Schedule B (Form 941) – Report of Tax Liability for Semiweekly Schedule Depositors (2010)

What Schedule B (Form 941) Is For

Schedule B (Form 941) is a supplemental IRS tax form that works hand-in-hand with your quarterly Form 941 (Employer's QUARTERLY Federal Tax Return). Think of it as a detailed calendar that shows the IRS exactly when you accumulated your payroll tax liabilities throughout the quarter—not when you made deposits, but when you actually paid wages to your employees.

This schedule reports your daily tax liability for federal income tax withholding, Social Security taxes (both employer and employee portions), and Medicare taxes (both portions). The IRS uses Schedule B to verify that you deposited your employment taxes on time according to the semiweekly deposit schedule rules.

Schedule B is divided into three monthly sections (one for each month of the quarter), with 31 numbered spaces representing each possible day of the month. You'll enter your tax liability on the specific dates you paid wages—for example, if you paid employees on the 15th and 30th of each month, you'd only fill in those date lines with the corresponding tax amounts.

It's crucial to understand that Schedule B tracks liability, not deposits. Your liability occurs when you pay wages, while deposits are made separately according to strict IRS timetables. The IRS cross-references this schedule against your actual deposit records to ensure compliance with federal tax deposit rules. IRS Instructions for Schedule B (Form 941) 2010

When You’d Use Schedule B (Form 941)

Original Filing Requirements

You must file Schedule B with your Form 941 if you're a semiweekly schedule depositor at any point during the quarter. You're classified as a semiweekly depositor if:

You reported more than $50,000 in total taxes during the lookback period (July 1 of the second preceding year through June 30 of the previous year)
You accumulated $100,000 or more in tax liability on any single day during the quarter (this immediately triggers semiweekly depositor status, even if you started the quarter as a monthly depositor)

You do NOT need to file Schedule B if:

Your total tax liability is less than $2,500 for the quarter (after subtracting any advance earned income credit payments)
You remain a monthly schedule depositor throughout the entire quarter

Late or Amended Filings

Correcting Errors (Amended Schedule B)

If the IRS has assessed a failure-to-deposit (FTD) penalty and you made an error on Schedule B that doesn't change your total quarterly liability, you can file an amended Schedule B to potentially reduce your penalty. For example, if you reported a $3,000 liability on day 1 of month 1, but it actually belonged on day 1 of month 3, you can file an amended schedule. Write "Amended" at the top and send it to the address on your penalty notice.

Monthly Depositors Switching to Semiweekly

If you were assessed an FTD penalty as a monthly depositor, you can retroactively file Schedule B showing only monthly totals (not daily entries) to demonstrate proper timing.

Filing with Form 941-X

If you're filing Form 941-X (Amended Form 941) for a tax decrease and you were assessed an FTD penalty, you should file an amended Schedule B with it. If you're filing Form 941-X late (after the due date for the quarter in which you discovered the error), you must include an amended Schedule B to avoid an "averaged" FTD penalty assessment. IRS Instructions for Schedule B (Form 941) 2010

Key Rules or Details for 2010

The $100,000 Next-Day Deposit Rule

In 2010, if you accumulated $100,000 or more in tax liability on any single day, you immediately became a semiweekly depositor for at least the remainder of that calendar year and the entire following calendar year. When this happens, you must deposit that liability by the next banking day and complete Schedule B going forward.

Social Security Wage Base

For 2010, the Social Security wage base was $106,800. Once an employee's wages reached this amount during the year, you stopped withholding and paying Social Security tax on additional wages for that employee (though Medicare tax continued on all wages with no limit).

The HIRE Act Tax Exemption (2010 Special Provision)

The 2010 tax year included a unique incentive under the Hiring Incentives to Restore Employment (HIRE) Act. Qualified employers could claim an exemption from paying the employer's 6.2% share of Social Security tax on wages paid to qualified new employees hired after February 3, 2010, and before January 1, 2011. This exemption reduced the amount you needed to report and deposit, but Schedule B still had to account for the tax liability correctly.

COBRA Premium Assistance

In 2010, employers could also claim a credit for COBRA premium assistance payments (65% of premiums for assistance-eligible individuals). This credit reduced your deposit obligations and affected how you calculated your Schedule B liabilities.

Critical Matching Requirement

The total liability shown on Schedule B for the quarter must exactly match line 10 on Form 941 (Total taxes after adjustment for advance EIC). Any discrepancy can trigger IRS inquiries and potential penalties. IRS Form 941 Instructions Q2 2010

Step-by-Step (High Level)

Step 1: Determine Your Depositor Status

Before completing Schedule B, confirm you're required to file it. Review your lookback period tax liability or check if you hit the $100,000 threshold during the quarter.

Step 2: Gather Payroll Records

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

Step 3: Enter Business Information

At the top of Schedule B, carefully enter your Employer Identification Number (EIN) and business name exactly as they appear on your Form 941. Check the appropriate quarter box (1st, 2nd, 3rd, or 4th quarter).

Step 4: Record Daily Tax Liabilities

For each month of the quarter, enter your tax liability on the numbered line corresponding to the date you paid wages (not the date you made deposits). If you paid wages on January 6, go to Month 1 and enter the liability amount on line 6. Leave all other days blank unless you also paid wages on those dates.

Step 5: Calculate Monthly and Quarterly Totals

Add up your liabilities for each month and enter the subtotals. Then add all three monthly totals to get your Total Liability for the Quarter. This number must match line 10 on your Form 941 exactly.

Step 6: Double-Check Everything

Review each entry for accuracy. Verify that your quarter selection matches Form 941, your EIN is correct, and your quarterly total reconciles perfectly. Even minor discrepancies can lead to penalty assessments.

Step 7: Attach to Form 941 and File

Staple Schedule B to your Form 941 and file them together by the quarterly deadline (April 30, July 31, October 31, or January 31). Make sure you've checked the box on line 17 of Form 941 indicating you're a semiweekly schedule depositor. IRS Instructions for Schedule B (Form 941) 2010

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Liability Dates with Deposit Dates

The Error: Many employers enter the dates they made deposits rather than the dates they paid wages.
How to Avoid It: Remember, Schedule B tracks when liability was incurred (wage payment dates), not when taxes were deposited. If you paid wages on Friday, January 15, but deposited taxes the following Wednesday, January 20, you enter the liability on line 15 of Month 1, not line 20.

Mistake #2: Total Doesn't Match Form 941 Line 10

The Error: The Total Liability for the Quarter on Schedule B doesn't equal line 10 on Form 941.
How to Avoid It: Before filing, use a calculator to verify your math. Add up all three monthly totals on Schedule B, then compare the result directly to Form 941, line 10. If they don't match, track down the discrepancy before submitting.

Mistake #3: Filing Schedule B When Not Required

The Error: Monthly depositors unnecessarily file Schedule B, or depositors with under $2,500 in quarterly liability include it.
How to Avoid It: Review your depositor status each quarter. If you're a monthly depositor and didn't hit the $100,000 threshold, use line 17 of Form 941 to report monthly totals instead—no Schedule B needed.

Mistake #4: Wrong EIN or Mismatched Quarter

The Error: The EIN on Schedule B doesn't match Form 941, or the quarter checked is different between the two forms.
How to Avoid It: Always use your IRS-assigned EIN (not a Social Security number). Before stapling Schedule B to Form 941, verify that both forms show the same EIN, business name, and quarter checkbox.

Mistake #5: Not Adjusting for Special 2010 Credits

The Error: Failing to properly account for the HIRE Act exemption or COBRA premium assistance when calculating Schedule B liabilities.
How to Avoid It: While these credits reduce your deposit obligations, your Schedule B should still reflect your base tax liability as if these credits don't apply (unless specifically instructed otherwise in the form instructions). Consult IRS Publication 15 (Circular E) for proper treatment.

Mistake #6: Forgetting to Check the Box on Form 941 Line 17

The Error: Filing Schedule B but not indicating semiweekly depositor status on the main Form 941.
How to Avoid It: After completing Schedule B, go to Part 2, line 17 of Form 941 and check the box that says "You were a semiweekly schedule depositor for any part of this quarter." Then attach Schedule B. IRS Instructions for Schedule B (Form 941) 2010

What Happens After You File

IRS Processing and Verification

Once you file Schedule B with Form 941, the IRS will:

Match your deposits: The IRS compares the liability dates and amounts on Schedule B against your actual deposit records from Form 8109 coupons (or EFTPS electronic records) to verify you deposited taxes on time according to semiweekly rules.
Verify the reconciliation: The IRS checks that your Schedule B total matches line 10 on Form 941 exactly. Any mismatch triggers a review.
Assess penalties if warranted: If the IRS determines you deposited late based on your Schedule B dates, you'll receive a failure-to-deposit penalty notice. These penalties are "time-sensitive"—the longer the delay, the higher the penalty percentage (2%, 5%, 10%, or even 15% for deposits not made within 10 days after an IRS notice).

Potential Outcomes

If everything is correct: You'll receive no contact from the IRS (good news!). Your deposits were timely, your Schedule B was accurate, and your account is in good standing.
If there's a discrepancy: You'll receive a CP notice (such as CP207 or CP137) proposing penalties or explaining discrepancies. You typically have 30-60 days to respond, dispute the penalty, or pay the assessed amount.
If Schedule B is incomplete or missing: The IRS may assess an "averaged" failure-to-deposit penalty. This means the IRS will estimate when you should have made deposits based on your total quarterly liability, distributing it evenly across the quarter. This averaging method almost always results in higher penalties than if you'd filed Schedule B correctly in the first place.

Record Retention

Keep Schedule B and all supporting payroll records for at least four years from the due date of the return or the date you filed it, whichever is later. The IRS can audit your employment tax returns during this period. IRS Instructions for Form 941 Q2 2010

FAQs

1. What's the difference between being a monthly depositor and a semiweekly depositor?

Your depositor status determines when you must deposit employment taxes after each payday. Monthly depositors have until the 15th of the following month to deposit all taxes accumulated during the previous month. Semiweekly depositors must deposit taxes within three banking days if payday falls on Wednesday, Thursday, or Friday, or within the following Wednesday if payday falls on Saturday through Tuesday. Your status is based on your lookback period tax liability—if you reported more than $50,000 in total taxes from July 1 two years ago through June 30 last year, you're a semiweekly depositor. You also become a semiweekly depositor immediately if you accumulate $100,000 or more in tax liability on any single day.

2. I'm a monthly depositor, but I hit $100,000 in tax liability on one day during the quarter. Do I need to file Schedule B?

Yes. Once you accumulate $100,000 or more in tax liability on any day, you immediately become a semiweekly depositor for the rest of that quarter and must complete Schedule B (Form 941) for that quarter. You must also deposit that $100,000+ liability by the next banking day and continue following semiweekly deposit rules going forward. Even though you started the quarter as a monthly depositor, the $100,000 next-day deposit rule automatically switches your status.

3. What if I paid wages on the 31st of a month that only has 30 days—where do I report it?

Schedule B has 31 lines for each month to accommodate months with 31 days. If you paid wages on, say, April 30 (a 30-day month), you enter the liability on line 30 for Month 2 (April). The 31st line would simply remain blank. The key is to match the line number to the calendar date when you paid wages, regardless of how many days that particular month actually has.

4. Can I file Schedule B electronically, or must it be paper?

For the 2010 tax year, Schedule B could be filed as part of your electronic Form 941 submission if you used IRS-approved e-file software. Electronic filing was encouraged because it reduces errors and speeds processing. If you filed Form 941 electronically and it included Schedule B, you should not also file a paper copy—this would create duplicate filings and potential confusion.

5. What happens if my Schedule B total doesn't match line 10 on Form 941?

The IRS will flag this discrepancy during processing. You may receive a notice asking you to explain the difference or correct the error. If the mismatch is significant, the IRS might assess an "averaged" failure-to-deposit penalty, assuming your deposits were not timely based on the information available. To fix this before filing, carefully review your calculations on both forms and make sure all tax amounts are carried forward correctly. If you've already filed and discover the mismatch, you may need to file Form 941-X to correct the error.

6. I made a mistake on Schedule B after filing. Can I correct it without penalties?

It depends on the nature of the error. If your mistake didn't change your total quarterly liability but only moved liability amounts between days (for example, you reported a liability on the wrong date within the same quarter), you can file an amended Schedule B. Write "Amended" at the top and mail it to the address on any penalty notice you receive. The IRS will recalculate your penalty based on the corrected information. However, if the correction changes your total liability for the quarter, you'll need to file Form 941-X instead. Acting quickly to correct errors generally results in better outcomes.

7. Do I subtract advance earned income credit (EIC) payments when calculating Schedule B liabilities?

Yes. When determining your tax liability for each payday, you should subtract any advance EIC payments you made to employees from the total employment taxes for that day. Schedule B should show your net tax liability after accounting for advance EIC. This ensures that your Schedule B total properly matches line 10 on Form 941 (which is calculated after subtracting advance EIC on line 9). IRS Instructions for Schedule B (Form 941) 2010

For More Information

IRS Instructions for Schedule B (Form 941) – 2010 Revision
IRS Form 941 Instructions – 2010
IRS Form 941 – 2010
IRS Business Tax Line: 1-800-829-4933

This guide is based on official IRS publications and instructions for the 2010 tax year. Tax rules and forms may change in subsequent years. Always consult current IRS guidance for your specific situation.