Enter the number of employees on your payroll for the pay period including March 12, June 12, September 12, or December 12, for the quarter indicated at the top of  
Form 941. Do not include:

Enter amounts on line 2 that would also be included in box 1 of your employees' Forms W-2. Include sick pay paid by a third party if you were given timely notice of the payments and transferred liability for the employees' taxes. See the Instructions for Forms W-2 and W-3 for details.

If you are a third-party payer of sick pay, do not include sick pay that you paid to policyholders' employees here if you gave the policyholders timely notice of the payments.

Enter the federal income tax you withheld (or were required to withhold) from your employees on this quarter's wages, tips, taxable fringe benefits, and supplemental unemployment compensation benefits. Do not include any income tax withheld by a third-party payer of sick pay even if you reported it on Form W-2. You will reconcile this difference on Form W-3. Also include here any excise taxes you were required to withhold on golden parachute payments (section 4999).

If you are a third-party payer of sick pay, enter the federal income tax you withheld (or were required to withhold) on third-party sick pay here.

If no wages, tips, and other compensation on line 2 are subject to social security or Medicare tax, check the box on line 4. If this question does not apply to you, leave the box blank. For more information about exempt wages, see section 15 of Pub. 15 (Circular E) and section 4 of Pub. 15-A.

Report the total wages, sick pay, and fringe benefits subject to social security taxes you paid to your employees during the quarter. For this purpose, sick pay includes payments made by an insurance company to your employees for which you received timely notice from the insurance company. See Section 6 in Pub. 15-A for more information about sick pay reporting.

Enter the amount before deductions. Do not include tips on this line. For information on types of wages subject to social security taxes, see section 5 of Pub. 15 (Circular E).

For 2011, the rate of social security tax on taxable wages is 6.2% (.062) for the employer and 4.2% (.042) for the employee or 10.4% (.104) for both. Stop paying social security tax on and reporting an employee's wages on line 5a when the employee's taxable wages (including tips) reach $106,800 for the year. However, continue to withhold income and Medicare taxes for the whole year on wages and tips even when the social security wage base of $106,800 has been reached.

Enter all tips your employees reported to you during the quarter until the total of the tips and wages for an employee reach $106,800  
for the year. Include all tips your employee reported to you even if you were unable to withhold the employee tax of 4.2%.

An employee must report cash tips to you, including tips you paid the employee for charge customers, totaling $20 or more in a month by the 10th of the next month. Employees may use Form 4070, Employee's Report of Tips to Employer (available only in Pub. 1244, Employee's Daily Record of Tips and Report to Employer), or submit a written statement or electronic tip record.

Do not include allocated tips on this line. Instead, report them on Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Allocated tips are not reportable on Form 941 and are not subject to withholding of federal income, social security, or Medicare taxes.

Report all wages, tips, sick pay, and taxable fringe benefits that are subject to Medicare tax. Unlike social security wages, there is no limit on the amount of wages subject to Medicare tax.

Include all tips your employees reported during the quarter, even if you were unable to withhold the employee tax of 1.45%.

For more information on tips, see section 6 of Pub. 15 
(Circular E).

Add the social security tax (line 5a), social security tips tax (line 5b), and Medicare tax (line 5c) and enter the result on line 5d.

Enter the tax due from a Section 3121(q) Notice and Demand on line 5e. The IRS issues a Section 3121(q) Notice and Demand to advise an employer of the amount of tips received by employees who failed to report or underreported tips to the employer. An employer is not liable for the employer share of the social security and Medicare taxes on unreported tips until a Section 3121(q) Notice and Demand for the taxes is made to the employer by the IRS. The tax due may have been determined from tips reported to the IRS on employees' Form 4137, Social Security and Medicare Tax on Unreported Tip Income, or other tips that were not reported to their employer as determined by the IRS during an examination.

Deposit the tax within the time period required under your deposit schedule to avoid any possible deposit penalty. The tax is treated as accumulated by the employer on the “Date of Notice and Demand” as printed on the Section 3121(q) Notice and Demand. The employer must include this amount on the appropriate line of the record of federal tax liability (Part 2 of Form 941 for a monthly schedule depositor or Schedule B (Form 941) for a semiweekly schedule depositor).

Add the total federal income tax withheld from wages, tips, and other compensation (line 3), the total social security and Medicare taxes before adjustments (line 5d), and any tax due under section 3121(q) as reported on line 5e. Enter the result on line 6e.

Enter tax amounts on lines 7 through 9 that result from current quarter adjustments. Use a minus sign (if possible) to show an adjustment that decreases the total taxes shown on line 6e instead of parentheses. Doing so enhances the accuracy of our scanning software. For example, report “-10.59” instead of “(10.59).” However, if your software only allows for parentheses in reporting negative amounts, you may use them.

Combine lines 6e through 9 and enter the result on line 10.

For more information on federal tax deposits, see Depositing Your Taxes on page 4 and section 11 of Pub. 15 (Circular E).

Enter your deposits for this quarter, including any overpayment that you applied from filing Form 941-X or Form 944-X in the current quarter. Also include in the amount shown any overpayment from a previous period that you applied to this return.

Report on this line 65% of the COBRA premiums for assistance eligible individuals. Take the COBRA premium assistance credit on this line only after the assistance eligible individual's 35% share of the premium has been paid. For COBRA coverage provided under a self-insured plan, COBRA premium assistance is treated as having been made for each assistance eligible individual who pays 35% of the COBRA premium. Do not include the assistance eligible individual's 35% of the premium in the amount entered on this line. For more information on the COBRA premium assistance credit, visit IRS.gov and enter the keyword COBRA.

If you provided premium assistance in a prior quarter of the current year and did not report the amount of that premium assistance on Form 941 for that quarter, you may include the amount of that premium assistance in the amount entered on this line, or file form 941-X to report the amount for the prior quarter of the current year.

Enter the total number of assistance eligible individuals provided COBRA premium assistance reported on line 12a. Count each assistance eligible individual who paid a reduced COBRA premium in the quarter as one individual, whether or not the reduced premium was for insurance that covered more than one assistance eligible individual. For example, if the reduced COBRA premium was for coverage for a former employee, spouse, and two children, you would include one individual in the number entered on line 12b for the premium assistance. Further, each individual is reported only once per quarter. For example, an assistance eligible individual who made monthly premium payments during the quarter would only be reported as one individual.

Add lines 11 and 12a.

If line 10 is more than line 13, write the difference on line 14. Otherwise, see Overpayment below. You do not have to pay if line 14 is under $1. Generally, you should have a balance due only if your total taxes (line 10) for the current quarter or preceding quarter are less than $2,500, and you did not incur a $100,000 next-day deposit obligation during the current quarter. However, see section 11 of Pub. 15 (Circular E) for information about payments made under the accuracy of deposits rule.

You may pay the amount shown on line 14 using EFTPS, a credit or debit card, a check or money order, or electronic funds withdrawal (EFW). Do not use a credit or debit card or EFW to pay taxes that were required to be deposited. For more information on electronic payment options, visit the IRS website at www.irs.gov/e-pay.

If you pay by EFTPS, credit or debit card, or EFW, file your return using the Without a payment address on page 5 and do not file Form 941-V, Payment Voucher.

If you pay by check or money order, make it payable to the “United States Treasury.” Enter your EIN, Form 941, and the tax period on your check or money order. Complete Form 941-V and enclose with Form 941.

If line 10 is $2,500 or more and you have deposited all taxes when due, the balance due on line 14 should be zero.

If line 13 is more than line 10, write the difference on line 15. Never make an entry on both lines 14 and 15.

If you deposited more than the correct amount for the quarter, you can choose to have the IRS either refund the overpayment or apply it to your next return. Check only one box on line 15. If you do not check either box or if you check both boxes, generally we will apply the overpayment to your account. We may apply your overpayment to any past due tax account that is shown in our records under your EIN.

If line 15 is under $1, we will send a refund or apply it to your next return only if you ask us in writing to do so.

You must complete both pages of Form 941 and sign on page 2. An incomplete return may delay processing.

Beginning January 1, 2011, the IRS will use business days to determine the timeliness of deposits. Business days are any day that is not a Saturday, Sunday or legal holiday in the District of Columbia.

Legal holidays in the District of Columbia for 2011 are listed below.

To provide transitional relief for 2011, the IRS will not assert penalties for federal tax deposits that are untimely solely because the depositor used a statewide legal holiday instead of a District of Columbia legal holiday. See Notice 2010-87, 2010-52 I.R.B. 908, available at  
www.irs.gov/irb/2010-52_IRB/ar12.html.

In the space provided, write the two-letter U.S. Postal Service abbreviation for the bank branch in the state where you initiate electronic funds transfers. If you deposit in multiple states, enter “MU” in the spaces provided. If you receive a notice because you used a statewide holiday instead of a District of Columbia holiday, respond to the notice citing the statewide legal holiday and applicable deposit amount.

If you go out of business or stop paying wages, you must file a final return. To tell the IRS that a particular Form 941 is your final return, check the box on line 18 and enter the date you last paid wages in the space provided. For additional filing requirements, see If Your Business Has Closed... on page 2.

If you hire employees seasonally—such as for summer or winter only—check the box on line 19. Checking the box tells the IRS not to expect four Forms 941 from you throughout the year because you have not paid wages regularly.

Generally, we will not ask about unfiled returns if you file at least one return showing tax due each year. However, you must check the box every time you file a Form 941.

Also, when you complete Form 941, be sure to check the box on the top of the form that corresponds to the quarter reported.

A paid preparer must sign Form 941 and provide the information in the Paid Preparer Use Only section of Part 5 if the preparer was paid to prepare Form 941 and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give you a copy of the return in addition to the copy to be filed with the IRS.

If you are a paid preparer, enter your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, enter the firm's name and the EIN of the firm. You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application. For more information about applying for a PTIN online, visit the IRS website at www.irs.gov/taxpros. You cannot use your PTIN in place of the EIN of the tax preparation firm.

Generally, do not complete this section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, advising the client on determining whether its workers are employees or independent contractors for federal tax purposes.