Schedule B (Form 941): Report of Tax Liability for Semiweekly Schedule Depositors – 2019 Guide
What Schedule B (Form 941) Is For
Schedule B (Form 941) is a supplemental form that certain employers must attach to their quarterly Form 941 tax return. While Form 941 reports the total employment taxes you owe—including federal income tax withheld from employees' paychecks plus both the employer and employee portions of Social Security and Medicare taxes—Schedule B breaks down exactly when those tax liabilities occurred during the quarter.
Think of Form 941 as the "big picture" summary of your quarterly taxes, while Schedule B is the detailed daily diary. Schedule B requires you to report your actual tax liability for each specific day you paid wages to employees during the three-month quarter. This isn't about when you made deposits to the IRS; it's about the dates when your employees received their paychecks and your tax obligations were created.
The IRS uses Schedule B to verify that semiweekly depositors are making their required tax deposits on time according to strict deadlines. Because semiweekly depositors handle larger payroll tax amounts (more than $50,000 annually), the IRS monitors their compliance more closely to ensure these significant tax dollars reach the Treasury on schedule.
When You’d Use Schedule B (Including Late or Amended Filings)
You must file Schedule B if you're a "semiweekly schedule depositor" for the quarter. You qualify as a semiweekly depositor in two situations:
Lookback Period Threshold
First, you automatically become a semiweekly depositor if you reported more than $50,000 in total employment taxes during the "lookback period"—the 12-month period from July 1 of the second preceding calendar year through June 30 of the preceding calendar year. For 2019 filing, that lookback period was July 1, 2017, through June 30, 2018. Once you cross that $50,000 threshold, you remain a semiweekly depositor for the entire following calendar year.
The $100,000 Next-Day Deposit Rule
Second, you immediately become a semiweekly depositor—regardless of your lookback period—if you accumulate $100,000 or more in tax liability on any single day during the current or previous calendar year. This is called the "$100,000 Next-Day Deposit Rule," and it triggers same-day status changes because the IRS wants these large amounts deposited quickly.
Filing Deadlines and Extensions
Schedule B must be filed with each quarterly Form 941 by the standard deadlines: April 30 (for Q1), July 31 (for Q2), October 31 (for Q3), and January 31 of the following year (for Q4). If you made all your required tax deposits on time and in full, you get a 10-day extension—meaning you can file by the 10th of the second month following the quarter end.
Late Filings
For late filings: If you missed filing Schedule B with your original Form 941, you generally need to file Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) to correct the error. Simply submitting a standalone Schedule B won't properly update IRS records. Missing Schedule B can trigger "averaged" failure-to-deposit penalties, where the IRS estimates your deposit schedule and assesses penalties accordingly.
Amended Returns
For amended returns: If you need to correct errors on a previously filed Form 941, use Form 941-X within three years of filing the original return or two years from when you paid the tax (whichever is later). However, don't change your tax liability on Schedule B based on adjustments reported on Form 941-X—keep Schedule B reflecting the original liability amounts from when wages were actually paid.
IRS.gov - About Form 941
IRS.gov - Instructions for Form 941 (2019)
Key Rules or Details for 2019
Deposit Schedule Determination
Deposit Schedule Determination: Your deposit schedule (monthly vs. semiweekly) is locked in for the entire calendar year based on your lookback period. For 2019, the lookback period was July 1, 2017–June 30, 2018. Calculate your total Form 941 tax liability for those four quarters: if the total exceeds $50,000, you're a semiweekly depositor for all of 2019.
The $100,000 Next-Day Rule
The $100,000 Next-Day Rule: This supersedes everything else. If your accumulated tax liability reaches $100,000 or more on any single day, you must deposit that money by the next business day. This rule applies even if you're normally a monthly depositor. Once triggered during 2019 or 2018, you become a semiweekly depositor for the remainder of 2019 and all of 2020.
What to Report
What to Report: Enter the actual tax liability for each day you paid wages—not the amount you deposited. Tax liability includes federal income tax withheld plus both employer and employee shares of Social Security (6.2% each) and Medicare taxes (1.45% each). For 2019, Social Security tax applied to the first $132,900 of each employee's wages, while Medicare tax had no wage cap.
Electronic Deposit Requirement
Electronic Deposit Requirement: All federal tax deposits must be made electronically through the Electronic Federal Tax Payment System (EFTPS) or via same-day wire transfer through your bank. Paper checks for deposits were not accepted. Deposits must be submitted by 8 p.m. Eastern Time the day before the due date to count as timely.
Semiweekly Deposit Timeline
Semiweekly Deposit Timeline: If you paid employees on Wednesday, Thursday, or Friday, the deposit is due the following Wednesday. If you paid employees on Saturday, Sunday, Monday, or Tuesday, the deposit is due the following Friday. These deadlines apply to the date wages were paid, not the pay period end date.
Credits and Adjustments
Credits and Adjustments: If you're claiming the qualified small business payroll tax credit for increasing research activities (reported on Form 941, line 11), you apply this credit to reduce your employer share of Social Security tax starting with the first payroll of the quarter. However, you cannot reduce your daily tax liability on Schedule B below zero—any unused credit carries forward to subsequent paydays within the quarter.
Negative Adjustments
Negative Adjustments: If adjustments from Form 941 lines 7–9 result in a negative amount that exceeds your total liability for a given month, don't enter a negative number for that month. Instead, enter zero and carry the unused adjustment forward to the next month.
IRS.gov - Topic 757: Forms 941 and 944 Deposit Requirements
IRS.gov - Publication 15 (Circular E), Employer's Tax Guide
Step-by-Step (High Level)
Step 1: Confirm You Need Schedule B
Review your total employment tax liability from July 1, 2017, through June 30, 2018. Add up line 12 (total taxes after adjustments) from your four quarterly Form 941s during that period. If the sum exceeds $50,000, or if you had any day with $100,000+ in tax liability during 2018 or 2019, you must file Schedule B for all 2019 quarters.
Step 2: Gather Payroll Records
Collect your detailed payroll records for the quarter, including every date you paid employees. You need the total gross wages, federal income tax withheld, and Social Security/Medicare taxes for each payday.
Step 3: Calculate Daily Tax Liability
For each payday during the quarter, calculate your tax liability:
- Federal income tax withheld from all employees
- Social Security tax: 12.4% of wages (6.2% employer + 6.2% employee) up to $132,900 per employee for the year
- Medicare tax: 2.9% of all wages (1.45% employer + 1.45% employee) with no cap
- Additional Medicare Tax: 0.9% withheld from wages exceeding $200,000 (employee portion only)
Step 4: Complete Schedule B
The form shows three months divided into daily boxes. On Schedule B:
- Find the calendar date when you paid wages
- Enter the total tax liability for that specific date in the corresponding box
- Leave boxes blank for non-payday dates
- If you had multiple payroll runs on the same day, combine them into one total for that date
Step 5: Verify Total Matches Form 941
Add up all the daily amounts you entered on Schedule B. This total must equal line 12 on your Form 941 (total taxes after adjustments and credits). If they don't match, review your calculations—mismatches trigger IRS notices.
Step 6: Check the Semiweekly Box on Form 941
On Form 941, line 16, check the third box indicating you're a semiweekly schedule depositor. Don't fill in the monthly tax liability lines (16a, 16b, 16c)—Schedule B replaces that section.
Step 7: Attach and File
Attach completed Schedule B to your Form 941 and file by the quarterly deadline. Include your EIN and business name on both forms. If filing electronically (recommended), ensure your software includes Schedule B in the submission.
IRS.gov - Instructions for Schedule B (Form 941)
Common Mistakes and How to Avoid Them
Mistake #1: Reporting Deposits Instead of Liabilities
The single most common error is entering the amounts you deposited to the IRS rather than your actual tax liability on payday. Schedule B tracks when your obligation occurred (the payday), not when you satisfied that obligation (the deposit date). These dates often differ by several days.
How to avoid: Use your payroll reports showing wages paid and taxes withheld on specific dates. Ignore your EFTPS deposit confirmations when completing Schedule B.
Mistake #2: Using Schedule B When You're a Monthly Depositor
Some employers mistakenly attach Schedule B even though they're monthly depositors (under $50,000 in the lookback period and no $100,000 day). This creates processing confusion.
How to avoid: Calculate your lookback period total carefully. If you're under $50,000 and had no $100,000 day, use line 16 on Form 941 instead—don't file Schedule B.
Mistake #3: Forgetting Schedule B Entirely
Semiweekly depositors who submit Form 941 without Schedule B face automatic "averaged" failure-to-deposit penalties. The IRS assumes deposits were late and calculates penalties accordingly.
How to avoid: Set up a checklist for quarter-end filing. If you're a semiweekly depositor, Schedule B is mandatory, not optional—treat it as page 3 of Form 941.
Mistake #4: Including Form 941-X Adjustments on Schedule B
When filing an amended return (Form 941-X), employers sometimes try to revise Schedule B to reflect the adjusted amounts. The IRS specifically instructs against this.
How to avoid: Schedule B always shows the original liability from when wages were paid. Adjustments get handled separately on Form 941-X; don't retroactively change Schedule B.
Mistake #5: Reducing Daily Liability Below Zero for Credits
If you're claiming research payroll tax credits or other credits that exceed your tax liability on a particular payday, you cannot enter negative numbers on Schedule B.
How to avoid: Apply credits to reduce liability as low as zero, then carry forward any unused credit to the next payday. Never show negative amounts in Schedule B boxes.
Mistake #6: Using the Wrong Quarter's Form
Each Schedule B is printed for a specific quarter with the correct number of days for those three months. Using Q1's form for Q2 causes date misalignment.
How to avoid: Download the correct quarter's Schedule B from IRS.gov or ensure your tax software generates the right quarter's version.
Mistake #7: Mismatched Totals with Form 941
The sum of all entries on Schedule B must exactly match line 12 on Form 941. Even small discrepancies trigger IRS correspondence and potential penalties.
How to avoid: Before filing, add up all Schedule B entries and compare to Form 941, line 12. If they differ, trace back through your calculations to find the error.
IRS.gov - Publication 5343: Failure to Deposit Penalties
What Happens After You File
IRS Processing (8–12 Weeks)
After you file Form 941 with Schedule B, the IRS processes your return through its automated systems. This typically takes 8–12 weeks during normal periods. The IRS matches your reported liabilities on Schedule B against your actual deposit dates and amounts from EFTPS records to verify compliance with semiweekly deposit deadlines.
Deposit Matching and Penalty Assessment
The IRS computer system checks whether each deposit was made on time according to the semiweekly schedule rules. For each instance where deposits were late, insufficient, or missing, the system calculates failure-to-deposit (FTD) penalties. These penalties range from 2% (1–5 days late) to 10% (16+ days late) to 15% (never paid but assessed after IRS notice), calculated on the unpaid tax amount.
If Everything Matches
When your deposits align correctly with your Schedule B liabilities, you won't receive any correspondence—the IRS simply processes your return and updates your account. You can verify this by checking your account transcript at IRS.gov using "Get Transcript" or by calling 800-829-4933.
If There Are Discrepancies
Mismatches trigger an IRS notice (typically CP161, CP207, or CP215 series), usually arriving 3–6 months after filing. The notice explains the penalty calculation, provides a payment deadline (typically 21 days), and includes instructions for responding if you believe it's incorrect.
Reasonable Cause Relief
If you receive a penalty notice but had reasonable cause for the late deposit (first-time administrative errors, natural disasters, serious illness, etc.), don't ignore it. Respond in writing within the deadline explaining your situation and requesting abatement. The IRS grants reasonable cause relief more readily for first-time penalties or when circumstances were truly beyond your control.
Form 843 for Penalty Abatement
If penalties were already assessed and you believe you qualify for relief, file Form 843 (Claim for Refund and Request for Abatement) with supporting documentation. Don't request abatement on Form 941 itself—it must be done separately.
Record Retention
Keep copies of Form 941, Schedule B, all payroll records, and EFTPS deposit confirmations for at least four years. The IRS can examine your employment tax returns for three years (or longer if there's substantial underreporting or fraud), and you may need these records to defend against penalty assessments.
Next Quarter Preparation
Your deposit schedule for 2020 depends on your total 2019 tax liability. If you reported more than $50,000 across all four 2019 quarters (or had any $100,000 day), you'll continue as a semiweekly depositor for 2020 and must file Schedule B with every Form 941 next year.
IRS.gov - Understanding Your IRS Notice or Letter
FAQs
Q1: I'm a new employer in 2019 with no lookback period. Do I use Schedule B?
No. New employers with no tax history are automatically monthly depositors unless they accumulate $100,000 in tax liability on any single day. Start as a monthly depositor, report your liabilities on Form 941 line 16 (not Schedule B), and make deposits by the 15th of the following month. If you hit the $100,000 threshold on any day, you instantly become a semiweekly depositor and must use Schedule B going forward.
Q2: We switched payroll companies mid-quarter. How does this affect Schedule B?
It doesn't change your filing requirements—Schedule B must still show every payday's liability for the entire quarter. Coordinate with both payroll companies to get complete records. You're ultimately responsible for accurate reporting even if payroll vendors provide conflicting information. Combine data from both services to show the complete quarter's daily liabilities.
Q3: If my Schedule B total doesn't match Form 941 line 12, what should I do?
Don't file until they match exactly. Discrepancies always indicate a calculation error somewhere. Review each payday's tax calculation, verify you included all payrolls, check that Social Security wage base limits ($132,900 for 2019) were properly applied, and ensure you didn't accidentally include any adjustments from Form 941 lines 7–9 on Schedule B (those shouldn't appear on Schedule B). Once corrected, the totals must be identical.
Q4: Can I file Schedule B separately if I forgot to include it with Form 941?
While you technically can mail Schedule B separately with a cover letter referencing your EIN and the quarter, the preferred method is filing Form 941-X to properly amend your return. A standalone Schedule B may not get processed correctly into your account. If the original filing was recent (within 30 days), call the IRS at 800-829-4933 to ask whether you should mail Schedule B separately or wait for a notice before filing Form 941-X.
Q5: What if I made deposits on time but was actually a semiweekly depositor and didn't realize it?
If you mistakenly operated as a monthly depositor (making deposits by the 15th of the following month) when you should have been semiweekly (depositing within 3 business days), the IRS may still assess FTD penalties even if money was deposited. The penalty is based on when deposits were required versus when they were made. However, reasonable cause relief may be available for first-time misclassification errors. File corrected returns with Schedule B and request penalty abatement if assessed.
Q6: Does the $100,000 next-day rule apply to the total tax liability or just one type of tax?
It applies to your combined total of all employment taxes on a single day: federal income tax withholding plus both employer and employee Social Security and Medicare taxes. If that aggregate amount reaches $100,000 on any payday, you must deposit by the next business day. The threshold is determined before reducing for any credits—credits don't affect whether you've crossed the $100,000 trigger.
Q7: I'm a semiweekly depositor due to the lookback period, but my quarterly tax is under $2,500. Do I still need Schedule B?
This is a gray area. Technically, if your current quarter's line 12 is less than $2,500 and your prior quarter was also under $2,500, you're exempt from deposit requirements and can pay with the return. However, if your lookback period made you a semiweekly depositor, the conservative approach is to still file Schedule B to document your liability pattern. The IRS instructions aren't crystal clear on this scenario, so consider calling 800-829-4933 for clarification or consult a tax professional to avoid penalties.
For More Information:
IRS Form 941 page: https://www.irs.gov/forms-pubs/about-form-941
2019 Instructions for Form 941: https://www.irs.gov/pub/irs-prior/i941--2019.pdf
Publication 15 (Circular E), Employer's Tax Guide: https://www.irs.gov/publications/p15
IRS Employment Tax Information: https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes
IRS Help Line: 800-829-4933 (Monday–Friday, 7 a.m.–7 p.m. local time)
