Form 941 (2010) Filing Checklist for Employers

from April 1 through June 30. An updated version issued in April 2010 added more explicit guidance on the Hiring Incentives to Restore Employment Act exemption and refined the reporting rules for qualified employers.

Employers must submit this return by July 31, 2010, and include only wages paid during the applicable three-month period. A return is considered timely only when it is adequately addressed, contains sufficient postage, and carries a United States Postal Service postmark dated on or before the filing deadline.

Confirm Your Filing Quarter and Deadline

Verify that you are completing Form 941 for the correct calendar quarter before you begin. Late filing triggers automatic penalties regardless of whether you owe additional taxes.

Complete Employer Identification and Business

Information

Enter your employer identification number exactly as the IRS assigned it to your business.

Provide your legal business name, trade name if applicable, and complete mailing address in the header section. The 2010 instructions require exact matching of the legal business name registered with the Social Security Administration to prevent processing delays. Update any information that has changed since your last quarterly filing to maintain accurate IRS records.

Report Wages Subject to Social Security and Medicare

Taxes

Line 2 requires you to report total wages subject to Social Security tax for all employees during the quarter. Line 5 requires total wages subject to Medicare tax, which has no annual wage limit.

Calculate Federal Income Tax Withholding Without

Backup Withholding

Report total federal income tax withheld from employee wages on Line 3. Do not include backup withholding amounts on Form 941. Backup withholding must be reported on Form 945, Annual

Return of Withheld Federal Income Tax, not on this quarterly employment tax return. The April

2010 instructions explicitly state that Form 941 does not serve as the reporting mechanism for backup withholding under Internal Revenue Code Section 3406.

Apply the HIRE Act Payroll Tax Exemption for Qualified

Employees

The Hiring Incentives to Restore Employment Act created a payroll tax exemption effective

March 18, 2010, allowing qualified employers to exempt their 6.2 percent share of Social

Security taxes. You report this exemption using lines 6a through 6d, which require you to enter the number of qualified employees and the amount of exempt wages paid during the quarter.

This exemption program operates separately from the Work Opportunity Tax Credit, and you cannot claim both benefits for the same employee. Wages paid under HIRE Act incentive provisions must appear on wage reporting lines before you apply any exemption reduction.

Qualified employees must meet four specific requirements under the HIRE Act provisions

• The individual must begin employment after February 3, 2010, and before January 1,

2011.

• The worker must certify on Form W-11 that they have not been employed for more than

40 hours during the 60 days ending on the employment start date.

• The employee cannot replace another worker unless the previous employee separated

voluntarily or for cause.

• The individual cannot be related to you or to anyone who owns more than 50 percent of

your business.

Report Third-Party Sick Pay Adjustments

Line 7b addresses adjustments for the employee share of Social Security and Medicare taxes withheld by third-party sick pay administrators. This reconciliation adjustment applies only when an insurance company or other third party withholds employment taxes on behalf of your employees.

Determine Schedule B Filing Requirements Based on

Deposit Schedule

Schedule B must be attached if you qualify as a semiweekly schedule depositor at any point during the quarter. Classification as a semiweekly depositor occurs when more than $50,000 in employment taxes is reported during the lookback period, or when $100,000 or more in tax liability is accumulated on a single day.

While the $2,500 threshold determines whether employment taxes must be deposited in advance or paid with the return, it does not affect Schedule B filing requirements. To report tax liability by specific payment dates throughout the quarter, all semiweekly depositors must complete Schedule B.

Calculate Total Tax Liability and Verify Deposit Accuracy

Add Social Security tax, Medicare tax, and federal income tax withholding to determine your total tax liability. The additional Medicare tax did not exist in 2010 and does not apply to any wages reported on this form.

Compare your calculated liability to the sum of all federal employment tax deposits you made during and after the second quarter. Any underpayment triggers interest charges and potential penalties calculated from the original deposit due dates.

Complete Second Quarter 2010 Retroactive HIRE Act

Lines

Lines 12c through 12e appear only on the second quarter 2010 Form 941 and serve a specific retroactive purpose. These lines allow qualified employers to claim the Social Security tax

exemption for wages paid to qualified employees between March 19, 2010, and March 31,

2010.

This brief period falls after the HIRE Act's March 18, 2010, effective date but within the first calendar quarter. The exemption amount you calculate on line 12e reduces your second-quarter deposit obligations and applies retroactively to qualified wages from the final days of the previous quarter.

Sign, Assemble, and Submit Your Return

An authorized officer, manager, or paid tax preparer must sign and date Form 941 to certify the accuracy of all reported information. Attach Schedule B if you are a semiweekly depositor, along with any documentation supporting HIRE Act exemptions or COBRA premium assistance claims.

Mail the original form to the appropriate IRS processing center listed in the instructions, ensuring the envelope reaches the facility by the July 31, 2010, deadline. The IRS processes only original, signed returns and rejects photocopies or unsigned submissions, regardless of a timely postmark.

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