Did you know you file Form 941-X to correct errors on a previously filed?
Form 941-Employers Quarterly Federal Tax Return? Use Form 941-X to correct:
Employee wages, Income tax withheld from wages, Taxable social security wages,
Taxable social security tips, Taxable Medicare wages and tips,
Taxable wages and tips subject to Additional Medicare Tax withholding.
You must file a separate Form 941-X for each tax period in which there was an error.
For example, a quarterly 941 filer would file four 941-X’s if they made
a payroll error throughout the entire calendar year. Do not mail a Form 941-X for a previous quarter
along with a Form 941. You have a limited amount of time to file Form 941-X.
Generally, this form must be filed by the later of: 3 years from the date you filed your original return, or
2 years from the date you paid the tax.
All quarterly Forms 941 filed for a calendar year are considered filed on
April 15th of the following year if they are actually filed before that date.
For example, if you filed the first three quarterly returns in 2017
and you filed the fourth quarter Form 941 on January 31, 2018,
the IRS treats all tax returns as though they were filed on April 15, 2018.
So, in this example the period of limitations or deadline to file corrections
for all four 2017 quarterly Forms 941 would be April 15, 2021.
This is because all 4 tax returns are considered filed on April 15, 2018.
Select one of two processes on Form 941-X, Part 1 to correct your previously filed Form 941.
First is “Adjusted employment tax return”. Select this when there are underreported amounts on Form 941,
overpayments with more than 90 days remaining before
the period of limitations expires or, when you want the overreported amount
credited to your Form 941 for the period in which you are filing Form 941-X.
Note, this amount will be credited rather than refunded to you.
And, if you are correcting both underreported amounts and overreported amounts
on the Form 941-X, you must check box 1 in Part 1.
Claim is the second process offered in Part 1.
Select this option if you overreported amounts and
want a refund of the amount over paid.
This is your only option if you are filing within 90 days or less
before the statute expiration to take care of an over payment.
Check the box on line 2. Remember you cannot check this box
if you are correcting any underreported amounts.
Now that you have selected the “process” that fits your situation,
complete the “Certifications” in Part 2 of the form.
Taxpayers must certify in Part 2: on line 3 that they have filed or will file
all applicable Forms W-2C, Corrected Wage and Tax Statements,
with the Social Security Administration.
Next, if taxes were originally overreported, and you checked Line 1 in part 1,
requesting an adjustment to your Form 941, you must complete Part 2 Line 4.
The employer must repay or reimburse the employee for the
over-collected federal income tax for the current year.
Remember, you can’t request a refund for
federal income taxes withheld from an employee in a prior year.
The employer is also obligated to repay or reimburse the employee
for social security and Medicare taxes for the current and prior years.
In Part 2 both lines 4 and 5 include certification that a written statement
has been received from affected employees. This is important because
the Tax Code provides that for social security and Medicare tax
over-collected in a prior year, an employer must secure
the employee's written statement confirming that the employee:
hasn’t made any previous claims (or the claims were rejected) and
won’t make any future claims for refund or credit of the amount over collected.
Here is an example of one employee’s statement. These statements
should not be sent to the IRS, but keep them for your records.
Be aware Rev. Proc. 2017-28 allows employers to secure such consents
through electronic means. It will permit, but does not require,
the employee consent to be requested, furnished, and retained
in an electronic format as an alternative to a paper format.
If you make a reasonable effort to secure the required written statement,
yet the employee does not furnish it, the employer may make an adjustment
for only the overpaid employer share of social security and Medicare taxes.
If you checked Line 2 in Part 1, requesting a refund or an abatement
of the employment taxes overreported, you must complete
Part 2 Line 5 by checking all boxes that apply.
On Form 941-X Part 2 you must certify that you have:
refunded the employee share of tax, secured statements from your employees,
or you are only requesting a refund of the employer paid portion of tax.
Part 2 questions 4 and 5 are very specific to multiple circumstances
that commonly arise. You should refer to the Instructions for Form 941-X
pages 5 and 6 for the best responses to certifying and reporting corrections.
Note that multiple boxes could be checked for multiple corrections within a 941 period.
If you have an overpayment and selected line 1 in part 1 Adjusted
employment tax return, you must complete the certifications in part 2 item 4.
If you have an overpayment and have selected box 2 - Claim,
you must complete the certifications in part 2 item 5.
Check box 5a when you can certify that you repaid or reimbursed
to the employees their share of social security and Medicare taxes.
Check box 5b when you have not yet repaid or reimbursed
the employee share of taxes but you certify that you received consent
from each affected employee to file this claim for their share of the taxes
and have received written statements for prior years from those employees
stating they did not and will not receive a refund or credit personally.
Check box 5c to certify that your overreported tax is only for the employer share
of social security and Medicare taxes. This applies when affected employees:
Didn’t give you consent to file a claim for refund for the employee share
of social security and Medicare taxes, Couldn’t be found, or
Didn’t give you a statement described on line 5b.
Finally, Check the box on line 5d to certify that your overreported amount
is only for federal income tax, social security tax, Medicare tax, or
Additional Medicare Tax that you did not withhold from your employees.
On Part 3 of Form 941-X you will enter the corrections for the quarter and
compute the tax due or overpayment. See pages 6, 7, 8, & 9 of the instructions
for examples of the many different adjustments taxpayers may face.
And on Part 4 of the form take the time to explain your corrections
made to Part 3 above. Include the rationale for adjusting the original Form 941
you filed with the IRS. These explanations will help to process your
overpayment or underpayment with the IRS efficiently.
As soon as you realize an error has been made and
you owe additional tax as a result of an underpayment,
a Form 941-X is due by the due date of the return for the return period
in which the employer discovered the error. In other words,
in the quarter that the error was discovered or occurred.
Generally, you won’t be assessed interest and penalties if
you file Form 941-X by the due date of the return for the period
in which you discovered the error. However, you must pay
the additional tax due at the time you file.
For example if you find an underreporting error on your
2016 fourth quarter 941 in March of 2017, you have until April 30, 2017,
to file Form 941-X and pay the tax due. April 30th is the due date
for January, February & March payroll taxes reported on Form 941.
Revenue Ruling 2009-39 describes how an employer corrects
employment tax reporting errors using the interest-free adjustment and
refund claim processes under sections 6205, 6402, 6413, and 6414 of
the Internal Revenue Code with ten (10) examples.
Tell us on line 24 if you have not repaid or reimbursed employees
or obtained consents at the time you file the claim.
You MUST repay or reimburse your employees or secure consents
and certify that you have done so before the IRS can allow the claim.
Be sure to always sign and date the form before mailing to the IRS.
For additional information Visit IRS.gov and search “Correcting Employment Taxes”.
Select “Correcting Employment Taxes” from the search results.
Once there, you will find links to the “X” forms and instructions
and to Revenue Ruling 2009-39.
Thank you for investing your time to hear about
filing Form 941-X to correct employment tax reporting