TaxBandits Knowledge Base

When is Schedule R added to Form 941?

Schedule R (Form 941) is used to report the IRS with client-specific information to justify the totals reported on an aggregate Form 941. It includes an allocation line for each client, showing a breakdown of their wages and employment tax liability for the tax period. 

You should add Schedule R information to Form 941 if any of the following conditions apply:

• If you accumulate $100,000 or more of liabilities on any day during a deposit period, you must use Schedule R to allocate your liability among the semiweekly periods within that deposit period.
• If you accumulated $100,000 or more of liabilities on any day during a deposit period during the lookback period (which is generally the four quarters ending on June 30 of the preceding calendar year), you are a semiweekly schedule depositor for the current calendar year and must complete Schedule R.
• If you were a monthly schedule depositor for the preceding calendar year but reported $100,000 or more of taxes on any day during any month in the current or prior calendar quarter, you become a semiweekly schedule depositor for the current calendar year and must complete Schedule R.

In summary, if you meet any of the criteria mentioned above, you will need to complete Schedule R and include it with your Form 941 when reporting your employment tax liabilities.