Schedule R (Form 941) - Allocation for Aggregate Form 941 Filers

Instructions for Schedule R
(Form 941)

Department of the Treasury
Internal Revenue Service

(June 2020)

Allocation Schedule for Aggregate Form 941 Filers
Section references are to the Internal Revenue Code unless
otherwise noted.

and Notice 2020-35, 2020-25 I.R.B. 948, available at IRS.gov/irb/
2020-25_IRB#NOT-2020-35.

Future Developments

Specific Instructions

For the latest information about developments related to Schedule R
and its instructions, such as legislation enacted after they were
published, go to IRS.gov/Form941.

Completing Schedule R

What’s New

Carefully enter your EIN and the name of your business at the top of
the schedule. Make sure they exactly match the EIN and name
shown on the attached Form 941. Check one of the "Type of filer"
boxes to tell us if you're a section 3504 agent, CPEO, or any other
type of third party (for example, a non-certified PEO).

Schedule R has been redesigned to allow the new lines from the
April 2020 revision of Form 941 to be reported on Schedule R.

General Instructions

Calendar Year

Enter the calendar year that applies to the quarter checked.

Purpose of Schedule R

Use Schedule R to allocate the aggregate information reported on
Form 941 to each client. For purposes of Schedule R, the term
“client” means (a) an “employer or payer” identified on the Form
2678, Employer/Payer Appointment of Agent; (b) a customer who
enters into a contract that meets the requirements under section
7705(e)(2); (c) a client who enters into a service agreement
described under Regulations section 31.3504-2(b)(2) with a certified
professional employer organization (CPEO); (d) a client who enters
into a service agreement described under Regulations section
31.3504-2(b)(2) with a non-certified professional employer
organization (PEO); or (e) third party paying qualified sick leave
wages as an agent for the employer under Regulations section
32.1(e)(3). If you have more than 5 clients, complete as many
continuation sheets as necessary. Attach Schedule R, including any
continuation sheets, to your aggregate Form 941.

Who Must File?

Agents approved by the IRS under section 3504 and CPEOs must
complete Schedule R each time they file an aggregate Form 941. To
request approval to act as an agent for an employer under section
3504, the agent must file Form 2678 with the IRS. Form 2678 must
be previously filed and approved by the IRS before filing
Schedule R. To become a CPEO, the organization must apply
through the IRS Online Registration System. Visit the IRS website at
IRS.gov/CPEO for more information. Other third-party payers that
file aggregate Forms 941, such as non-certified PEOs, must
complete and file Schedule R if they have clients that are claiming
the qualified small business payroll tax credit for increasing research
activities, the credit for qualified sick and family leave wages, or the
employee retention credit, or clients deferring the employer share of
social security tax.

When Must You File?

If you are an aggregate Form 941 filer, file Schedule R with your
aggregate Form 941 every quarter. Agents and non-certified PEOs
may file Form 941 and Schedule R electronically or by paper
submission. CPEOs must generally file Form 941 and Schedule R
electronically. However, CPEOs are permitted to file a paper Form
941 and its accompanying schedules in lieu of electronic
submissions for the second, third, and fourth quarters of calendar
year 2020. For more information about a CPEO's requirement to file
electronically, and the waiver for 2020, see Rev. Proc. 2017-14,
2017-3 I.R.B. 426, available at IRS.gov/irb/2017-03_IRB/ar14.html
Jun 22, 2020

Enter Your Business Information

Check the Box for the Quarter

Check the appropriate box of the quarter for which you are filing
Schedule R. Make sure the quarter checked on the top of the
Schedule R matches the quarter checked on the attached Form 941.

Client and Employee Information

On Schedule R, including any continuation sheets, you must report
the following for each client.
Note. When entering amounts over 999.99 on Schedule R, don't
enter commas.
Column a. The client’s EIN.
Column b (CPEO Use Only). Type of wages, tips, and other
compensation. Enter a code to report the type of wages, tips, and
other compensation paid to the individual(s) performing services for
the client. If you paid more than one type of wages, tips, or other
compensation, you must use more than one line to report for that
client and enter the applicable code for each line. The following four
codes are the only entries that can be made in column b.
• A: Wages, tips, and other compensation paid under section
3511(a).
• B: Wages, tips, and other compensation paid under section
3511(c).
• C: Wages, tips, and other compensation not reported under Code
A or Code B paid as a payor under a service agreement described in
Regulations section 31.3504-2(b)(2).
• D: Wages, tips, and other compensation paid as an agent under
Regulations section 31.3504-1.
Column c. Number of employees who received wages, tips, or
other compensation for the pay period for the listed client from Form
941, line 1.
Column d. Wages, tips, and other compensation allocated to the
listed client EIN from Form 941, line 2.
Column e. Total federal income tax withheld from wages, tips, and
other compensation allocated to the listed client EIN from Form 941,
line 3.
Column f. Qualified sick leave wages allocated to the listed client
EIN from Form 941, line 5a(i), column 1.

Cat. No. 53729E

Column g. Qualified family leave wages allocated to the listed
client EIN from Form 941, line 5a(ii), column 1.

Column u. Qualified wages for the employee retention credit
allocated to the listed client EIN from Form 941, line 21.

Column h. Total social security and Medicare taxes allocated to the
listed client EIN from Form 941, line 5e. This amount includes
Additional Medicare Tax withholding.

Column v. Qualified health plan expenses allocable to wages
reported on Form 941, line 21, allocated to the listed client EIN from
Form 941, line 22.

Column i. Section 3121(q) Notice and Demand—Tax due on
unreported tips allocated to the listed client EIN from Form 941,
line 5f.

Column w. Enter the total amounts of social security tax on wages
and tips from Form 941, lines 5a and 5b, column 2.
Columns x and y, if applicable, are used only on a
Schedule R filed with the second quarter 2020 Form 941.
CAUTION Don't enter any amounts in columns x and y for the third or
fourth quarter of 2020.

Column j. Qualified small business payroll tax credit for increasing
research activities allocated to the listed client EIN from Form 941,
line 11a. You must attach a separate Form 8974 for each client
claiming this credit.

!

Column x. Qualified wages paid March 13 through March 31, 2020,
for the employee retention credit allocated to the listed client EIN
from Form 941, line 24.

Column k. Nonrefundable portion of credit for qualified sick and
family leave wages allocated to the listed client EIN from Form 941,
line 11b.

Column y. Qualified health plan expenses allocable to wages
reported on Form 941, line 24, allocated to the listed client EIN from
Form 941, line 25.

Column l. Nonrefundable portion of employee retention credit
allocated to the listed client EIN from From 941, line 11c.
Column m. Total taxes after adjustments and nonrefundable
credits allocated to the listed client EIN from Form 941, line 12.

Line 6. Enter the subtotals for clients for column c through column
y.

Column n. Total deposits for this quarter, including overpayment
applied from a prior quarter and overpayments applied from Form
941-X, 941-X (PR), 944-X, or 944-X (SP) filed in the current quarter
allocated to the listed client EIN from Form 941, line 13a. Include
any payment made with the return allocated to the listed client EIN.

Line 7. Enter the combined subtotal from line 9 of all Continuation
Sheets for Schedule R for column c through column y.
Line 8. Enter Form 941 amounts for your employees for column c
through column y. Non-certified PEOs and third party payers of sick
pay as agents for the employer must consolidate and include on
line 8 any amounts for clients that aren't reported individually on
Schedule R.

Column o. Deferred amount of the employer share of social
security tax allocated to the listed client EIN from Form 941, line 13b.
Column p. Refundable portion of credit for qualified sick and family
leave wages allocated to the listed client EIN from Form 941,
line 13c.

Line 9. Enter the totals of lines 6, 7 and 8 for column c through
column y. The totals on line 9 must match the totals on the
aggregate Form 941. If the totals don't match, there is an error that
must be corrected before filing Form 941 and Schedule R.

Column q. Refundable portion of employee retention credit
allocated to the listed client EIN from Form 941, line 13d.

Continuation Sheet for Schedule R (Form 941)

Column r. Total advances received from filing Form(s) 7200 for the
quarter allocated to the listed client EIN from Form 941, line 13f.

Columns a through y. See instructions for Completing
Schedule R, earlier.

Column s. Qualified health plan expenses allocable to qualified
sick leave wages allocated to the listed client EIN from Form 941,
line 19.

Line 9. Enter subtotals for clients from lines 1 through 8 for column
c through column y.

Column t. Qualified health plan expenses allocable to qualified
family leave wages allocated to the listed client EIN from Form 941,
line 20.

Paperwork Reduction Act Notice
We ask for the information on Schedule R to carry out the Internal
Revenue laws of the United States. You are required to give us this
information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax.

Recordkeeping . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . . . . . .
Preparing and sending the form to the IRS . . . . . . .

You’re not required to provide the information requested on a
form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue
law. Generally, tax returns and return information are confidential, as
required by Code section 6103.

20 hr., 05 min.
18 min.
38 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making Schedule R simpler, we would
be happy to hear from you. You can send us comments from
IRS.gov/FormComment. Or you can send your comments to Internal
Revenue Service, Tax Forms and Publications Division, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Don't send
Schedule R to this address. Instead, see Where Should You File? in
the Instructions for Form 941.

The time needed to complete and file Schedule R will vary
depending on individual circumstances. The estimated average time
is:

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Instructions for Schedule R (Form 941) (6-2020)