department of labour

Employer Credits Form 7200

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IRS Form 7200 - Line by Line Instructions - Explained

Updated on June 28, 2021 - 10:30 AM by Admin, TaxBandits

Employers who file any of the following employment tax Form 941, 943, 944, or CT-1 may file Form 7200 to request an advance payment of the tax credit for qualified sick, family leave wages and the employee retention credit.

In this article, we cover the following topics:

Just follow the instructions below to complete and file your form 7200 successfully to the IRS.

1. Complete Your Business Information

First, complete your basic business details in

  • Box 1 - Entering Employer Details

    In box 1, enter the name, business name, address, foreign address, third party payers details, EIN.

  • Box 2 - Choose the applicable calendar quarter

    In box 2, choose the calendar quarter of 2021 for which Form 7200 is being filed. If you file an annual employment tax return, you should still check the box to indicate the applicable calendar quarter of 2021 in which the wages are paid.

Form 7200 for 2021

Form 7200 for 2021

2. Part 1 - Tell Us About Your Employment Tax Return

Part 1 reports the employment tax return types and recently filed details

Part 1 consists of 8 lines, A-H, where each line is explained in detail.

Lines A–H

  • Line A: Check the box to your employment tax return type you file for 2021

    Employment tax return types are Form 941/PR/SS, Form 943/PR, Form 944/SP, and Form CT-1

  • Line B: Enter the total number of employees to whom you paid qualified wages eligible for the employee retention credit this quarter

    Number of employees who received paid qualified wages under employee retention credit should be mentioned in this line.

  • Line C: Amount reported on line 2 of your most recently filed Form 941

    The IRS will verify this information with the employer that the credit is being paid to the correct or not.

    • If your wages are reported on Schedule R (Form 941), enter the wages reported by your third-party payer for your EIN on its most recently filed Schedule R (Form 941), column (c).
    • If your wages are reported on Schedule R (Form 943), enter the social security tax reported by your third-party payer for your EIN on its most recently filed Schedule R (Form 943), column (c).
    • Form 941-PR, line 5a, Salarios sujetos a la contribución al Seguro Social. Enter the amount reported in column 1.
    • Form 941-SS, line 5a, Taxable social security wages. Enter the amount reported in column 1.
    • Form 943, line 2, Total wages subject to social security tax.
    • Form 943-PR, line 2, Total de salarios sujetos a la contribución al Seguro Social.
    • Form 944, line 1, Wages, tips, and other compensation.
    • Form 944(SP), line 1, Salarios, propinas y otras remuneraciones.
    • Form CT-1, line 1, Tier 1 employer tax—compensation (other than tips and sick pay). Enter the amount reported in the Compensation column.

  • Line D: Enter the tax period of your most recently filed employment tax return

    If your most recently filed employment tax return is Form 941 for the first quarter of 2021, enter “Q1 2021”. If your most recently filed employment tax form is Form 943 for 2020, enter “2020”.

  • Line E: Enter the average number of full-time employees

    Suppose you have 500 or more employees in your business. In that case, you are not eligible to claim the credit for qualified paid sick and family leave wages, and employee retention credit may be based on the number of employees you have. Please visit https://www.irs.gov/coronavirus for more information about Coronavirus Tax Relief.

  • Line F: Enter the number of employees you had when qualified leave was taken during the quarter for the advance requested

    If you're requesting an advance payment for qualified sick leave wages and/or qualified family leave wages, enter the number of employees you had when qualified leave was taken during the quarter for the advance requested on line 8.

  • Line G: Enter the number of individuals provided COBRA premium assistance during the quarter for the advance requested on line 9.

    Include each eligible individual who received COBRA premium assistance.

  • Line H: If you’re eligible for the employee retention credit solely because your business is a recovery startup business, check here.

    Check this box if you are an employer eligible to claim Employee Retention Credit.

Form 7200 for 2021 - Part 1

Form 7200 for 2021 - Part 1

2. Part II Enter Your Credits and Advance Requested

Part 2 requires information about tax credits for the quarter and advanced credits requested on previous filings of this form for this quarter.

Part 2 consists of 9 lines where each line is explained in detail.

Lines 1-8

  • Line 1: Total employee retention credit for the quarter

    Enter 50% of the amount of the qualified wages you paid to your employees as of the current quarter. Don’t enter the full amount just enter only 50% of the qualified wages. Qualified wages may not exceed 50% of $10,000 ($5,000) for any employee for all quarters.

  • Line 2: Total qualified sick leave wages eligible for the credit and paid this quarter

    Enter the qualified sick leave wages you paid as of in the current quarter. Qualified sick leave wages are the wages required to be paid under the EPSLA.

What is EPSLA?

Emergency Paid Sick Leave Act (EPSLA), requires employers with less than 500 employees to provide paid sick leave to employees unable to work because of:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
  • A health care provider has advised the employee to self-quarantine due to concerns related to COVID-19
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis
  • The employee is caring for a child if the school or place of care has been closed or the childcare provider is unavailable due to COVID-19 precautions
  • The employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services

  • Line 3: Total qualified family leave wages eligible for the credit and paid this quarter

    Enter the qualified family leave wages you paid as of in the current quarter. Qualified family leave wages are the wages required to be paid under the Emergency Family and Medical Leave Expansion Act.

  • Line 4: Total COBRA premium assistance provided this quarter

    Enter the COBRA premium assistance that you provided so far in the quarter.

  • Line 5: Add lines 1, 2, and 3 and 4

    Adding total employee retention credit, qualified sick leave wages eligible for the credit, and qualified family leave wages eligible for the credit and paid to the employee in this current quarter.

  • Line 6:

    Total amount by which you have already reduced your federal employment tax deposits for these credits for this quarter.

  • Line 7: Total advanced credits requested on previous filings of this form for this quarter.

    If you did not enter any amount in line 5 and 6, or you entered the incorrect amount, you may have an underpayment when you file your employment tax return.

  • Line 8: Add lines 6 and 7 and enter the result on line 8

  • Line 9: Subtract line 8 amount from line 5 amount and enter the amount on line 9

If suppose line 9 amount is zero or less, then don’t file form 7200. You are not eligible to receive an advance.

Suppose line 9 amount is more than zero. In that case, you will need to report the amount of the advance that you requested on your employment tax return for the return period, as well as the amounts that you requested on line 9 of other Forms 7200 that you filed during the return period.

Form 7200 for 2021 - Part 2

Form 7200 for 2021 - Part 2

Third-party designee

A Third-party designee is authorized by the employer to discuss their return with the IRS.

  • Check “Yes”, If you wish to discuss this return with the IRS and provide the designee name and phone number. Also, enter the 5 digit pin to use while talking with the IRS.
  • Check “No”, if you don’t wish to discuss it.

Signature

Once each and every line is completed, you are required to sign Form 7200.

The following persons are authorized to sign the return for each type of business entity.

  • Sole proprietorship: Individual who owns the company
  • The corporation or an LLC treated as a corporation: President, vice president, or other principal officers
  • Partnership or an LLC treated as a partnership: Partner, member, or officer
  • Single-member LLC: Owner of the LLC or a principal officer
  • Trust or estate: The fiduciary

Paid Preparer

Form 7200 may be signed by a duly authorized agent of the taxpayer if a valid power of attorney
has been filed.

A paid preparer must sign Form 7200 and provide the information in the Paid Preparer Use Only section if the preparer was paid to prepare Form 7200 and isn't an employee of the filing entity. The preparer must give you a copy of Form 7200 in addition to the copy to be filed with the IRS.

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