Instructions for Schedule B (Form 941) (1/2006)

Specific Instructions:

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Completing Schedule B (Form 941)

Completing Schedule B (Form 941)

Fill in Your Business Information

Carefully fill in your employer identification number (EIN) and name at the top of the schedule. Make sure that they exactly match the name of your business and the EIN that IRS assigned to your business and also agree with the name and EIN shown on the attached Form 941 or Form 941-SS.

Always be sure the EIN on the schedule you file exactly matches the EIN that IRS assigned to your business. Do not use your social security number on forms that ask for an EIN. Filing a Schedule B (Form 941) with an incorrect EIN, or using the EIN of another business, may result in penalties and delays in processing your return.

Calendar year

Show the calendar year that applies to the quarter checked. See Check the Box for the Quarter below.

Check the Box for the Quarter

In the box at the top of the schedule, check the appropriate box of the quarter for which you are filing this schedule. Make sure that the quarter checked on the top of the Schedule B (Form 941) matches the quarter checked on your Form 941 or Form 941-SS.

Fill in Your Tax Liability by Month

Schedule B (Form 941) is divided into the 3 months that make up a quarter of a year. Each month has 31 numbered spaces that correspond to the dates of a typical month. Write your tax liabilities in the spaces that correspond to the dates you paid wages to your employees, not the date payroll deposits were made.

For example, if your payroll period ended on
December 31, 2005, and you paid the wages for that period on January 6, 2006, you would:

go to Month 1 (because January is the first month of the quarter) and
write your tax liability on line 6 (because line 6 represents the sixth day of the month).

Make sure you have checked the appropriate box on line 15 of Form 941 or Form 941-SS to show that you are a semiweekly schedule depositor.

Total Liability for the Quarter

To find your total liability for the quarter, add your monthly tax liabilities.

	Tax Liability for Month 1
+	Tax Liability for Month 2
+	Tax Liability for Month 3
	Total Liability for the Quarter
Your total liability for the quarter must equal line 10 on Form 941 or line 8 on Form 941-SS.

Here are some examples.

Employer A is a semiweekly schedule depositor who pays wages for each month on the last day of the month. On December 22, 2006, Employer A also paid its employees year-end bonuses (subject to employment taxes). Because Employer A is a semiweekly schedule depositor, Employer A must record employment tax liabilities on Schedule B (Form 941). For the 4th quarter (October, November, December), Employer A should report tax liability in this way—

Month	Lines for dates wages were paid

1 (October)	line 31 (pay day, last day of the month)
2 (November)	line 30 (pay day, last day of the month)
3 (December)	lines 22 (bonus paid) + 31 (pay day)

Employer B is a semiweekly schedule depositor who pays employees every other Friday. Employer B accumulated a $20,000 employment tax liability on each of these pay dates:
1/13/06, 1/27/06, 2/10/06, 2/24/06, 3/10/06, and 3/24/06. Since Employer B is a semiweekly schedule depositor, Employer B must record tax liabilities on Schedule B (Form 941) in this way—

Month Lines for dates wages were paid

1 (January) lines 13 and 27

2 (February) lines 10 and 24

3 (March) lines 10 and 24
Employer C is a new business and monthly schedule depositor for 2006. Employer C pays wages every Friday and has accumulated a $2,000 employment tax liability on
1/13/06 and a $110,000 liability on 1/20/06 and on every subsequent Friday during 2006. Under the deposit rules, employers become semiweekly schedule depositors on the day after any day they accumulate $100,000 or more of tax liability in a deposit period. (See section 11 of Pub. 15
(Circular E) or section 8 of Pub. 80 (Circular SS) for details.)

Because Employer C accumulated $112,000 on 1/20/06, Employer C became a semiweekly schedule depositor on the next day and must complete Schedule B (Form 941) and file it with Form 941 or Form 941-SS. Employer C should record tax liabilities in this way—

Month	Dates wages were paid	Amount to record

1 (January)	line 13	$2,000
1 (January)	lines 20, 27	$110,000
2 (February)	lines 3, 10, 17, 24	$110,000
3 (March)	lines 3, 10, 17, 24	$110,000

Prior Period Adjustments

On Schedule B (Form 941), you must take into account adjustments to correct errors on prior period returns. See lines 7d-7g on post-2004 versions of Forms 941; lines 7e and 7g on post-2004 versions of Forms 941-SS. (For pre-2005 Forms 941 and 941-SS, see lines 4 and 9.)

If the adjustment corrects an underreported liability in a prior quarter, include the adjustment amount in the total liability reported for the entry space that corresponds to the date you discovered the error.
If the adjustment corrects an overreported liability, use the adjustment amount to offset subsequent liabilities until it is used up.

Example.

On 1/20/06, Employer D discovered that social security tax was over-reported by $10,000 on a prior quarter return. Employer D paid wages on 1/13/06, 1/20/06, 1/27/06, and 2/3/06 and had a $5,000 tax liability for each of those pay dates. On Schedule B (Form 941), Employer D must report a $5,000 liability on 1/13/06 for Month 1 using line 13. Since the adjustment for the $10,000 over-reported liability offsets the
1/20/06 and 1/27/06 liability, Employer D does not deposit or report these two $5,000 liabilities on Schedule B (Form 941). Employer D must report the $5,000 liability for 2/3/06 on Month 2 using line 3. (See section 13 of Pub. 15 (Circular E) for details on reporting adjustments to correct errors on prior period returns.)

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