
13h. | Reserved for future use | Not applicable | Not applicable |
13i. | Reserved for future use | Not applicable | Not applicable |
14 | Balance due | The amount owed to the IRS if total tax liability exceeds total deposits and credits. This field is only populated when Box 31 (Total taxes after adjustments and nonrefundable credits) is greater than Box 38 (Total deposits and refundable credits). This is the amount the employer must pay to the IRS by the quarterly filing deadline. This field displays NULL if there is no balance due (i.e., if there is an overpayment instead). | Calculated during the data load process. The system calculates this as: Box 31 - Box 38 (when the result is positive). |
15 | Overpayment | The amount by which deposits and credits exceed the tax liability for the quarter. This field is only populated when Box 38 (Total deposits and refundable credits) is greater than Box 31 (Total taxes after adjustments and nonrefundable credits). The employer can choose to either:
The field displays NULL if there is a balance due instead of an overpayment. | Calculated during the data load process. The system calculates this as: Box 38 - Box 31 (when the result is positive). |