Employer's Quarterly Federal Tax Return

Instructions for Schedule R
(Form 941)

Department of the Treasury
Internal Revenue Service

(Rev. March 2023)

Allocation Schedule for Aggregate Form 941 Filers

Who Must File?

Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments
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.

What’s New
Calendar year “2023” has been prepopulated on the
March 2023 revision of Schedule R. Don't use the March
2023 revision of Schedule R for any calendar quarter
beginning before January 1, 2023. At this time, the IRS
expects the March 2023 revision of Schedule R and these
instructions to also be used for the second, third, and
fourth quarters of 2023. If changes in law require
additional changes to Schedule R, the form and/or these
instructions may be revised. Prior revisions of Schedule R
are available at IRS.gov/Form941 (select the link for "All
Form 941 Revisions" under "Other Items You May Find
Useful"). Don't use an earlier revision of Schedule R for
any calendar quarter beginning after December 31, 2022.
See the Instructions for Form 941 for information

TIP on which employers may be eligible to claim the

credit for qualified sick and family leave wages
paid in 2023.

Use Schedule R to allocate certain 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 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) a 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 five
clients, complete as many Continuation Sheets as
necessary. Attach Schedule R, including any Continuation
Sheets, to your aggregate Form 941.

Nov 29, 2022

Generally, the common-law employer of the individuals
that are paid qualified sick or family leave wages is
entitled to the credit for qualified sick and family leave
wages regardless of whether they use a third-party payer.
The third-party payer isn't entitled to the credit with
respect to the wages and taxes it remits on behalf of
clients (regardless of whether the third party is considered
an "employer" for other purposes).

When Must You File?

General Instructions
Purpose of Schedule R

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. Go to
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 or the credit for qualified sick and
family leave wages. Third-party payers other than agents
approved by the IRS under section 3504 and CPEOs
need to include client-by-client amounts only for those
clients claiming one or more of these credits. Amounts for
clients not claiming any of these credits are included on
Schedule R, page 1, line 8.

If you’re 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. For
more information about a CPEO's requirement to file
electronically, see Rev. Proc. 2017-14, 2017-3 I.R.B. 426,
available at IRS.gov/irb/2017-03_IRB#RP-2017-14.

Specific Instructions
Completing Schedule R
Enter Your Business Information

Carefully enter your employer identification number (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, a CPEO, or
any other type of third party (for example, a non-certified
PEO).

Cat. No. 53729E

Calendar Year

This amount includes Additional Medicare Tax
withholding.

Calendar year “2023” has been prepopulated on the
March 2023 revision of Schedule R.

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

Check the Box for the Quarter

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

Column k. 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.

Client and Employee Information

Column l. Nonrefundable portion of the credit for
qualified sick and family leave wages paid this quarter of
2023 for leave taken after March 31, 2020, and before
April 1, 2021, allocated to the listed client EIN from Form
941, line 11b.

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 m. Nonrefundable portion of the credit for
qualified sick and family leave wages paid this quarter of
2023 for leave taken after March 31, 2021, and before
October 1, 2021, allocated to the listed client EIN from
Form 941, line 11d.

Column a. The client’s EIN.
Column b (CPEO Use Only). 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 n. Total taxes after adjustments and
nonrefundable credits allocated to the listed client EIN
from Form 941, line 12.
Column o. 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.
Column p. Refundable portion of the credit for qualified
sick and family leave wages paid this quarter of 2023 for
leave taken after March 31, 2020, and before April 1,
2021, allocated to the listed client EIN from Form 941,
line 13c.

Column c. Number of employees who received wages,
tips, or other compensation for the pay period for the listed
client EIN from Form 941, line 1.

Column q. Refundable portion of the credit for qualified
sick and family leave wages paid this quarter of 2023 for
leave taken after March 31, 2021, and before October 1,
2021, allocated to the listed client EIN from Form 941,
line 13e.

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 r. Qualified health plan expenses allocable to
qualified sick leave wages paid this quarter of 2023 for
leave taken after March 31, 2020, and before April 1,
2021, allocated to the listed client EIN from Form 941,
line 19.

Column f. Total qualified sick leave wages and qualified
family leave wages paid this quarter of 2023 for leave
taken after March 31, 2020, and before April 1, 2021,
allocated to the listed client EIN from Form 941, lines 5a(i)
and 5a(ii), column 1.

Column s. Qualified health plan expenses allocable to
qualified family leave wages paid this quarter of 2023 for
leave taken after March 31, 2020, and before April 1,
2021, allocated to the listed client EIN from Form 941,
line 20.

Column g. Total social security tax allocable to taxable
social security wages (which includes qualified sick and
family leave wages paid this quarter of 2023 for leave
taken after March 31, 2021, and before October 1, 2021)
and taxable social security tips allocated to the listed
client EIN from Form 941, lines 5a and 5b, column 2.

Column t. Qualified sick leave wages paid this quarter of
2023 for leave taken after March 31, 2021, and before
October 1, 2021, allocated to the listed client EIN from
Form 941, line 23.

Column h. Medicare tax allocated to the listed client EIN
from Form 941, line 5c, column 2.

Column u. Qualified health plan expenses allocable to
qualified sick leave wages paid this quarter of 2023 for
leave taken after March 31, 2021, and before October 1,
2021, allocated to the listed client EIN from Form 941,
line 24.

Column i. Total social security and Medicare taxes
allocated to the listed client EIN from Form 941, line 5e.
-2-

Instructions for Schedule R (Form 941) (Rev. 3-2023)

Line 7. Enter the combined subtotal from line 9 of all
Continuation Sheets for Schedule R for column c through
column y.

Column v. Amounts under certain collectively bargained
agreements allocable to qualified sick leave wages paid
this quarter of 2023 for leave taken after March 31, 2021,
and before October 1, 2021, allocated to the listed client
EIN from Form 941, line 25.

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 w. Qualified family leave wages paid this quarter
of 2023 for leave taken after March 31, 2021, and before
October 1, 2021, allocated to the listed client EIN from
Form 941, line 26.

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 x. Qualified health plan expenses allocable to
qualified family leave wages paid this quarter of 2023 for
leave taken after March 31, 2021, and before October 1,
2021, allocated to the listed client EIN from Form 941,
line 27.

Continuation Sheet for Schedule R (Form 941)

Column y. Amounts under certain collectively bargained
agreements allocable to qualified family leave wages paid
this quarter of 2023 for leave taken after March 31, 2021,
and before October 1, 2021, allocated to the listed client
EIN from Form 941, line 28.

Columns a through y. See the instructions under
Completing Schedule R, earlier.
Line 9. Enter subtotals for clients from lines 1 through 8
for column c through column y.

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

Paperwork Reduction Act Notice
We ask for the information on Schedule R to carry out the
Internal Revenue laws of the United States. You’re
required to give us this information. We need it to ensure
that you’re 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.

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/
FormComments. 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:

Instructions for Schedule R (Form 941) (Rev. 3-2023)

20 hr., 5 min.
18 min.
38 min.

-3-