Schedule B (Form 941) Report of Tax Liability for Semiweekly Schedule Depositors: 2020 Guide

What Schedule B (Form 941) Is For

Schedule B (Form 941) is a detailed daily reporting form that works hand-in-hand with your quarterly Form 941 (Employer's Quarterly Federal Tax Return). Think of it as your tax liability diary—it shows the IRS exactly when you paid wages and what taxes you owed each day during the quarter.

When you pay employees, you're responsible for withholding federal income tax, Social Security tax, and Medicare tax from their paychecks. You also owe the employer's share of Social Security and Medicare taxes. Schedule B records your total tax liability (both withheld and employer portions) for each pay date, broken down day by day across the three months in your quarter.

Here's what makes Schedule B different from Form 941: while Form 941 reports your total quarterly taxes, Schedule B provides the granular detail the IRS needs to verify you deposited those taxes on time according to the semiweekly deposit schedule. The IRS uses this information to determine whether you've met federal employment tax deposit requirements and to calculate any failure-to-deposit (FTD) penalties if you fell short.

Schedule B consists of three monthly calendars with 31 numbered lines each. You enter your tax liability amounts only on the dates you actually paid wages—not when you accrued liabilities or made deposits. The dates are based on when paychecks went out, which is crucial for proper deposit timing IRS Instructions for Schedule B (Form 941).

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

Regular Filing

You must file Schedule B if you're classified as a semiweekly schedule depositor for any part of the quarter, even if you only became one partway through. You're a semiweekly depositor if either:

You reported more than $50,000 in employment taxes during your "lookback period" (the 12-month period ending June 30 of the previous year), OR
You accumulated $100,000 or more in tax liability on any single day during the current or prior calendar year

Once you become a semiweekly depositor, you must complete Schedule B for the entire quarter, and it's filed as an attachment to your Form 941 by the quarterly due date (April 30, July 31, October 31, and January 31).

Important exception: Don't complete Schedule B if your total tax liability on Form 941, line 12, is less than $2,500 for the quarter—even if you're technically a semiweekly depositor IRS Form 941.

Amended Schedule B

If the IRS has assessed you a failure-to-deposit penalty and you discovered 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 the penalty. For example, if you mistakenly reported a $3,000 liability on day 1 of Month 1 when it actually belonged to day 1 of Month 3, an amended Schedule B can correct the deposit timing and lower penalties. Write "Amended" at the top and include all liabilities for the quarter IRS Instructions for Schedule B (Form 941).

With Form 941-X (Adjusted Returns)

If you're filing Form 941-X to correct a previously filed Form 941 and you were assessed an FTD penalty, you may need to file an amended Schedule B alongside it. The requirements differ based on whether you're reporting a tax increase or decrease and whether the filing is timely or late.

Key Rules or Details for 2020

Nonrefundable Tax Credits (Lines 11a, 11b, 11c)

For 2020, you needed to account for three special nonrefundable credits when reporting liabilities on Schedule B:

Qualified Small Business Payroll Tax Credit for Increasing Research Activities (Form 941, line 11a): Applied against employer Social Security tax starting with the first payroll of the quarter
Credit for Qualified Sick and Family Leave Wages (Form 941, line 11b): Reduced employer Social Security tax liability, claimed starting with the first payroll payment
Employee Retention Credit (Form 941, line 11c): Also reduced employer Social Security tax, applied sequentially after the other credits

These credits reduced your reported daily liabilities on Schedule B (but never below zero), and you applied them starting with your first pay date of the quarter, then carried forward any unused amounts to subsequent pay dates until fully utilized IRS Instructions for Schedule B (Form 941).

Social Security Tax Deferral

Under the CARES Act, employers could defer payment of the employer share of Social Security taxes. However, you should NOT reduce your liability reported on Schedule B by the deferred amount. If you deferred tax and then paid or deposited that deferred amount in the same quarter, you report the payment on Schedule B on the date you actually paid it, not the original liability date.

Critical Matching Requirement

Your total liability for the quarter on Schedule B must exactly equal line 12 on Form 941. This is after accounting for nonrefundable credits but before any deferrals or refundable credits.

$100,000 Next-Day Deposit Rule

The threshold for triggering a mandatory next-business-day deposit remained $100,000 in 2020, and this threshold is calculated before considering any credits.

Step-by-Step (High Level)

Overview

Step 1: Confirm You Need Schedule B

Verify you're a semiweekly schedule depositor and your quarterly liability (Form 941, line 12) is $2,500 or more. Check the "semiweekly schedule depositor" box in Part 2 of Form 941.

Step 2: Enter Your Business Information

At the top of Schedule B, carefully enter your Employer Identification Number (EIN) exactly as it appears on your Form 941. Enter your legal business name (not your trade name) and check the correct quarter box.

Step 3: Calculate Your Daily Tax Liabilities

For each date you paid wages, calculate your total tax liability, which includes:

Federal income tax withheld from employees
Employee share of Social Security tax (6.2% of wages up to $137,700 in 2020)
Employee share of Medicare tax (1.45% of all wages, plus 0.9% Additional Medicare Tax on wages over $200,000)
Employer share of Social Security tax (6.2%)
Employer share of Medicare tax (1.45%)

Step 4: Apply Any Nonrefundable Credits (2020 Specific)

If you claimed credits on Form 941 lines 11a, 11b, or 11c, reduce your first pay date's liability by these credits (but not below zero), then apply any remaining credit to subsequent pay dates in order.

Step 5: Enter Liabilities on Schedule B

In the appropriate month section (Month 1, 2, or 3), enter your net tax liability on the numbered line corresponding to each pay date. For example, if you paid wages on January 10, enter the liability on line 10 of Month 1. Leave blank any dates when you didn't pay wages.

Step 6: Calculate and Verify Totals

Add up each month's liabilities, then total all three months. This "Total liability for the quarter" must exactly match Form 941, line 12.

Step 7: Attach to Form 941

Submit Schedule B as an attachment to your Form 941. The due date is the same as your Form 941 quarterly deadline IRS Instructions for Schedule B (Form 941).

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Liability Dates with Deposit Dates

Many employers enter amounts on the dates they made deposits rather than when they paid wages. Schedule B requires you to report liabilities based on pay dates—the actual dates wages were paid to employees, not when you deposited taxes with the IRS. How to avoid: Use your payroll records showing when you issued paychecks or direct deposits, not your deposit confirmations.

Mistake #2: Total Doesn't Match Form 941, Line 12

The most common error is having Schedule B's quarterly total not equal Form 941, line 12. This mismatch triggers IRS scrutiny and potential "averaged" failure-to-deposit penalties. How to avoid: Double-check your math. Remember: Schedule B should reflect line 12 (after nonrefundable credits but before deferrals and refundable credits).

Mistake #3: Incorrectly Applying 2020 Tax Credits

Some employers reduced liabilities on the wrong pay dates or forgot to carry forward unused credits to subsequent pay periods. How to avoid: Apply credits starting with your first pay date of the quarter and work forward sequentially. Keep a running tally to track any unused credit amounts that need to carry forward IRS Instructions for Schedule B (Form 941).

Mistake #4: Reducing Schedule B for Deferred Social Security Tax

In 2020, many employers incorrectly reduced their reported Schedule B liabilities by the deferred employer Social Security tax amount. How to avoid: Report the full liability on Schedule B even if you deferred payment. The deferral affects when you pay, not the liability amount reported.

Mistake #5: Filing Schedule B When Not Required

Monthly schedule depositors sometimes mistakenly complete Schedule B instead of using the monthly deposit schedule on Form 941, line 16. How to avoid: Verify your depositor status based on your lookback period. If you reported $50,000 or less in employment taxes during the lookback period and didn't hit the $100,000 threshold, you're a monthly depositor and should use line 16, not Schedule B IRS Topic 757.

Mistake #6: Not Filing an Amended Schedule B After an FTD Penalty

When employers receive FTD penalty notices, they sometimes don't realize they can file an amended Schedule B to correct timing errors and potentially reduce penalties. How to avoid: Review any FTD penalty notices carefully. If you made a reporting error (not an actual late deposit), consider filing an amended Schedule B with the address shown on the penalty notice.

What Happens After You File

IRS Processing and Deposit Verification

Once you submit Schedule B with Form 941, the IRS uses your reported daily liabilities to verify whether you made timely deposits according to the semiweekly deposit schedule. The IRS has electronic records of your actual deposits through the Electronic Federal Tax Payment System (EFTPS) or your bank, and they'll cross-reference these against your Schedule B entries.

Semiweekly Deposit Schedule Requirements

As a semiweekly depositor, you generally must deposit:

Taxes for wages paid on Wednesday, Thursday, or Friday by the following Wednesday
Taxes for wages paid on Saturday, Sunday, Monday, or Tuesday by the following Friday

The IRS will check whether your deposits matched this schedule based on the liability dates you reported on Schedule B IRS About Form 941.

Potential Penalties

If the IRS determines you didn't deposit on time, you may face failure-to-deposit penalties:

2% if deposited 1-5 days late
5% if deposited 6-15 days late
10% if deposited 16 or more days late or within 10 days of receiving an IRS notice
10% if you paid directly rather than depositing electronically
15% for amounts still unpaid more than 10 days after the first IRS notice

The "Averaged" FTD Penalty Risk

If you're required to file Schedule B but don't submit it, or if it's incomplete or incorrect, the IRS may assess an "averaged" FTD penalty. This penalty assumes your tax liability was spread evenly throughout the quarter, which often results in a higher penalty than if you'd reported accurately IRS Instructions for Schedule B (Form 941).

Notice and Response Opportunities

If the IRS proposes penalties, you'll receive a notice explaining the assessment. You have the right to respond, provide additional documentation, or file an amended Schedule B if you believe there were reporting errors. Acting quickly can help minimize penalties and interest charges.

FAQs

Q1: What is the "lookback period" that determines if I'm a semiweekly depositor?

The lookback period is a 12-month period used to determine your deposit schedule. For calendar year 2020, the lookback period was July 1, 2018, through June 30, 2019. If your total employment taxes reported during this period exceeded $50,000, you're classified as a semiweekly depositor for 2020. If you reported $50,000 or less, you're a monthly depositor unless you accumulate $100,000 or more on any single day IRS Topic 757.

Q2: I became a semiweekly depositor in the middle of the quarter. Do I complete Schedule B for the entire quarter or just the part when I was semiweekly?

You must complete Schedule B for the entire quarter, even if you only became a semiweekly depositor partway through. Include all your daily liabilities from the beginning of the quarter through the end, regardless of when your deposit schedule changed IRS Instructions for Schedule B (Form 941).

Q3: What if I pay wages on the same day every week? Do I really need to list it separately each time?

Yes. Schedule B requires a separate entry for each pay date, even if the amounts are identical. If you pay employees every Friday with the same tax liability, you'll have multiple entries for different line numbers (one for each Friday's date). This detail allows the IRS to verify proper deposit timing for each payroll.

Q4: Can I use Schedule B if I'm a monthly depositor but want more detailed records?

Schedule B is specifically for semiweekly depositors. Monthly depositors should use the deposit schedule on Form 941, line 16, which only requires monthly totals, not daily details. However, if you're a monthly depositor who has been assessed an FTD penalty due to an error in your monthly reporting, you can file a Schedule B showing only monthly totals to potentially reduce the penalty IRS Instructions for Schedule B (Form 941).

Q5: For 2020, how do I know if I applied the COVID-19 tax credits correctly on Schedule B?

Your Schedule B should show reduced liabilities starting with your first pay date of the quarter, with credits applied sequentially until exhausted. To verify: add up your Schedule B total and confirm it equals Form 941, line 12 (which is line 10 minus line 11d). If these match, and you didn't reduce any daily liability below zero, you've likely applied credits correctly. The refundable portions of credits (Form 941, lines 13c and 13d) should not affect your Schedule B entries IRS Instructions for Schedule B (Form 941).

Q6: What's the deadline for filing Schedule B, and where do I send it?

Schedule B is always attached to Form 941 and has the same due date: the last day of the month following the end of the quarter (April 30, July 31, October 31, and January 31, with possible extensions if these fall on weekends or holidays). You file it at the same IRS address as your Form 941, which depends on your location and whether you're including a payment. Check the most current Form 941 instructions for your specific mailing address IRS Form 941.

Q7: I made a deposit a few days late but reported everything correctly on Schedule B. Will I still face penalties?

Unfortunately, yes. Schedule B helps the IRS determine whether you made timely deposits according to the semiweekly schedule. If your Schedule B accurately shows when you incurred liabilities but your actual deposits were late, the IRS can assess failure-to-deposit penalties based on how many days late each deposit was. Accurate Schedule B reporting won't eliminate penalties for actual late deposits, but it will ensure you're penalized fairly based on when liabilities actually occurred rather than facing an "averaged" penalty IRS Instructions for Schedule B (Form 941).

Additional Resources

IRS Form 941 and Instructions
IRS Publication 15 (Circular E), Employer's Tax Guide
IRS Electronic Federal Tax Payment System (EFTPS)

Note: This guide covers 2020 tax year provisions. Tax laws and forms change annually, so always consult the current year's forms and instructions or a tax professional for your specific situation.