You must attach a corrected Form 8974 and explain the reasons for this correction on line 43. You may correct underreported taxes on a previously filed Form 941 if you file Form 941-X within 3 years of the date the Form 941 was filed. The modified Form 941-X must have the corrected facts for each quarter in which the business claims the credit and a detailed explanation of the changes made. Prior revisions of the Instructions for Form 941 are available at IRS.gov/Form941 (select the link for All Form 941 Revisions under Other Items You May Find Useful).. Instead, include qualified sick leave wages and qualified family leave wages excluded from the definition of employment under sections 3121(b)(1)(22) separately in Step 2, line 2a(iii) and/or line 2e(iii), respectively, before you figure your total credit in Step 2, line 2d (credit for qualified sick leave wages), or Step 2, line 2h (credit for qualified family leave wages). Also check this box if the IRS (or you) determined that workers you treated as independent contractors or nonemployees should be classified as employees. . The credits were $80,000 in Q1, $75,000 in Q2 and $90,000 in Q3. If you currently file Form 944 because your filing requirement changed, include this amount on the "Total deposits" line of Form 944 for the year during which you filed Form 941-X. A paid preparer must sign Form 941-X and provide the information in the Paid Preparer Use Only section of Part 5 if the preparer was paid to prepare Form 941-X and isnt an employee of the filing entity. Enter the total corrected amount in column 1. In column 3, enter the difference between columns 1 and 2. You cant use your PTIN in place of the EIN of the tax preparation firm. To become a CPEO, the organization must apply through the IRS Online Registration System at, The due date for filing Form 941-X depends on when you discover an error and if you underreported or overreported tax. Therefore, other than in rare circumstances, due to the COBRA notice and election period requirements (generally, employers have 60 days to provide notice and assistance eligible individuals have 60 days to elect coverage), the first quarter of 2022 was the last quarter in which employers may have been eligible to claim the COBRA premium assistance credit. . See Is There a Deadline for Filing Form 941-X, earlier. Deferred amount of the employer share of social security tax. You must also report that $20,000 of the amount shown in column 3 was related to the correction of a prior year nonadministrative error and $27,000 of the amount shown in column 3 was related to the correction of an administrative error. Instead, use the X form that corresponds to those forms (Form CT-1 X, 943-X, 944-X, or 945-X).. For help filing Form 941-X or for questions about federal employment taxes and tax corrections, you can: Go to IRS.gov/EmploymentTaxes and IRS.gov/CorrectingEmploymentTaxes; See Pub. Adjustments to qualified wages paid March 13, 2020, through March 31, 2020, for the employee retention credit are reported on Form 941-X, line 33a, and adjustments to qualified health plan expenses allocable to these wages are reported on Form 941-X, line 34. Here is how you would enter the numbers on Form 941X, line 17. ExampleCombination of prior year administrative and nonadministrative errors. Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages for Leave Taken After March 31, 2020, and Before April 1, 2021, 30. See the General Instructions for Forms W-2 and W-3 for detailed information about filing requirements. Use Courier font (if possible) for all typed or computer-generated entries. Check Part 2, Box 5d The employee retention credit isn't available in the second quarter of 2021 on the basis of being a recovery startup business. These amounts were reported on your 2021 third quarter Form 941. You may not use any credit that you show on another Form 941-X to pay the amount you owe, even if you filed for the amount you owe and the credit at the same time. .Generally, you may correct federal income tax withholding errors only if you discovered the errors in the same calendar year you paid the wages. For details and required documentation, see Rev. If your Form 941 didn't claim the correct amount for the employee retention credit because you received a Small Business Interruption Loan under the PPP, you may file Form 941-X and complete Worksheet 2 to claim the correct amount of the credit. In column 3, enter the difference between columns 1 and 2. . If you claimed the credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021, on your original Form 941 for the quarter, and you make any corrections on Form 941X for the quarter to amounts used to figure this credit, you'll need to refigure the amount of this credit using Worksheet 1. In column 3, enter the difference between columns 1 and 2. On each Form 941 for which youre entitled to use section 3509 rates, complete the following steps. If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet the reasonable-cause criteria. For more information about correcting federal tax liabilities reported on Form 941, Part 2, or on Schedule B (Form 941), see the Instructions for Schedule B (Form 941). A decrease to the deferred amount of the employer and/or the employee share of social security tax decreases the payment you can defer and must be shown as a balance due item; therefore, to properly show the amount as a balance due item, enter a negative number in column 3 as a positive number in column 4. Complete Form 941 using the Instructions for Form 941. ExamplePrior year administrative error (incorrectly reported amount of Additional Medicare Tax actually withheld). Adjusted Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2020, and Before April 1, 2021, Worksheet 2. The appropriate lines related to the exclusions under sections 3121(b)(1)(22) were added to Worksheet 1 in the first quarter 2021 Instructions for Form 941 (Revised March 2021). In column 3, enter the difference between columns 1 and 2. Youre certifying that you repaid or reimbursed to the employees their share of social security and Medicare taxes. Enter the corrected amount from column 1 on Worksheet 3, Step 2, line 2g. Because special circumstances apply for lines 1422, 2426c, and 2840, read the instructions for each line carefully before entering amounts in the columns. Taxable qualified sick leave wages and qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021, were included on Form 941, line 5a, column 1, and can be adjusted only on Form 941-X, line 8. They did offer a revised copy of the Q4 941 that would have allowed you to claim the credit on your initial filing, but it was only available for a short window before the due date, and many had already submitted their standard Q4 941. Use line 34 only for corrections to the second quarter of 2020. Qualified Sick Leave Wages for Leave Taken After March 31, 2021, and Before October 1, 2021, 36. Keep them for your records. Enter the corrected amount from column 1 on Worksheet 2, Step 2, line 2a, for qualified wages paid after March 31, 2020, and before July 1, 2021. Section 3509 rates arent available if you intentionally disregarded the requirements to withhold taxes from the employee, or if you withheld federal income tax but didnt withhold social security and Medicare taxes. In column 3, enter the difference between columns 1 and 2. In column 3, enter the difference between columns 1 and 2. The employee retention credit for wages paid March 13, 2020, through March 31, 2020, is claimed on Form 941 for the second quarter of 2020; therefore, any corrections to the employee retention credit for the period from March 13, 2020, through March 31, 2020, should be reported on Form 941X filed for the second quarter of 2020. Nonrefundable Portion of Employee Retention Credit, Instructions for Qualified Wages Paid After March 12, 2020, and Before July 1, 2021, Instructions for Qualified Wages Paid After June 30, 2021, and Before January 1, 2022, 18b. Otherwise, you may only correct the amount of the deferred employer share of social security tax if the amount originally reported on Form 941, line 13b, isnt the amount you actually deferred (for example, you incorrectly reported the amount that you actually deferred). In column 2, enter the amount you originally reported or as previously corrected. Get a Form for Every Quarter You Want to Amend 3. Select Create Form. The total wages paid to Sophie for 2021 were $220,000. The portion of the credit used against the employer share of social security tax is allowed in the first calendar quarter beginning after the date that the qualified small business filed its income tax return. 2. In column 2, enter the amount you originally reported or as previously corrected. The guidance addresses the ERC program as modified by the Consolidated Appropriations Act of 2021. These scammers may lie about your eligibility. Form 8974 is used to determine the amount of the credit that can be used in the current quarter. I've been asked a few times since Notice 2021-49 was published by the IRS what should be done about already filed Forms 941 or 941-X where an employee retention credit was claimed on the return in question for wages the Notice indicates are ineligible to be used to claim that credit. Additionally, you can use Form 941-X to file the adjusted return or claim for a refund for the 4th quarter. Records related to qualified sick leave wages and qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021, and records related to qualified wages for the employee retention credit paid after June 30, 2021, should be kept for at least 6 years. In column 2, enter the amount you originally reported or as previously corrected. In column 2, enter the amount you originally reported or as previously corrected. Complete all five pages and sign Form 941-X on page 5. In the fourth quarter of 2021, you withheld $1,000 of federal income tax from Xavier Black, $2,000 from Sophie Rose, and $6,000 from Leo Wood. 2021-33. See section 2 of Pub. Certain errors discovered on a previously filed Form 941 are corrected on Form 941-X, line 13. For details and required documentation, see Rev. 2021-33. Use line 18a only for corrections to quarters beginning after March 31, 2020, and before January 1, 2022. For example, you cant correct federal income tax withheld in a prior year because you used the wrong income tax withholding table or you didnt treat a payment correctly as taxable or nontaxable. 2005-39, 2005-28 I.R.B. Time & Attendance Time & Attendance Manage labor costs and compliance with easy time & attendance tools. Proc. Check the box on line 1 if youre correcting underreported tax amounts or overreported tax amounts and you would like to use the adjustment process to correct the errors. You were required to withhold $180 ($20,000 x 0.009) but you withheld nothing and didnt report Sophie's $20,000 in wages subject to Additional Medicare Tax withholding on line 5d of your fourth quarter 2021 Form 941. Follow the chart on page 6 of Form 941-X for help in choosing whether to use the adjustment process or the claim process. Attach a completed Form 941-X (see instructions next). The eligible employer can claim the employee retention credit on any qualified wages that aren't counted as payroll costs in obtaining PPP loan forgiveness. Organizations can still apply for the ERC by amending their Form 941 X for the quarters that they were an Eligible Employer. Records related to qualified sick leave wages and qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021, and records related to qualified wages for the employee retention credit paid after June 30, 2021, should be kept for at least 6 years. If all of your corrections relate to underreported tax amounts, complete line 3 only; skip lines 4 and 5 and go to Part 3. On line 43, you must explain the reason for both the $15,000 increase and the $5,000 decrease. Records related to qualified sick leave wages and qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021, and records related to qualified wages for the employee retention credit paid after June 30, 2021, should be kept for at least 6 years. Businesses can claim the ERC for qualified wages paid between March 13 . This correction removes the reported wages that were never paid.. If you're correcting the refundable portion of the employee retention credit that you reported on Form 941, line 13d, for qualified wages paid after June 30, 2021, and before January 1, 2022, enter the total corrected amount from Worksheet 4, Step 2, line 2i, in column 1. If applicable to the quarter that you're correcting, you'll enter the credit claimed on Form 5884-D on, Rev. In column 2, enter the amount you originally reported or as previously corrected. Unless the IRS corrects Form 941-X during processing or you owe other taxes, penalties, or interest, the IRS will refund the amount shown on line 27, plus any interest that applies. Use Form 843, Claim for Refund and Request for Abatement, to request a refund or abatement of assessed interest or penalties. The Employee Retention Credit (ERC) is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021. 15 for correcting Form 941, or Pub. For prior years, you may only correct administrative errors to federal income tax withholding (that is, errors in which the amount reported on Form 941, line 3, isn't the amount you actually withheld from an employees wages) and errors for which section 3509 rates apply. If the amount in column 3 used a minus sign, also use a minus sign in column 4. After running the tax update, go back and check line 11c or line 13d of the form. If youre correcting the qualified sick leave wages for leave taken after March 31, 2021, and before October 1, 2021, that you reported on Form 941, line 23, enter the total corrected amount in column 1. Proc. On July 1, 2022, you discover an error that results in additional tax on your 2021 third quarter Form 941. Under the CARES Act, the ERC provided a refundable 50 percent payroll tax credit for up to $10,000 in qualified wages per quarter per employee. Also see section IV of Notice 2021-49 and Rev. If you also need to correct any underreported tax amounts, you must file another Form 941-X reporting only corrections to the underreported amounts. If you overreported the tax on a previously filed Form 941, you may choose one of the following options. If your corrections relate to overreported tax amounts, other than corrections related to underreported employment tax credits and social security tax deferrals, you have a duty to ensure that your employees' rights to recover overpaid employee social security and Medicare taxes that you withheld are protected. However, you may correct errors to Additional Medicare Tax withholding for prior years if the amount reported on Form 941, line 5d, column 2, isnt the amount you actually withheld, including any amount you paid on behalf of your employee rather than deducting it from the employees pay (which resulted in additional wages subject to tax). You withheld $400 of federal income tax at the time you paid Jack. If youre correcting the wages, tips, and other compensation you reported on Form 941, line 2, enter the total corrected amount for all employees in column 1. Proc. 556, Examination of Returns, Appeal Rights, and Claims for Refund, for more information. The total tax reported on the Total liability for the quarter line of Schedule B (Form 941) must match the corrected tax (Form 941, line 12, combined with any correction reported on Form 941-X, line 23) for the quarter, less any previous abatements and interest-free tax assessments. The dates shown in the table above apply only to corrections of underreported amounts. If youre correcting both shares of tax for some employees and only the employer share for other employees, enter the properly calculated amount in column 4. If the employer issued the required information returns, use the section 3509 rates as follows. The time needed to complete and file Form 941-X will vary depending on individual circumstances. See section 2 of Pub. See. If you file Form 941-X before October 31, 2022, pay the amount you owe by the time you file. Enter the corrected amount from column 1 on Worksheet 4, Step 2, line 2b, for qualified health plan expenses allocable to qualified wages paid after June 30, 2021, and before January 1, 2022.
