The Credit for Qualified Sick and Family Leave Wages and the Employee Retention Credit are included on Form 941 after being calculated with the use of worksheets.
While these credits were also available in 2020, some changes have been made to the worksheets and line items for 2021. For information about the calculation and reporting of the credits in 2020, see Related Links below.
Both the Sick and Family Leave Credit and the Employee Retention Credit have a nonrefundable and refundable portion. To figure the nonrefundable portion, complete Step 1 of Worksheet 1. "The credits under sections 3131 and 3132 are available for qualified leave wages paid for leave taken after March 31, 2021, and before October 1, 2021."
Different worksheets are used to calculate the credits depending on when the leave was taken. The 941 Instructions summarize the changes:
"How you report qualified sick and family leave wages and the credit for qualified sick and family leave wages has changed. Taxable qualified sick and family leave wages for leave taken after March 31, 2021, are included on line 5a and taxed at 12.4% for social security tax purposes. However, if you’re reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on lines 5a(i) and 5a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 11b (nonrefundable portion) and, if applicable, line 13c (refundable portion). For leave taken after March 31, 2021, the credit for qualified sick and family leave wages is reported on line 11d (nonrefundable portion) and, if applicable, line 13e (refundable portion); and the nonrefundable portion of the credit is against the employer share of Medicare tax. For more information, see the instructions for line 11b, line 11d, line 13c, and line 13e, later. Use Worksheet 1 to figure the credit for leave taken before April 1, 2021. Use Worksheet 3 to figure the credit for leave taken after March 31, 2021. For more information about the credit for qualified sick and family leave wages, go to IRS.gov/PLC."
Note: While most of the information will be carried to Form 941 from payroll, manual entries may be required on Worksheet(s) 1 and/or 3 to appropriately calculate the credits. Fully review the worksheets and results on Form 941 to ensure that the eligible credits are being calculated as needed.
These credits, along with other items on Form 941, serve to reduce the employer's liability on Form 941, Part 1. See the Form 941 Instructions and the About Form 941 page for further information.