What Schedule B (Form 941) Is For

Schedule B (Form 941) is a companion form to your quarterly Form 941 (Employer's Quarterly Federal Tax Return) that serves as a detailed diary of your employment tax liabilities. Think of it as a day-by-day calendar where you record exactly when you paid your employees and how much tax you owed on those specific dates.

This form is specifically designed for "semiweekly schedule depositors"—employers who must make tax deposits within days after paying employees rather than monthly. The IRS uses Schedule B to verify that you deposited your employment taxes (federal income tax withholding plus both employee and employer portions of Social Security and Medicare taxes) on time according to strict deadlines.

Unlike your main Form 941, which shows totals for the entire quarter, Schedule B breaks down your tax liability by the actual dates wages were paid to employees. This granular reporting helps the IRS match your deposits to your liabilities and determine whether you've met the accelerated deposit requirements that apply to larger employers.

When You’d Use Schedule B (Including Late or Amended Filings)

You must file Schedule B if you're a semiweekly schedule depositor, which means you fall into one of these categories:

• You reported more than $50,000 in employment taxes during the "lookback period" (the 12-month period ending the previous June 30). For example, if you reported more than $50,000 in employment taxes from July 1, 2021, through June 30, 2022, you're a semiweekly depositor for all of 2023.
• You accumulated $100,000 or more in tax liability on any single day during the current or prior calendar year—even if you were previously a monthly depositor. This "next-day deposit rule" instantly changes your status, and you must complete Schedule B for the entire quarter in which this occurred.
• If your total tax liability for the quarter (Form 941, line 12) is less than $2,500, you generally don't need to file Schedule B even if you're normally a semiweekly depositor.

Late or Amended Filings

Amended Schedule B

If you've been assessed a failure-to-deposit (FTD) penalty and made an error on your original Schedule B that doesn't change your total quarterly liability, you can file an amended Schedule B to potentially reduce your penalty. Write "Amended" at the top and submit it to the address on your penalty notice.

With Form 941-X

If you're filing Form 941-X (the correction form for Form 941) and you were assessed an FTD penalty due to an incorrect or missing Schedule B, you may need to file an amended Schedule B along with Form 941-X. For late Form 941-X filings showing a tax increase, you must attach an amended Schedule B to avoid an "averaged" FTD penalty.

Key Rules or Details for 2023

Deposit Schedule Rules

Semiweekly depositors must follow strict deposit deadlines based on when wages are paid:

• Wages paid Wednesday, Thursday, or Friday: Deposit by the following Wednesday
• Wages paid Saturday, Sunday, Monday, or Tuesday: Deposit by the following Friday

You have at least 3 business days following the close of the semiweekly period to make deposits. All deposits must be made electronically through the Electronic Federal Tax Payment System (EFTPS) or a similar electronic method.

$100,000 Next-Day Deposit Rule

If you accumulate $100,000 or more in tax liability on any single day, you must deposit that tax by the next business day, regardless of your normal deposit schedule. This threshold is calculated before considering any nonrefundable credits. Triggering this rule once makes you a semiweekly depositor for the rest of that calendar year and the following calendar year.

What to Report

Enter your tax liability on Schedule B based on the dates wages were paid to employees, not when payroll periods ended or when you made deposits. Your tax liability includes:

• Federal income tax you withheld from employees
• Employee share of Social Security and Medicare taxes
• Employer share of Social Security and Medicare taxes

Important 2023 Credit Adjustments

For 2023, you must account for certain nonrefundable credits that reduce your reported tax liability:

• Qualified small business payroll tax credit for increasing research activities (up to $500,000 starting in 2023, applied first to employer Social Security tax up to $250,000, then to employer Medicare tax)
• Credits for qualified sick and family leave wages paid in 2023 for leave taken during 2020-2021 (these expired but can still apply if wages are paid in 2023)

Reduce your daily liability on Schedule B by these credits, but never below zero. The total liability shown on Schedule B must equal Form 941, line 12.

Step-by-Step (High Level): How to Complete Schedule B

Step 1: Gather Your Payroll Records

Compile records showing every date you paid wages to employees during the quarter, along with the total tax liability for each payday (federal income tax withheld plus Social Security and Medicare taxes for both employee and employer).

Step 2: Fill in the Header Information

Enter your Employer Identification Number (EIN) and business name exactly as they appear on Form 941. Check the appropriate quarter box and enter the calendar year (2023).

Step 3: Record Daily Tax Liabilities

Schedule B is divided into three months (Month 1, Month 2, Month 3), with 31 numbered lines for each month representing the days. On the line corresponding to each date you paid wages, enter the total tax liability for that day.

For example, if you paid wages on January 6, 2023, go to Month 1 and enter the tax liability amount on line 6. If you paid wages multiple times in one day, combine those amounts into one entry for that date.

Step 4: Apply Any Nonrefundable Credits

If you're claiming nonrefundable credits (like the research activities credit), reduce your tax liability entries starting with the first payday of the quarter. Apply the credit to successive paydays until fully used, but never reduce any single day's liability below zero.

Step 5: Total Each Month

Add up all the daily amounts for each month and enter the monthly totals in the spaces provided at the bottom of each month's section.

Step 6: Calculate Your Quarterly Total

Add the three monthly totals together to get your "Total liability for the quarter." This amount must exactly match the amount on Form 941, line 12. If it doesn't match, review your entries for errors.

Step 7: Attach to Form 941

Submit Schedule B together with your Form 941 by the quarterly due date (April 30, July 31, October 31, or January 31 for the preceding quarter, unless you deposited all taxes when due—then you get an additional 10 days).

Common Mistakes and How to Avoid Them

Mistake #1: Reporting Deposit Dates Instead of Wage Payment Dates

Schedule B records tax liability based on when wages were paid, not when you made deposits. Many employers incorrectly enter amounts on the dates they deposited taxes. Always use the actual payday.

Mistake #2: Not Filing Schedule B When Required

If you're a semiweekly depositor and don't file Schedule B (or file an incomplete one), the IRS may assess an "averaged" failure-to-deposit penalty. This penalty assumes you deposited all taxes for the quarter on the last day of the quarter, resulting in maximum penalties. Always attach Schedule B when you're a semiweekly depositor.

Mistake #3: Incorrect Quarterly Total

The total on Schedule B must match Form 941, line 12 exactly. Don't reduce your Schedule B total by refundable credits (like the refundable portion of sick and family leave wages). Only nonrefundable credits reduce your Schedule B liability.

Mistake #4: Entering Information in the Wrong Month

Pay careful attention to quarter boundaries. If your payroll period ended in December but you paid wages in January, that liability goes in Month 1 of the first quarter (January), not Month 3 of the fourth quarter (December).

Mistake #5: Not Accounting for the $100,000 Rule

Failing to recognize when you've triggered the $100,000 next-day deposit rule can result in significant penalties. Monitor your daily tax accumulations closely, and remember that once you hit this threshold, you become a semiweekly depositor for the rest of that year and all of the next year.

Mistake #6: Mishandling Nonrefundable Credits

When applying credits like the research activities credit, some employers spread the credit evenly across all paydays. Instead, you should apply the full credit to your first payday(s) until it's exhausted. Follow the specific ordering rules for each type of credit.

Mistake #7: Using Schedule B as a Monthly Depositor

Monthly depositors should complete the monthly tax liability section on Form 941 itself, not Schedule B. Only use Schedule B if you're a semiweekly depositor. If you mistakenly file Schedule B as a monthly depositor, it may cause processing delays.

What Happens After You File

Processing and Matching

Once you file Schedule B with Form 941, the IRS uses the information to verify your deposit timeliness. The IRS receives electronic records of all your deposits through EFTPS, and Schedule B allows them to match each deposit to the specific paydays when liabilities arose. This matching process determines whether you met the semiweekly deposit deadlines or the next-day deposit rule.

Penalty Assessment

If the IRS identifies late deposits, you may receive a notice assessing failure-to-deposit (FTD) penalties. These penalties are tiered:

• 2% for deposits 1-5 days late
• 5% for deposits 6-15 days late
• 10% for deposits more than 15 days late
• 10% for amounts deposited at unauthorized financial institutions or paid directly to the IRS instead of being deposited
• 15% for amounts still unpaid more than 10 days after the IRS issues a notice demanding payment

No Separate Acknowledgment

Unlike some tax forms, you won't receive a separate acknowledgment specifically for Schedule B. It's processed together with your Form 941. If there are no issues, you simply won't hear anything. The IRS will contact you only if they find discrepancies or assess penalties.

Audit and Examination

Schedule B becomes part of your permanent tax record and may be reviewed during employment tax audits. The IRS may compare Schedule B entries to your payroll records, bank statements, and EFTPS transaction history. Keeping detailed payroll records for at least 4 years (6 years for certain credits) is essential.

Correcting Errors

If you discover an error after filing, you can file an amended Schedule B to correct it, especially if you've been assessed an FTD penalty. The IRS will recalculate your penalty based on the corrected information and notify you of any changes. Submit amended Schedule B forms to the address on your penalty notice, not to the regular filing address.

FAQs

1. I'm a new employer. How do I know if I'm a monthly or semiweekly depositor?

New employers are automatically monthly depositors for the first calendar year unless they accumulate $100,000 or more in tax liability on any single day. In that case, you immediately become a semiweekly depositor. Starting in your second year, your deposit schedule depends on your lookback period (employment taxes reported for the 12 months ending the prior June 30). If that amount exceeded $50,000, you're a semiweekly depositor.

2. Can I just complete the monthly section on Form 941 instead of filing Schedule B?

No. If you're a semiweekly schedule depositor (or became one during the quarter), you must file Schedule B. Check the third box on Form 941, Part 2, line 16, and attach Schedule B. Don't complete the monthly liability section on Form 941 itself.

3. What if I paid wages on multiple days but deposited the taxes all at once?

That's fine—deposits don't have to match paydays one-for-one. Schedule B records your liabilities by payday, and your deposits can cover multiple paydays as long as you meet the semiweekly deadlines. The IRS matches your total deposits to your total liabilities for each deposit period.

4. Do I need to file Schedule B if my quarterly tax liability is under $2,500?

Generally, no. If your total tax liability for the quarter (Form 941, line 12) is less than $2,500, you don't need to file Schedule B even if you're normally a semiweekly depositor. However, if you accumulated $100,000 or more on any day during the quarter, you must file Schedule B regardless of your quarterly total.

5. How do I handle paydays that fall on weekends or holidays?

Enter the tax liability on Schedule B based on the actual date wages were paid, even if it's a weekend or holiday. Your deposit deadline adjusts if the required deposit date falls on a non-business day—in that case, the deposit is due the next business day.

6. I claimed the qualified sick and family leave credits in 2023. How does this affect Schedule B?

If you're claiming the nonrefundable portion of these credits (Form 941, lines 11b or 11d for leave taken in 2020-2021), you must reduce your daily tax liabilities on Schedule B starting with the first payday of the quarter. Apply the credit to successive paydays until fully used, but don't reduce any day's liability below zero. The refundable portion of these credits doesn't affect Schedule B.

7. What should I do if I receive a failure-to-deposit penalty notice but my deposits were timely?

Review your Schedule B carefully. Errors in reporting liabilities on the wrong dates can make timely deposits appear late. If you find an error, file an amended Schedule B with "Amended" written at the top and send it to the address on the penalty notice. Include a brief explanation of the correction. If your Schedule B was correct, contact the IRS number on the penalty notice to discuss the discrepancy—you may need to provide proof of timely deposits (EFTPS confirmation numbers).

For More Information

• Form 941 and Instructions
• Schedule B (Form 941) and Instructions
• Publication 15 (Circular E), Employer's Tax Guide
• Topic No. 757, Deposit Requirements
• Employment Tax Due Dates