Schedule B (Form 941) Report of Tax Liability for Semiweekly Schedule Depositors: 2016 Guide

What Schedule B (Form 941) Is For

Schedule B (Form 941) is a supplementary IRS form that semiweekly schedule depositors must attach to their quarterly Form 941, Employer's Quarterly Federal Tax Return. Think of it as a detailed daily diary of your payroll tax obligations throughout the quarter.

The form serves one critical purpose: to report your tax liability for each day you had a payroll during the quarter—not when you deposited money with the IRS, but when you actually incurred the obligation to do so. This distinction is crucial. Your tax liability is created the moment you pay wages to employees, regardless of when you physically send money to the government.

For 2016, this form applies to employers who reported more than $50,000 in employment taxes (federal income tax withholding, Social Security, and Medicare taxes) during the "lookback period"—the four-quarter window from July 1, 2014, through June 30, 2015. These employers must track and report their tax liability day-by-day because they're handling larger payroll tax volumes that require more frequent deposit monitoring.

Schedule B helps the IRS verify that you deposited the right amounts at the right times according to the semiweekly deposit schedule rules, which are more stringent than the monthly deposit rules that smaller employers follow.

When You’d Use Schedule B (Late/Amended Filing)

You must file Schedule B with every Form 941 for each quarter of 2016 if you're classified as a semiweekly schedule depositor. The quarterly due dates are:

First Quarter (Jan–Mar): April 30, 2016
Second Quarter (Apr–Jun): July 31, 2016
Third Quarter (Jul–Sep): October 31, 2016
Fourth Quarter (Oct–Dec): January 31, 2017

If you made timely deposits covering your full tax liability for the quarter, you get an automatic 10-day extension (e.g., May 10 instead of April 30 for Q1).

Late Filing

If you miss the deadline, file as soon as possible. Late filing penalties start at 5% of unpaid taxes per month, maxing out at 25%. Failure-to-deposit penalties range from 2% to 15% depending on how late your deposits were. Interest accrues on unpaid amounts from the original due date.

Amended Filing

If you discover errors on a previously filed Schedule B—such as incorrect tax liability amounts, wrong dates, or miscalculated totals—you must file Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) with an amended Schedule B attached. File a separate Form 941-X for each quarter you're correcting. The corrected Schedule B must accompany Form 941-X, and the total liability shown must match the corrected amount on Form 941-X. Don't file a second Form 941 to make corrections; always use Form 941-X. You generally have three years from the date you filed Form 941 or two years from when you paid the tax (whichever is later) to claim a refund of overpaid taxes.

Key Rules for 2016

Understanding your depositor status is fundamental. Your classification depends entirely on your tax liability during the lookback period (July 1, 2014 to June 30, 2015 for the 2016 tax year):

Semiweekly depositor: Reported more than $50,000 during lookback period
Monthly depositor: Reported $50,000 or less during lookback period

Critical Deposit Timing Rules for Semiweekly Depositors

If payday falls on Wednesday, Thursday, or Friday: Deposit by the following Wednesday
If payday falls on Saturday, Sunday, Monday, or Tuesday: Deposit by the following Friday

The $100,000 Next-Day Rule

Regardless of your depositor status, if you accumulate $100,000 or more in tax liability on any single day, you must deposit that amount by the next business day. Once triggered, you become a semiweekly depositor for the remainder of the calendar year and the entire following year.

What Schedule B Records (2016 Rates)

Schedule B captures your tax liability—the combined total of federal income tax withheld plus both the employer and employee shares of Social Security and Medicare taxes for each payday. For 2016, the rates were:

Social Security: 6.2% each for employer and employee (12.4% total) on wages up to $118,500
Medicare: 1.45% each for employer and employee (2.9% total) with no wage cap
Additional Medicare Tax: 0.9% employee-only withholding on wages exceeding $200,000

Important: Schedule B shows tax liability (when you owe it), not deposits (when you paid it). These are often different dates, and mixing them up is a common error.

Step-by-Step (High Level)

Step 1: Determine Your Deposit Schedule

Before completing Schedule B, confirm you're a semiweekly depositor by reviewing your tax liability from July 1, 2014, through June 30, 2015. If the total exceeded $50,000, you must use Schedule B for all of 2016.

Step 2: Track Tax Liability Daily

Throughout the quarter, maintain records of your tax liability for each day you run payroll. Calculate the total by adding federal income tax withheld plus 12.4% of Social Security wages (up to $118,500 per employee) plus 2.9% of all Medicare wages. If any employee's cumulative wages exceed $200,000, add 0.9% Additional Medicare Tax withholding.

Step 3: Complete the Calendar Grid

Schedule B displays three monthly calendar grids covering the quarter. Enter your tax liability in the box corresponding to each payday. If you pay employees on Friday, enter that day's liability in Friday's box. If you have multiple payrolls in one day, combine them into a single amount for that date.

Step 4: Calculate Monthly Totals

At the bottom of each monthly calendar, add up all the daily liability amounts to get the month's total. Write this figure in the "Total liability for Month" line.

Step 5: Verify the Quarterly Total

Add the three monthly totals together. This grand total must equal line 10 (Total taxes after adjustments) on your Form 941. If they don't match, you've made an error—review your work before filing.

Step 6: Attach to Form 941

Don't file Schedule B separately. Staple it to Form 941 when you mail both forms to the IRS address listed in the Form 941 instructions, or include it when filing electronically.

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Liability with Deposits

The most pervasive error is entering deposit dates and amounts instead of liability dates and amounts. Schedule B asks "When did you owe this?" not "When did you pay it?" If you paid employees Friday but deposited taxes the following Wednesday, enter Friday's date with Friday's liability amount.

Mistake #2: Failing to File Schedule B When Required

If you're a semiweekly depositor and you omit Schedule B, the IRS may assess deposit penalties based on whatever information they have available—which may not be accurate or favorable to you. Even if you deposited correctly, missing Schedule B can trigger penalties. Always attach it when required.

Mistake #3: Using Schedule B as a Monthly Depositor

Monthly depositors should complete line 14 on Form 941 directly, not Schedule B. Using Schedule B when you're not required to can confuse the IRS and delay processing. Check your lookback period carefully.

Mistake #4: Adjusting Liability Figures for Corrections

Don't modify the liability amounts on Schedule B to account for adjustments reported on Form 941-X. Schedule B must reflect the original tax liability for each payday as it actually occurred. Corrections belong on Form 941-X only.

Mistake #5: Mismatched Totals

Your Schedule B quarterly total must exactly equal Form 941, line 10. If they don't match, your return will be rejected or flagged for review. Common causes include arithmetic errors, forgetting to include all paydays, or double-counting a payday across months.

Mistake #6: Ignoring the $100,000 Next-Day Rule

If you accumulate $100,000 or more on any day, you must deposit by the next business day—and this immediately converts you to semiweekly status even if you were previously a monthly depositor. Track daily accumulations carefully, especially during high-payroll periods like year-end bonuses.

What Happens After You File

Once the IRS receives your Form 941 with Schedule B attached, they process your return through automated systems that match your reported liability against your deposit records. Here's what to expect:

Processing Time

The IRS typically processes quarterly returns within 4–6 weeks. During this period, they verify that your liability amounts align with your deposit history retrieved from EFTPS or other payment channels.

Verification Checks

IRS systems compare:

Your Schedule B daily liabilities against deposit timing rules
Your Form 941 line 10 total against Schedule B quarterly total
Your quarterly Forms 941 totals against your annual W-2/W-3 filings (year-end reconciliation)

If Everything Matches

You'll receive no correspondence. Your account is settled for that quarter, and your records should reflect a zero balance. Keep Schedule B and all supporting documentation for at least four years in case of future audits.

If Discrepancies Appear

The IRS may send notices such as:

CP136/CP136B: Incorrect deposit penalty assessed
CP207: Unpaid tax balance due
CP220: Errors in calculation or missing information

These notices explain the issue and provide instructions for responding. You typically have 30–60 days to respond with explanations, corrections, or payment.

Penalties and Interest

If the IRS determines you deposited late or under-deposited, you'll receive a penalty assessment. Failure-to-deposit penalties are:

2% if deposited 1–5 days late
5% if deposited 6–15 days late
10% if deposited 16+ days late or deposited directly to the IRS rather than via EFT
15% if still unpaid 10+ days after IRS notice (or the day before levy/seizure)

Interest accrues daily on unpaid taxes and penalties at the federal short-term rate plus 3%.

Payment Options

If you owe additional taxes, you can pay via EFTPS, credit/debit card, check, or money order. For balances you can't pay immediately, you may qualify for an online payment agreement (installment plan) through IRS.gov.

FAQs

Q1: I'm a new employer in 2016. Am I automatically a monthly depositor?

Yes, if you have no lookback period (no employment taxes in 2014–2015), you're automatically classified as a monthly depositor for 2016. You won't need Schedule B unless you trigger the $100,000 next-day rule during the year, which converts you to semiweekly status.

Q2: What if I paid employees twice in one day—do I list it twice on Schedule B?

No. Combine all tax liability incurred on a single calendar day into one amount and enter it once in that day's box. The IRS doesn't need a breakdown by individual payroll run, just the total daily liability.

Q3: Can I skip Schedule B for a quarter if I had no employees or zero liability?

No. If you're classified as a semiweekly depositor, you must file Schedule B every quarter even if all boxes are blank. Check the appropriate box on Form 941 line 14 indicating you're a semiweekly depositor and attach a blank Schedule B showing zero liability.

Q4: I made a deposit error—should I wait to file or file with an error and correct later?

File your Form 941 and Schedule B on time showing the correct liability amounts regardless of deposit errors. The IRS separates filing compliance from deposit compliance. If you need to correct tax amounts (not just deposit timing), file Form 941-X after submitting the original Form 941. Never delay filing to avoid penalties.

Q5: How do I handle a payday that falls on a weekend or holiday?

Enter the tax liability on the actual payday date (the date employees received or had access to their wages), even if it's a Saturday, Sunday, or holiday. For deposit deadlines, the next-business-day rule applies, but Schedule B records actual liability dates.

Q6: What if my payroll service made the deposits—am I still responsible for Schedule B?

Yes. As the employer, you remain legally responsible for all tax filings and deposits even when using a third-party payroll service. You must ensure Schedule B accurately reflects your tax liability. Verify your payroll service's work and maintain your own records. The IRS holds you accountable for any errors or failures.

Q7: If I become a semiweekly depositor mid-year due to the $100,000 rule, when does Schedule B start?

You must file Schedule B beginning with the quarter in which you triggered the rule. If you hit $100,000 in August, you need Schedule B for Q3 (July–September) and all subsequent quarters. You remain a semiweekly depositor through the end of the following calendar year (through December 31, 2017, in this example).

Sources: All information in this guide comes from official IRS sources including Instructions for Form 941 (Rev. January 2016), Form 941 (Rev. January 2016), and IRS.gov employment tax resources. For the most current information or year-specific updates beyond 2016, visit www.irs.gov/form941.