Schedule B (Form 941): Report of Tax Liability for Semiweekly Schedule Depositors (2017)
What the Form Is For
Schedule B (Form 941) is a detailed reporting form used by certain employers to report their daily federal employment tax liabilities to the Internal Revenue Service. Think of it as a daily diary of your tax obligations—it shows exactly when you incurred tax liabilities based on when you paid your employees, not when you made your tax deposits.
This schedule is specifically designed for semiweekly schedule depositors—employers who must follow stricter deposit rules due to their larger payroll tax obligations. The form breaks down each quarter into three months, with numbered spaces for each day of the month. You'll enter your tax liability for each day you paid wages to employees.
It's crucial to understand that Schedule B reports tax liability, not deposits. The IRS already knows when you made deposits through the Electronic Federal Tax Payment System (EFTPS). What they need from Schedule B is confirmation of when those liabilities actually occurred. The IRS uses this information to verify you deposited your taxes on time and to calculate any potential penalties for late deposits.
Your tax liability includes three components: federal income tax withheld from employees' paychecks, the employee's share of Social Security and Medicare taxes (which you withheld), and the employer's share of Social Security and Medicare taxes (which you pay directly). For 2017, these rates were 6.2% for Social Security (on wages up to $127,200) and 1.45% for Medicare (on all wages) for both employee and employer portions.
When You'd Use It (Including Late or Amended Filings)
Regular Filing Requirements
You must file Schedule B if you're a semiweekly schedule depositor. You become a semiweekly depositor in two situations: (1) if you reported more than $50,000 in employment taxes during your ""lookback period"" (July 1 of the second preceding year through June 30 of the preceding year), or (2) if you accumulated $100,000 or more in tax liability on any single day during the current or prior calendar year.
The $100,000 threshold is particularly important—even if you start the year as a monthly depositor, the moment you hit $100,000 in liability on any day, you immediately become a semiweekly depositor for the rest of that calendar year and all of the following calendar year. Schedule B is attached to your quarterly Form 941 and is due on the same date—generally the last day of the month following the end of the quarter (April 30, July 31, October 31, and January 31).
Don't file Schedule B if
Your total quarterly tax liability is less than $2,500, even if you otherwise meet the semiweekly depositor criteria.
Amended Schedule B
If you've been assessed a failure-to-deposit (FTD) penalty and you made an error on your original Schedule B that doesn't change your total quarterly tax liability, you can file an amended Schedule B to potentially reduce your penalty. For example, if you reported $3,000 liability on day 1 of Month 1, but it should have been reported on day 1 of Month 3, you can file an amended Schedule B showing the correction. Write ""Amended"" at the top and send it to the address shown on your penalty notice.
Late Filing with Form 941-X
If you're filing Form 941-X (the correction form for Form 941) after the due date of the return and you owe additional tax, you must file an amended Schedule B with it. Otherwise, the IRS may assess an ""averaged"" FTD penalty, which assumes your deposits were evenly distributed throughout the quarter—almost certainly resulting in higher penalties than you deserve.
Key Rules for 2017
The Lookback Period
For 2017, your deposit schedule was determined by looking at employment taxes reported from July 1, 2015, through June 30, 2016. If you filed Form 944 (the annual employment tax return) in either 2015 or 2016, your lookback period is the entire 2015 calendar year.
Tax Rate Specifics
For 2017, the Social Security tax rate remained 6.2% each for employer and employee (12.4% total) on wages up to the $127,200 wage base limit. Medicare tax was 1.45% each for employer and employee (2.9% total) on all wages with no cap. Additionally, employees whose wages exceeded $200,000 were subject to Additional Medicare Tax withholding of 0.9%, though there's no employer match for this additional tax.
The $100,000 Next-Day Deposit Rule
This is a critical provision that overrides your normal deposit schedule. If you accumulate $100,000 or more in tax liability on any day, you must deposit the tax by the next business day. This immediately converts monthly depositors to semiweekly depositors for the remainder of that year and the entire following calendar year.
Semiweekly Deposit Deadlines
For semiweekly depositors, if you paid employees on Wednesday, Thursday, or Friday, your deposit must be made by the following Wednesday. If you paid employees on Saturday, Sunday, Monday, or Tuesday, the deposit must be made by the following Friday. These deadlines mean your deposits are due within 3 to 5 business days of the payday.
Reconciliation Requirement
The total liability reported on Schedule B for the quarter must exactly equal line 12 on your Form 941. Any discrepancy will trigger IRS scrutiny. If you claimed the qualified small business payroll tax credit for increasing research activities (reported on Form 941, line 11), you must account for this credit when calculating your Schedule B liabilities—don't reduce any daily liability below zero.
Electronic Deposit Mandate
All federal tax deposits for 2017 had to be made electronically using the Electronic Federal Tax Payment System (EFTPS) or through same-day wire transfer arrangements with your bank. Paper checks were not acceptable for deposits.
Step-by-Step Instructions (High Level)
Step 1: Determine Your Filing Requirement
Review your lookback period taxes and any instances where you hit $100,000 in liability. If you're a semiweekly depositor or your quarterly tax liability is $2,500 or more, you'll likely need Schedule B.
Step 2: Gather Payroll Records
Compile detailed records showing exactly when you paid wages during the quarter. You need the actual payment dates (when employees received or had access to their wages), not when you ran payroll or when the pay period ended.
Step 3: Calculate Daily Tax Liability
For each payday, calculate your total tax liability: federal income tax withheld + employee Social Security and Medicare taxes + employer Social Security and Medicare taxes. If you paid employees on December 31, 2016, but issued the checks on January 6, 2017, the liability belongs to January 6, 2017 (the pay date).
Step 4: Enter Your Information
At the top of Schedule B, accurately enter your Employer Identification Number (EIN), legal business name, and calendar year. Check the appropriate quarter box (1 through 4) that matches the quarter checked on your Form 941.
Step 5: Record Daily Liabilities
Schedule B is divided into three monthly sections with 31 numbered lines each. For each payday during the quarter, enter the total tax liability on the numbered line corresponding to that date. If you paid employees on the 15th and 30th of a month, you'd only enter amounts on lines 15 and 30 for that month, leaving the other lines blank.
Step 6: Calculate Monthly and Quarterly Totals
Add up each month's liabilities and enter the totals in the ""Tax liability for Month"" boxes. Then add the three monthly totals together to get your ""Total liability for the quarter."" This total must match line 12 on Form 941.
Step 7: Verify and Attach
Double-check that your quarterly total matches Form 941, line 12. Verify your EIN matches exactly. Attach Schedule B to your Form 941—never file it separately (except for amended versions sent to penalty notice addresses). If filing electronically, the software will combine them automatically.
Common Mistakes and How to Avoid Them
Mistake #1: Reporting Deposits Instead of Liability
The most fundamental error is entering deposit dates and amounts rather than the dates wages were paid and the corresponding tax liability. Schedule B tracks when you incurred the tax obligation (payday), not when you sent money to the IRS. The IRS already has your deposit information from EFTPS.
How to Avoid: Mark your calendar with actual pay dates—the days your employees received or could access their wages—and calculate the full tax liability for each of those specific dates.
Mistake #2: Mismatching Quarterly Totals
Your Schedule B total must exactly equal Form 941, line 12. Many employers forget to account for adjustments like the qualified small business payroll tax credit or report prior period adjustments on Schedule B (which should only appear on Form 941-X).
How to Avoid: Before finalizing Schedule B, compare its quarterly total to Form 941, line 12. If they don't match, review your calculations. Remember that Schedule B reports current quarter liability only—no prior period adjustments.
Mistake #3: Confusion About the $100,000 Rule
Some employers don't realize that hitting $100,000 in tax liability on a single day immediately converts them from monthly to semiweekly depositors. Others mistakenly think they can remain monthly depositors if they quickly deposit the funds.
How to Avoid: Monitor your tax liability carefully. If any single payday generates $100,000 or more in total tax liability (income tax withheld + employee and employer Social Security and Medicare taxes), you must: (1) deposit by the next business day, (2) become a semiweekly depositor immediately, and (3) file Schedule B with all quarterly Forms 941 for the rest of that year and the entire following year.
Mistake #4: Incorrect EIN or Name
Using a wrong EIN, SSN instead of EIN, or business name that doesn't match IRS records causes processing delays and potential penalties.
How to Avoid: Verify your EIN against previous IRS correspondence or your original SS-4 application. Use your legal business name, not your trade name or DBA, unless you're a sole proprietor (then use your personal name on the ""Name"" line).
Mistake #5: Failing to File When Required
Monthly depositors who become semiweekly depositors mid-quarter sometimes forget to file Schedule B. Others incorrectly believe that if they deposited properly, Schedule B isn't necessary.
How to Avoid: If you're a semiweekly depositor at any point during the quarter—even for just one day—you must file Schedule B for that entire quarter. Set reminders based on your deposit schedule status, not just your deposit compliance.
Mistake #6: Averaged Penalty from Missing Schedule B
When you file Form 941 without the required Schedule B, the IRS applies an ""averaged"" FTD penalty, assuming your tax liability was evenly distributed across the quarter. This almost always results in penalties that are higher than what you'd actually owe based on your real payment schedule.
How to Avoid: Always file Schedule B if you're a semiweekly depositor, even if you believe your deposits were timely. The small effort of completing the form can save substantial penalty dollars.
What Happens After You File
IRS Processing
After you file Schedule B with Form 941, the IRS matches your reported daily tax liabilities against your electronic deposit records from EFTPS. They verify that each deposit was made by the required deadline based on the semiweekly schedule rules—deposits for Wednesday through Friday paydays due by the following Wednesday, and Saturday through Tuesday paydays due by the following Friday.
Penalty Assessment
If the IRS identifies deposits that were late based on your Schedule B information, they'll calculate failure-to-deposit (FTD) penalties. These penalties are tiered: 2% of the underpayment for deposits made 1-5 days late, 5% for deposits 6-15 days late, 10% for deposits more than 15 days late, and 15% if the tax remains unpaid more than 10 days after the IRS sends its first notice demanding payment or if the deposit should have been made via same-day wire transfer but wasn't.
Notices and Correspondence
If the IRS proposes an FTD penalty, you'll receive a notice (typically Notice CP207 or a similar letter) explaining the penalty calculation. This notice will show which deposits were late and by how many days. You have the right to dispute the penalty if you believe it's incorrect—this is when filing an amended Schedule B can be valuable.
Matching with Annual Forms W-2
Throughout the year following your filings, the IRS reconciles your four quarterly Forms 941 (and attached Schedule B forms) with the Form W-3 and Forms W-2 you file with the Social Security Administration. Discrepancies in total wages, federal income tax withheld, or Social Security/Medicare wages may trigger correspondence requesting clarification.
Refund or Additional Payment
If you overpaid deposits during the quarter, the reconciliation may show you're due a refund, which you can claim on your Form 941. If you underpaid, the balance due will generate interest charges from the original due date until paid. Interest on underpayments cannot be abated, though penalties may be if you have reasonable cause.
Record Retention
The IRS requires you to keep all payroll tax records, including copies of Schedule B, for at least four years from the later of the due date or date you filed. Keep supporting documentation showing when you paid wages and how you calculated tax liabilities, as the IRS can audit these returns within this timeframe.
Frequently Asked Questions
Q1: I pay employees biweekly. Do I need to file Schedule B?
Not necessarily. Your filing requirement depends on your deposit schedule status, not your pay frequency. Even if you pay employees every two weeks (biweekly), you only need Schedule B if you're classified as a semiweekly depositor—meaning you reported more than $50,000 in employment taxes during your lookback period or accumulated $100,000 or more on any single day. If your lookback period taxes were $50,000 or less and you never hit the $100,000 threshold, you're a monthly depositor and would report your tax liability on Form 941, Part 2 (the monthly summary section) instead of Schedule B.
Q2: Can I file Schedule B separately from Form 941?
No, not for your regular quarterly filing. Schedule B must be attached to and filed with Form 941—they're submitted together as one filing. The only exception is when you're filing an amended Schedule B in response to an FTD penalty notice; in that case, you send the amended Schedule B to the specific address shown in the penalty notice, not to the regular Form 941 filing address.
Q3: What if I made a mistake on Schedule B after I filed?
If your total quarterly liability is still correct and matches Form 941, line 12, but you entered liability on the wrong day or in the wrong month, you can file an amended Schedule B if you've been assessed an FTD penalty. Write ""Amended"" at the top, show the corrected daily liabilities, and mail it to the address on your penalty notice. If your error changes the total quarterly liability, you must file Form 941-X (not just an amended Schedule B) to correct the underlying Form 941.
Q4: I accumulated $100,000 in tax liability on a Friday. When is my deposit due, and what does this mean for future quarters?
Your deposit for that $100,000 liability is due the next business day—so if the $100,000 occurred on Friday, you must deposit by Monday (or Tuesday if Monday is a bank holiday). Additionally, the moment you hit $100,000 on any day, you become a semiweekly depositor for the remainder of that calendar year plus the entire following calendar year. This means you must file Schedule B with every Form 941 during that period, regardless of whether you hit $100,000 again.
Q5: Do I enter negative amounts on Schedule B if I had adjustments or refunds?
No. Schedule B only reports positive tax liabilities—the amounts you actually owed on each day you paid wages. Don't reduce any daily liability below zero to account for credits or adjustments. Credits like the qualified small business payroll tax credit for increasing research activities affect your Form 941 calculations but should not create negative entries on Schedule B. If you need to correct an overpayment from a prior quarter, that's handled through Form 941-X, not Schedule B.
Q6: I'm a monthly depositor but my total tax for the quarter was $3,000. Do I need Schedule B?
No. The Schedule B requirement has two parts: (1) you must be a semiweekly depositor, AND (2) your quarterly tax liability must be $2,500 or more. If you're a monthly depositor and your total tax liability for the quarter is less than $2,500, you're not required to file Schedule B. However, if you're a monthly depositor and your quarterly liability is $2,500 or more, you report your monthly liabilities on Form 941, Part 2—not on Schedule B. Schedule B is exclusively for semiweekly depositors.
Q7: How does Schedule B work with Form 941-X corrections?
When filing Form 941-X to correct a prior quarter's Form 941, different rules apply for Schedule B depending on whether you're decreasing or increasing tax and when you're filing. If you're reporting a tax decrease and were assessed an FTD penalty, file an amended Schedule B with Form 941-X. If you're filing Form 941-X timely (before the due date of the next quarter's Form 941) to report a tax increase, don't file Schedule B unless you originally filed an incorrect, incomplete, or missing Schedule B that caused an FTD penalty. If you're filing Form 941-X late (after the next quarter's due date) to report a tax increase, you must file an amended Schedule B with it; otherwise, the IRS will assess an ""averaged"" penalty. The total on your amended Schedule B must match the corrected tax amount from Form 941-X.
For More Information
Sources: All information in this guide comes from official IRS publications for the 2017 tax year: Form 941 Schedule B (Rev. January 2017), Instructions for Schedule B (Form 941) (Rev. January 2017), and Instructions for Form 941 (Rev. January 2017).
