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ITG FAQ #2 Answer-What is the purpose of Form 941, Schedule B, Employer’s Record of Federal Tax Liability?

The IRS uses Form 941, Schedule B to determine if you have timely deposited your employment and withholding tax liabilities. Schedule B is used to report your tax liability on a daily basis. Tax liability is income tax withheld plus both employee and employer social security and Medicare taxes minus any advance earned income credit payments. Do not show your federal tax deposits on the Schedule B. Report your tax liability on this schedule corresponding to the date wages are paid, NOT when payroll liabilities are accrued.

Semiweekly schedule depositors are required to complete and attach Schedule B to Form 941. Monthly schedule depositors who accumulate $100,000 or more on any day must also complete and attach Schedule B. If you accumulate less than a $2,500 tax liability (reduced by advanced earned income payment) during the quarter, and you pay in full with a timely filed return, you do not need to complete Schedule B.

Unless Schedule B is properly completed and filed with Form 941, the IRS may not be able to process your return and either will contact you for the missing information or may assess penalties.

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Page Last Reviewed or Updated: 11-Oct-2016