941 Quarterly Federal Tax Return - Maintain Data - Part 3

Use the Part 3 tab on the 941 Quarterly Federal Tax Return page to disclose exceptional circumstances affecting your business. It notifies the IRS of business status changes (such as closure or seasonal operation). It provides detailed breakdowns of qualified sick and family leave expenses that support tax credit claims made in Part 1. Most employers will leave this section blank unless they have permanently closed their business, are seasonal employers, or are claiming COVID-19-related sick and family leave tax credits for the applicable time periods.

During the data load process, the system:

• Typically initializes fields to zero or NULL.

• Sets Box 54 (business closure date) to NULL.

• Unchecks the checkboxes (55, 56).

• Sets dollar amount fields (57-66) to empty strings or zero.

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 Part 3 tab on the 941 Quarterly Federal Tax Return page consists of the following lines:

• Line 17

• Line 18

• Line 19

• Line 20

• Line 21

• Line 22

• Line 23

• Line 24

• Line 25

• Line 26

• Line 27

• Line 28

Line 17

This section explains Line 17 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

If your business has closed or you stopped paying wages enter the final date you paid wages, also attach a statement to your return

Description

Indicates that you are permanently closing your business or permanently ceasing to pay wages to employees. This is your final Form 941 filing. You must attach a written statement to your Form 941 explaining the circumstances of the closure.

After selecting this option, you must select the final wage payment date.

Complete this field if:

• You have permanently closed or sold your business.

• You stopped paying wages and will no longer have employees.

• You have terminated all employees and will not hire replacements.

• This is the last Form 941 you will file for this Employer Identification Number (EIN).

Examples of when to use Line 17:

• An educational institution that has permanently closed and terminated all employees.

• An educational institution that has been sold to new owners (the new owners will file under their own EIN).

• A seasonal educational institution that is permanently ceasing operations (not just temporarily closed).

Examples of when not to use Line 17:

• Educational institutions that close for part of the year but will reopen (use Line 18 instead).

• Educational institutions that temporarily have no employees but may hire in the future.

• Educational institutions that are restructuring but continuing operations.

Important notes:

• Do not complete this line if you are only temporarily suspending operations and plan to resume paying wages later.

• Do not complete this line if you still have employees, even if you plan to close in the future.

• Only enter the date when you actually made the final wage payment, not when you plan to close.

• After filing this final return, you should not file additional Forms 941 unless you resume operations.

Line 18

This section explains Line 18 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

If you are a seasonal employer and you do not have to file a return for every quarter of the year

Description

Indicates that you are a seasonal employer and notifies the IRS that you will not be filing Form 941 for quarters when you have no tax liability because you have no employees during those periods.

Check this box if:

• Your business operates only during certain seasons

• You have quarters during the year when you have no employees

• You want to inform the IRS that you will not file returns for inactive quarters

• You have no tax liability for some quarters of the year

A seasonal employer is a business that:

• Operates only during certain seasons or periods of the year

• Does not have employees or pay wages during some quarters

• Has no tax liability during off-season quarters

• Will not file Form 941 for quarters with no operations

An example of a seasonal employer is a summer camp that operates only in summer.

Important distinctions:

• Seasonal Employer (Line 18): You continue operations year after year, but only during certain seasons. You will file Form 941 again when your season resumes.

• Business Closure (Line 17): You are permanently ceasing operations and will never file Form 941 again.

Benefits of identifying as seasonal:

• The IRS will not send you inquiries or penalty notices for quarters when you do not file.

• You avoid unnecessary paperwork for quarters with no activity.

• The IRS understands you are still in business, just not operating year-round.

Filing requirements:

• File Form 941 for each quarter when you pay wages to employees.

• Do not file Form 941 for quarters when you have no employees and no tax liability.

• Check the seasonal employer box on the returns you file.

You may still need to respond to IRS correspondence if they have questions about missing tax returns or quarters.

Example scenario:

An educational course is operational from December through March. The employer must do the following:

• Quarter 4 (Oct-Dec): File Form 941, check Box 56

• Quarter 1 (Jan-Mar): File Form 941, check Box 56

• Quarter 2 (Apr-Jun): Do not file (no employees)

• Quarter 3 (Jul-Sep): Do not file (no employees)

Line 19

This section explains Line 19 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021

Description

The employer's cost of providing health insurance coverage to employees who took qualified sick leave under the Families First Coronavirus Response Act (FFCRA) before April 1, 2021. These expenses are included when calculating the tax credit for qualified sick leave wages.

You must enter this amount based on health plan expense records.

The Families First Coronavirus Response Act (FFCRA):

The FFCRA, enacted in March 2020 in response to the COVID-19 pandemic, required certain employers to provide paid sick leave to employees for specific COVID-19-related reasons. Employers could claim tax credits to offset the cost of providing this leave, including the expenses associated with maintaining health insurance during the leave period.

What to report:

Enter the amount of qualified health plan expenses you paid to provide health insurance coverage for employees who:

• Took qualified sick leave for COVID-19-related reasons

• Took that leave before April 1, 2021

• Were covered under an employer-sponsored health plan

Qualified health plan expenses include the following:

• Employer portion of health insurance premiums.

• Employer contributions to Health Savings Accounts (HSAs).

• Employer contributions to flexible spending arrangements (FSAs).

• Employer contributions to health reimbursement arrangements (HRAs).

The expenses must be allocable to (associated with) the period the employee was on qualified sick leave.

Qualified sick leave under FFCRA:

Sick leave is qualified if the employee was unable to work or telework due to:

• Being subject to a federal, state, or local quarantine or isolation order related to COVID-19.

• Being advised by a health care provider to self-quarantine due to COVID-19 concerns.

• Experiencing COVID-19 symptoms and seeking a medical diagnosis.

• Caring for an individual subject to quarantine or isolation orders.

• Caring for a son or daughter whose school or childcare is closed due to COVID-19.

• Experiencing substantially similar conditions specified by the Secretary of Health and Human Services.

Relationship to tax credits:

This amount is added to the qualified sick leave wages reported in Part 1 to determine the total credit available. The credit may be:

• Nonrefundable portion (Part 1, Line 11b / Box 25): Offsets the employer's social security tax liability.

• Refundable portion (Part 1, Line 13c / Box 34): Amount exceeding tax liability that can be refunded.

Calculation method:

The health plan expenses must be calculated based on the number of hours of qualified sick leave taken:

Health Plan Expense = (Total annual health plan cost per employee ÷ Total annual hours worked) × Qualified sick leave hours

Important notes:

• This field applies only to leave taken before April 1, 2021.

• For leave taken after March 31, 2021, use Line 24 (Box 62) instead.

• You must maintain documentation showing how you calculated these expenses.

• The FFCRA provisions expired on September 30, 2021, so this field is generally only used when filing amended returns for 2020 or early 2021 quarters.

Line 20

This section explains Line 20 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021

Description

The employer's cost of providing health insurance coverage to employees who took qualified family leave under the Families First Coronavirus Response Act (FFCRA) before April 1, 2021. These expenses are included when calculating the tax credit for qualified family leave wages.

You must enter this amount based on health plan expense records.

What to report:

Enter the amount of qualified health plan expenses you paid to provide health insurance coverage for employees who:

• Took qualified family leave for COVID-19-related reasons.

• Took that leave before April 1, 2021.

• Were covered under an employer-sponsored health plan.

Qualified health plan expenses include the following:

• Employer portion of health insurance premiums

• Employer contributions to Health Savings Accounts (HSAs)

• Employer contributions to flexible spending arrangements (FSAs)

• Employer contributions to health reimbursement arrangements (HRAs)

The expenses must be allocable to the period the employee was on qualified family leave

Qualified family leave under FFCRA:

Family leave is qualified if the employee was unable to work or telework due to:

• Caring for a son or daughter under age 18 whose school or place of care is closed (or childcare provider is unavailable) due to COVID-19-related reasons.

• The first 10 days of family leave could be unpaid (or the employee could use other paid leave).

• Days 11 and beyond were paid at two-thirds of the employee's regular rate.

Difference between sick and family leave:

• Sick Leave: Short-term leave (up to 80 hours) for the employee's own health or quarantine.

• Family Leave: Longer-term leave (up to 12 weeks) specifically for childcare due to school/daycare closures.

Relationship to tax credits:

This amount is added to the qualified family leave wages reported in Part 1 to determine the total credit available. The credit may be:

• Nonrefundable portion (Part 1, Line 11b / Box 25): Offsets the employer's social security tax liability.

• Refundable portion (Part 1, Line 13c / Box 34): Amount exceeding tax liability that can be refunded.

Calculation method:

The health plan expenses must be calculated based on the number of hours or days of qualified family leave taken:

Health Plan Expense = (Total annual health plan cost per employee ÷ Total annual hours worked) × Qualified family leave hours

Important notes:

• This field applies only to leave taken before April 1, 2021.

• For leave taken after March 31, 2021, use Line 27 (Box 65) instead.

• The FFCRA provisions expired on September 30, 2021.

• Generally used only when filing amended returns for 2020 or early 2021 quarters.

Line 21

Line 21 is reserved for future use.

Line 22

Line 22 is reserved for future use.

Line 23

This section explains Line 23 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified sick leave wages for leave taken after March 31, 2021, and before October 1, 2021

Description

The qualified sick leave wages paid under the American Rescue Plan Act (ARPA) extension of the FFCRA provisions for leave taken from April 1, 2021, through September 30, 2021.

You must enter this amount.

The American Rescue Plan Act (ARPA) extension:

The American Rescue Plan Act, enacted in March 2021, extended and modified the FFCRA's paid sick leave provisions. While employer participation became voluntary (no longer required), employers who chose to provide this leave could still claim tax credits.

What to report:

Enter the total amount of qualified sick leave wages you paid to employees for COVID-19-related reasons during the period from April 1, 2021, through September 30, 2021.

Qualified sick leave reasons (ARPA period):

Employees are qualified for paid sick leave if unable to work or telework due to:

• Subject to a federal, state, or local quarantine or isolation order related to COVID-19.

• Advised by a health care provider to self-quarantine due to COVID-19.

• Experiencing COVID-19 symptoms and seeking a medical diagnosis.

• Obtaining or recovering from a COVID-19 vaccination.

• Experiencing symptoms related to a COVID-19 vaccination.

• Caring for an individual subject to quarantine or isolation.

• Caring for a child whose school or place of care is closed due to COVID-19.

Key differences from pre-April 2021:

• Employer participation was voluntary (not mandatory).

• Added vaccination-related reasons (#4 and #5 above).

• Reset the amount of leave available (new 80-hour cap, even if the employee used leave in 2020).

• Separate tracking and reporting from earlier FFCRA leave.

Wage limits:

• Regular sick leave reasons: Up to $511 per day and $5,110 in aggregate per employee

• Care-related reasons: Up to $200 per day and $2,000 in aggregate per employee

Relationship to tax credits:

This amount is used to calculate:

• Nonrefundable portion (Part 1, Line 11d / Box 27): Offsets employer's social security tax liability

• Refundable portion (Part 1, Line 13e / Box 36): Amount exceeding tax liability that can be refunded

What's included:

• Qualified sick leave wages paid to employees.

• Employer's share of Medicare tax on those wages.

• Employer's share of social security tax on those wages.

• Does NOT include health plan expenses or collectively bargained amounts (those are reported separately on Lines 24 and 25).

Important notes:

• Only applies to leave taken between April 1, 2021, and September 30, 2021.

• This differs from Line 19, which pertains to leave taken before April 1, 2021.

• The ARPA provisions expired on September 30, 2021.

• Must maintain documentation showing:

  • Which employees took qualified leave.

  • The reasons for leave.

  • The amounts paid.

  • That the leave met all ARPA requirements.

Line 24

This section explains Line 24 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified health plan expenses allocable to qualified sick leave wages reported on line 23

Description

The employer's cost of providing health insurance coverage to employees who took the qualified sick leave, as reported on Line 23 (leave taken from April 1 to September 30, 2021, under ARPA).

You must enter this amount based on health plan expense records.

What to report:

Enter the amount of qualified health plan expenses you paid for employees who:

• Took qualified sick leave during April 1 - September 30, 2021.

• Are the same employees whose sick leave wages were reported on Line 23 (Box 61).

• Were covered under an employer-sponsored health plan during the leave period.

Qualified health plan expenses include the following:

• Employer portion of health insurance premiums.

• Employer contributions to Health Savings Accounts (HSAs).

• Employer contributions to flexible spending arrangements (FSAs).

• Employer contributions to health reimbursement arrangements (HRAs).

The expenses must be allocable to the qualified sick leave period.

Calculation method:

Health Plan Expense = (Total annual health plan cost per employee ÷ Total annual hours worked) × Qualified sick leave hours

Or, if health plan costs are tracked monthly:

Health Plan Expense = (Monthly health plan cost ÷ Normal monthly hours) × Qualified sick leave hours

Relationship to Line 23:

• Line 23 reports the wages paid for qualified sick leave.

• Line 24 reports the health plan costs associated with that same leave.

• Together, these amounts (plus Line 25 if applicable) determine the total credit available.

Relationship to tax credits:

The sum of Lines 23 + 24 + 25 is used to calculate the credit in Part 1:

• Nonrefundable portion (Part 1, Line 11d / Box 27)

• Refundable portion (Part 1, Line 13e / Box 36)

Important notes:

• This is specifically for the ARPA period (April 1 - September 30, 2021).

• Must correspond to the sick leave wages reported on Line 23.

• Different from Line 19, which was for the earlier FFCRA period (before April 1, 2021).

• Must maintain documentation showing the calculation methodology.

Line 25

This section explains Line 25 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 23

Description

The additional amounts paid under collective bargaining agreements (union contracts) that are allocable to the qualified sick leave wages reported on Line 23.

What to report:

Enter amounts paid under a collective bargaining agreement for:

• Pension plan contributions.

• Apprenticeship program contributions.

• Other training program contributions.

• Contributions that are allocable to the qualified sick leave reported on Line 23.

Who needs to complete this:

Only employers who:

• Have employees covered by a collective bargaining agreement (union contract).

• Made contributions to pension, apprenticeship, or training programs as required by that agreement.

• Need to allocate a portion of those contributions to the qualified sick leave period.

What qualifies:

• Contributions to a defined benefit pension plan.

• Contributions to an apprenticeship or training program.

• Must be required by a collective bargaining agreement.

Must be allocable to the period when qualified sick leave was taken.

What does not qualify:

• Contributions to defined contribution plans (401(k), 403(b))

• Health plan expenses (those go on Line 24)

• Regular union dues

• Other benefits not mentioned explicitly in IRS guidance

Calculation method:

Similar to health plan expenses, allocate based on hours:

CBA Amount = (Total annual CBA contributions per employee ÷ Total annual hours worked) × Qualified sick leave hours

Line 26

This section explains Line 26 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021

Description

The qualified family leave wages paid to employees under the American Rescue Plan Act (ARPA) extension of COVID-19 paid leave provisions. This specifically captures family leave wages for the period from April 1, 2021, through September 30, 2021.

You must enter this amount after calculating qualified wages.

What to report:

Enter the total amount of qualified family leave wages you voluntarily provided to employees during this specific time period for COVID-19-related childcare reasons.

Who qualifies for this leave:

Employees qualified for paid family leave if they were unable to work or telework because they needed to care for a son or daughter when:

• The child's school or place of care was closed due to the COVID-19 pandemic.

• The child's childcare provider was unavailable due to COVID-19-related reasons.

• The child is under age 18 (or age 18 or older if incapable of self-care due to mental or physical disability).

Key features of ARPA family leave:

• Voluntary Participation: Unlike the original 2020 FFCRA mandate, employer participation under ARPA was voluntary. However, employers who choose to provide this leave may be eligible to claim tax credits.

• Leave Duration: Up to 12 weeks (60 days) of paid family leave per employee.

• Pay Rate: Two-thirds (2/3) of the employee's regular rate of pay.

• No Waiting Period: Unlike the original FFCRA, which required 10 days of unpaid or other leave before family leave began, ARPA eliminated this waiting period.

• Reset Allowance: Even if an employee used the full 12 weeks of family leave in 2020, they received a new 12-week allotment for the ARPA period.

Wage caps:

• Daily limit: $200 per day per employee

• Aggregate limit: $12,000 total per employee (for all 12 weeks combined)

What to include:

• Qualified family leave wages paid to employees during April 1 - September 30, 2021.

• The employer's share of Medicare tax on those wages.

• The employer's share of Social Security tax on those wages.

What not to include:

• Health plan expenses (report those on Line 27).

• Collectively bargained agreement amounts (report those on Line 28).

• Leave taken before April 1, 2021 (reported on the earlier lines).

• Sick leave (that goes on Line 23).

• Regular paid time off or vacation pay.

Documentation required:

You must maintain records showing:

• Employee names who took qualified family leave.

• Dates of leave (must be within April 1 - September 30, 2021).

• Reason for leave (childcare due to COVID-19-related school/daycare closure).

• Amount of wages paid for each leave period.

• Verification that the school or childcare provider was closed or unavailable due to COVID-19.

Difference between qualified sick leave (Line 23) and family leave (Line 26):

The following table shows the difference between qualified sick leave (Line 23) and family leave (Line 26).

Relationship to tax credits:

The amount reported on Line 26, combined with Lines 27 and 28, is used to calculate the tax credit in Part 1:

• Nonrefundable Credit (Part 1, Line 11d / Box 27): Reduces the employer's Social Security tax liability

• Refundable Credit (Part 1, Line 13e / Box 36): Any excess over tax liability that can be refunded or applied

Example calculation:

An employee earning $30/hour takes 4 weeks (160 hours) of qualified family leave because their child's daycare is closed due to COVID-19:

• Regular pay rate: $30/hour

• Qualified leave pay rate: $30 × 2/3 = $20/hour

• Hours of leave: 160 hours

• Qualified family leave wages: 160 × $20 = $3,200

Report $3,200 on Line 26

Important notes:

• This provision expired on September 30, 2021, and is no longer available for current quarters.

• Only applicable when filing returns for Q2 2021, Q3 2021, or amended returns for those periods.

• This is separate from and in addition to qualified sick leave.

• You must have actually provided this leave voluntarily to claim the credit.

• If you are completing this field for a current return, you are likely filing an amended return for a prior period.

Line 27

This section explains Line 27 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Qualified health plan expenses allocable to qualified family leave wages reported on line 26

Description

The employer's cost of maintaining health insurance coverage for employees while they were on the qualified family leave reported on Line 26. These health plan expenses are eligible for inclusion in the calculation of the tax credit.

You must enter this amount after calculating allocable health plan expenses.

What to report:

Enter the employer's share of health plan costs for employees who took qualified family leave during April 1 - September 30, 2021, as reported on Line 26.

Qualified health plan expenses include:

• Health Insurance Premiums: The employer's portion of premiums for medical, dental, and vision insurance plans

• Health Savings Account (HSA) Contributions: Employer contributions to employees' HSAs

• Flexible Spending Arrangement (FSA) Contributions: Employer contributions to health FSAs

• Health Reimbursement Arrangement (HRA) Contributions: Employer contributions to HRAs

• Other Health Benefits: Any other employer-paid health coverage that qualifies as a group health plan.

What does not qualify:

• Employee's portion of health insurance premiums (only the employer portion qualifies)

• Life insurance premiums

• Disability insurance premiums

• Long-term care insurance

• Dependent care FSA contributions

• Health plan expenses for employees not on qualified leave

Must be allocable:

The key requirement is that expenses must be "allocable to" the qualified family leave period. This means that the health plan costs must be associated with the specific time period during which the employee was on qualified leave.

Calculation methods:

Method 1: Hourly allocation (most common)

Health Plan Expense = (Annual employer health plan cost per employee ÷ Annual work hours) × Qualified leave hours

Example:

• Annual employer health plan cost: $7,200 per employee

• Annual work hours: 2,080 hours (40 hours/week × 52 weeks)

• Hourly rate: $7,200 ÷ 2,080 = $3.46 per hour

• Employee on leave: 160 hours (4 weeks)

• Allocable expense: $3.46 × 160 = $554

Method 2: Monthly allocation (for longer leave periods)

Health Plan Expense = Monthly employer health plan cost × Number of months (or partial months) on leave

Example:

• Monthly employer health plan cost: $600

• Employee on leave: 6 weeks (1.5 months)

• Allocable expense: $600 × 1.5 = $900

Method 3: Daily Rate (Alternative)

Health Plan Expense = (Monthly employer cost ÷ Average working days per month) × Days on leave

Example:

• Monthly employer cost: $600

• Average working days per month: 21.67 days

• Daily rate: $600 ÷ 21.67 = $27.69

• Days on leave: 20 days (4 weeks)

• Allocable expense: $27.69 × 20 = $554

Relationship to Line 26:

• Line 26: Reports the actual wages paid for qualified family leave

• Line 27: Reports the health insurance costs during that same leave period

• Line 28: Reports collectively bargained agreement amounts (if applicable)

Total Credit: Lines 26 + 27 + 28 = Total qualified family leave credit amount

Example scenario:

An employee takes 8 weeks (320 hours) of qualified family leave:

• Qualified family leave wages (Line 26): $6,400

• Employer health plan cost during leave (Line 27): $1,108 (320 hours × $3.46/hour)

• No CBA amounts (Line 28): $0

• Total credit eligible amount: $7,508

This total is then used in Part 1 to calculate:

• Nonrefundable credit (Part 1, Line 11d)

• Refundable credit (Part 1, Line 13e)

Documentation requirements:

You must maintain records showing:

• How you calculated the health plan expense per employee.

• The method used to allocate costs to the leave period.

• Proof of actual health plan costs (invoices, premium statements).

• Which employees' leave periods these expenses relate to.

• That the employees were covered under the plan during their leave.

Important considerations:

• Consistent Methodology: Use the same calculation method for all employees and maintain it for audit purposes.

• Only Employer Share: Do not include the portion employees pay through payroll deductions.

• Active Coverage Required: The employee must have been actively covered under the health plan during the leave period.

• Reasonable Allocation: The IRS expects a reasonable method that accurately reflects the cost of coverage during the leave period.

Common mistakes to avoid:

• Including the full annual health plan cost instead of allocating it to the leave period.

• Including employee contributions (only the employer portion qualifies).

• Including non-health benefits like life or disability insurance.

• Using different calculation methods inconsistently.

• Failing to maintain supporting documentation.

Verification:

This amount should be reasonable when compared to Line 26:

• Typically, health plan expenses are 10-30% of wages

• If Line 27 is significantly higher than this range relative to Line 26, review your calculation

Example: If Line 26 = $10,000, Line 27 would typically be $1,000 - $3,000

Important notes:

• This field only applies to the ARPA period (April 1 - September 30, 2021).

• Different from Line 20, which was for the earlier FFCRA period (before April 1, 2021).

• Must correspond to the same employees and time periods reported on Line 26.

• These provisions expired on September 30, 2021, so they are typically only used for amended returns.

Line 28

This section explains Line 28 on the Part 3 tab on the 941 Quarterly Federal Tax Return page.

Field name

Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 26

Description

The employer contributions to pension plans, apprenticeship programs, or training programs that are required by a collective bargaining agreement (union contract) and are allocable to the qualified family leave period reported on Line 26.

You must enter this amount after reviewing collective bargaining agreements and calculating allocable contributions.

What to report:

Enter the employer's contributions to qualified plans under a collective bargaining agreement that relate to the time employees spent on qualified family leave during April 1 - September 30, 2021.

Who needs to complete this field:

Only employers who have:

• Unionized employees covered by a collective bargaining agreement.

• Required contributions to specific benefit programs under that agreement.

• Employees who took qualified family leave as reported on Line 26.

• Allocable contributions to those leave periods.

Most employers will leave this field blank because they do not have:

• Unionized employees.

• Collective bargaining agreements that require these specific contributions.

• Unionized employees who take qualified family leave.

What qualifies for inclusion:

• Defined Benefit Pension Plans

  • Employer contributions to traditional pension plans.

  • Must be a defined benefit plan (not 401(k) or other defined contribution plans).

  • Common in unionized industries (construction, manufacturing, public sector).

• Apprenticeship Programs

  • Contributions to registered apprenticeship training programs.

  • Common in skilled trades (electricians, plumbers, carpenters).

  • Must be part of a formal apprenticeship program.

• Training Programs

  • Contributions to employee training and education programs.

  • Must be specified in the collective bargaining agreement.

  • Typically, industry-specific training programs.

What does not qualify:

• Contributions to 401(k) plans or other defined contribution plans

• Health insurance premiums (those go on Line 27)

• Union dues or fees

• Contributions not required by the collective bargaining agreement

• Voluntary contributions beyond agreement requirements

• Workers' compensation insurance

• Unemployment insurance

Calculation methods:

Hourly rate approach:

CBA Amount = (Annual CBA contributions per employee ÷ Annual work hours) × Qualified family leave hours

Example:

• Annual pension contribution per employee: $5,200

• Annual work hours: 2,080 hours

• Hourly rate: $5,200 ÷ 2,080 = $2.50 per hour

• Employee on family leave: 320 hours (8 weeks)

• Allocable CBA amount: $2.50 × 320 = $800

Monthly rate approach (for longer leave):

CBA Amount = Monthly CBA contributions × Months (or partial months) on leave

Example:

• Monthly pension contribution: $433

• Employee on leave: 12 weeks (3 months)

• Allocable CBA amount: $433 × 3 = $1,299

Per-pay-period approach:

CBA Amount = (CBA contribution per pay period) × Number of pay periods covering the leave

Example:

• Biweekly pension contribution: $200

• Employee on leave: 8 weeks (4 pay periods)

• Allocable CBA amount: $200 × 4 = $800

Complete example:

A unionized construction employee takes 6 weeks (240 hours) of qualified family leave. The collective bargaining agreement requires:

• Pension fund contribution: $3.00/hour

• Apprenticeship fund contribution: $0.50/hour

• Training fund contribution: $0.25/hour

• Total CBA hourly rate: $3.75/hour

Calculation:

• Hours of qualified family leave: 240 hours

• Allocable CBA amount: 240 × $3.75 = $900

Report $900 on Line 28

Relationship to Lines 26 and 27:

The following table shows how the three lines work together to capture the full cost of qualified family leave.

This total is then used to calculate the tax credit in Part 1 (Lines 11d and 13e).

Documentation requirements:

You must maintain:

• Copy of the collective bargaining agreement showing required contribution rates.

• Contribution records showing actual amounts paid.

• Calculation worksheets showing how amounts were allocated to leave periods.

• Employee leave records linking contributions to qualified family leave.

• Payment receipts to pension/apprenticeship/training funds.

Verification checks:

• Proportional to Leave Duration: Line 28 should be proportional to the leave time
  If leave is 10% of annual hours, the CBA amount should be ~10% of annual contributions

• Reasonable Relative to Wages: Typically 5-20% of wages, depending on industry
  Example: If Line 26 = $10,000, Line 28 might be $500-$2,000

• Matches Agreement Terms: Rates should match those specified in the collective bargaining agreement

Important Notes:

• Leave blank if not applicable: Most non-union employers will not complete this field.

• Only specific plans qualify: Not all union benefits are eligible; only pension, apprenticeship, and training contributions are accepted.

• Must be required by CBA: Voluntary contributions do not qualify.

• ARPA period only: April 1 - September 30, 2021

• Different from Line 25: Line 25 is for sick leave CBA amounts; Line 28 is for family leave CBA amounts.

• Expired provision: These provisions ended September 30, 2021

When to seek professional help:

Consider consulting with a tax professional or labor relations expert if:

• You are unsure whether your agreement qualifies.

• You have complex multi-employer pension plans.

• You have multiple unions with different agreements.

• Your agreement has variable contribution rates.

• You are facing an IRS audit regarding these credits.