TaxBandits Knowledge Base

What are the changes to Form 941 for the first quarter of 2023?

Form 941 has undergone a few major revisions for Q1, 2023. One of the most significant changes for this quarter is present in Form 8974. The Inflation Reduction Act of 2022 doubles this credit to $500,000. Starting in 2023, this credit will initially reduce the employer's social security share up to $250,000 per quarter, and any remaining credit will apply to the Medicare tax. As a result, Line 12 of Form 8974 has been updated from "Credit" to "Credit against the employer share of social security tax."

In addition to this, we can find some minor text changes in the Revised Form 941, where 

• Line 1 instructions now incorporate the pay period (March 12) for the first quarter. 
• Instruction in Line 5 specifies the quarter as "2023" instead of "2022".
• New Lines 13-17 have been included in the form for the first quarter of 2023 and beyond.

Changes in the Form 941 Worksheets

There are only a few minor changes in Form 941 Worksheet 1 for Q1, 2023. One of the most noticeable changes is the first step on the worksheet is now “Determine the employer share of social security tax this quarter after it is reduced by any credit claimed on Form 8974 and any credit to be claimed on Form 5884-C and/or Form 5884-D”. Additionally, a new line (1i) has been added where the amount from Form 941, Part 1, line 11a (credit from Form 8974) can be entered.

For Q1, 2023, the IRS has reintroduced Worksheet 2, which includes two new lines:

• Line 1g - Enter the amount from Form 8974, line 16 for this quarter
• Line 1h - Employer share of Medicare tax remaining. Subtract line 1g from line 1f.

To learn more about the changes to IRS Form 941 for the First Quarter of 2023, click here.