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Free Instruction 941-X (June 2009) - Federal
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Instructions for Form 941-X
current quarter adjustments for fractions of cents, third-party sick pay, tips, and group-term life insurance on Form 941 using lines 7a through 7c. Report the correction of underreported and overreported amounts for the same tax period on a single Form 941-X, unless you are requesting a refund or abatement. If you are requesting a refund or abatement and are correcting both underreported and overreported amounts, file one Form 941-X correcting the underreported amounts only and a second Form 941-X correcting the overreported amounts. Follow the chart on the back of Form 941-X for help in choosing whether to use the adjustment process or the claim process.
COBRA premium assistance payments credit. Employers who make COBRA premium assistance payments for assistance eligible individuals are allowed a credit for the payments on Form 941. Any errors discovered on previously filed Forms 941 for this credit are adjusted on Form 941-X. See 17a. COBRA premium assistance payments on page 8. New form. The Internal Revenue Service (IRS) has developed Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, to replace Form 941c, Supporting Statement to Correct Information. Use Form 941-X to make corrections to previously filed Forms 941. Do not attach Form 941-X to Form 941; file Form 941-X separately. Form 941-X replaces Form 843, Claim for Refund or Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. We believe you will find Form 941-X and its instructions easier to understand and fill out than Form 941c. At the same time, the new form will enable the IRS to make corrections to employment taxes more accurately and efficiently. Please read both the form and these instructions carefully to become familiar with the many changes. Background. Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Form 941, Employer's QUARTERLY Federal Tax Return, and for filing a claim for refund of employment taxes. Treasury Decision 9405, 2008-32 I.R.B. 293, is available at www.irs.gov/irb/2008-32_irb/ar13.html. You will use the revised adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941 period during which you file Form 941-X. (However, see the CAUTION on page 2.) You will use the revised claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. References to Form 941 on Form 941-X and in these instructions also apply to Form 941-SS, Employer's QUARTERLY Federal Tax Return, unless otherwise noted. We use the terms "correct" and "corrections" on Form 941-X and in these instructions to include interest-free adjustments under sections 6205 and 6413 and claims for refund and abatement under sections 6402, 6414, and 6404. If you have comments or suggestions for improving Form 941-X or these instructions, we would be happy to hear from you. Write to the address shown in the Privacy Act and Paperwork Reduction Act Notice on page 10. New process for correcting employment taxes. After December 31, 2008, when you discover an error on a previously filed Form 941, you must: � correct that error using Form 941-X, � file a separate Form 941-X for each Form 941 that you are correcting, and � file Form 941-X separately. Do not file Form 941-X with Form 941. Beginning with the first quarter of 2009, Form 941 will no longer provide adjustment lines (formerly lines 7d through 7g) for correcting prior quarter errors. However, continue to report
General Instructions: Understanding Form 941-X
What Is the Purpose of Form 941-X?
Use Form 941-X to correct errors on a Form 941 that you previously filed. Use Form 941-X to correct: � Wages, tips, and other compensation; � Income tax withheld from wages, tips, and other compensation; � Taxable social security wages; � Taxable social security tips; � Taxable Medicare wages and tips; � Advance earned income credit (EIC) payments made to employees; and � Credits for COBRA premium assistance payments. If you did not file a Form 941 for one or more quarters, do not use Form 941-X. Instead, file Form 941 for each of those quarters. See also When Should You File Form 941-X? on page 2. However, if you did not file Forms 941 because you improperly treated workers as independent contractors or nonemployees and are now reclassifying them as employees, see the instructions for line 20 on page 8. You have additional requirements to complete when filing Form 941-X, such as certifying that you filed (or will file) all applicable Forms W-2, Wage and Tax Statements, and Forms W-2c, Corrected Wage and Tax Statements. For corrections of overreported federal income tax, social security or Medicare tax, you must make any certifications that apply to your situation. Be sure to give us a detailed explanation on line 21 for each correction that you show on Form 941-X. Do not use Form 941-X to correct Forms CT-1, 943, 944, 944-SS, or Form 945. Instead, use the "X" form CAUTION that corresponds to the return you are correcting (Form CT-1 X, 943-X, 944-X, or Form 945-X).
For help filing Form 941-X or for questions about federal employment taxes and tax corrections, you can: � call the IRS toll-free at 1-800-829-4933 (TTY/TDD for the hearing impaired at 1-800-829-4059), � visit the IRS website at www.irs.gov/businesses and click on "Employment Taxes," or
Cat. No. 20331U
� get Pub. 15 (Circular E), Employer's Tax Guide, for correcting
Form 941, or Pub. 80 (Circular SS), Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, for correcting Form 941-SS. See also How Can You Order Forms and Publications from the IRS? on page 9.
Medicare wages on your 2008 fourth quarter Form 941. File Form 941-X and pay the amount you owe by April 30, 2009 because you discovered the error in the first quarter of 2009, and April 30, 2009, is the due date for that quarter. If you file Form 941-X before April 30, pay the amount you owe when you file. Overreported tax -- credit. If you overreported tax on Form 941 and choose to apply the credit to Form 941 or Form 944, file Form 941-X soon after you discovered the error but more than 90 days before the period of limitations on credit or refund for Form 941 expires. See Is There a Deadline for Filing Form 941-X? below. Overreported tax -- claim. If you overreported tax on Form 941, you may choose to file a claim for refund or abatement on Form 941-X any time before the period of limitations on credit or refund expires on Form 941. (If you need to correct any underreported amounts, you must file another Form 941-X reporting only corrections to the underreported amounts.) See Is There a Deadline for Filing Form 941-X? below. If you discovered an error on or before December 31,
File Form 941-X when you discover an error on a previously filed Form 941. However, if your only errors on Form 941 relate to the number of employees who received wages or to federal tax liabilities reported in Part 2 of Form 941 or on Schedule B (Form 941), do not file Form 941-X. For more information about correcting federal tax liabilities reported in Part 2 of Form 941 or on Schedule B (Form 941), see the Instructions for Schedule B (Form 941). Due dates. The due date for filing Form 941-X to qualify for interest-free adjustments for underpayments and overpayments depends on when you discover an error and if you underreported or overreported tax. If you underreported tax, see Underreported tax below. For overreported amounts, you may choose to either make an interest-free adjustment or file a claim for refund or abatement. If you are correcting overreported amounts, see Overreported tax -- credit or Overreported tax -- claim below. If any due date falls on a Saturday, Sunday, or legal holiday, you may file Form 941-X on the next business day. If we receive Form 941-X after the due date, we will treat Form 941-X as filed on time if the envelope containing Form 941-X is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service on or before the due date, or sent by an IRS-designated private delivery service on or before the due date. If you do not follow these guidelines, we will consider Form 941-X filed when it is actually received. See Pub. 15 (Circular E) or Pub. 80 (Circular SS) for more information on IRS-designated private delivery services. Underreported tax. If you are correcting underreported tax, you must file Form 941-X by the due date of the return for the return period in which you discovered the error and pay the amount you owe when you file. Doing so will generally ensure that your correction is interest free and not subject to failure-to-pay or failure-to-deposit penalties. See What About Penalties and Interest on page 3. For details on how to make a payment, see the instructions for line 18 on page 8.
If you discover an error in . . . . . . . 1. 2. 3. 4. January, February, March April, May, June July, August, September October, November, December Form 941-X is due . . . April 30 July 31 October 31 January 31
TIP 2008, but did not report it as a line adjustment on Form
941 for any quarter ended before 2009 and did not file a claim (Form 843), you may use Form 941-X to correct the error. File Form 941-X for the quarter in which you made the error.
Is There a Deadline for Filing Form 941-X?
Generally, you may correct overreported taxes on a previously filed Form 941 if you file Form 941-X within 3 years of the date Form 941 was filed or 2 years from the date you paid the tax reported on Form 941, whichever is later. 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. We call each of these time frames a "period of limitations." For purposes of the period of limitations, Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if filed before that date. Example: You filed your 2007 fourth quarter Form 941 on January 27, 2008, and payments were timely made. The IRS treats the return as if it were filed on April 15, 2008. On January 20, 2011, you discover that you overreported social security and Medicare wages on that form by $350. To correct the error you must file Form 941-X by April 15, 2011, which is the end of the period of limitations for Form 941, and use the claim process. If you file Form 941-X to correct overreported amounts in the last 90 days of a period of limitations (after CAUTION January 15, 2011, in the example above), you must use the claim process. You cannot use the adjustment process. If you are also correcting underreported amounts, you must use the adjustment process to file another Form 941-X to correct the underreported amounts only and pay any tax due.
The dates shown in the table above apply only to corrections of underreported amounts. If any due date falls on a Saturday, Sunday, or legal holiday, you may file Form 941-X on the next business day.
Where Should You File Form 941-X?
Send your completed Form 941-X to the Internal Revenue Service Center shown below.
Example -- You owe tax: On February 11, 2009, you discover that you underreported $10,000 of social security and
IF you are in . . . . . . . Special filing addresses for exempt organizations; federal, state, and local governmental entities; and Indian tribal governmental entities; regardless of location Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming No legal residence or principal place of business in any state
How Should You Make Entries on Form 941-X?
You can help the IRS process Form 941-X timely and accurately if you follow these guidelines. � Type or print your entries. � Use Courier font (if possible) for all typed or computer-generated entries. � Omit dollar signs. You may use commas and decimal points, if desired. Enter dollar amounts to the left of any preprinted decimal point and cents to the right of it. � Always show an amount for cents. Do not round entries to whole dollars. � Complete all three pages and sign Form 941-X on page 3. � Staple multiple sheets in the upper-left corner.
Generally, your correction of an underreported amount will not be subject to a failure-to-pay penalty, failure-to-deposit penalty, or interest if you: � file on time (by the due date of the quarter in which you discover the error), � pay the amount shown on line 18 when you file Form 941-X, � enter the date you discovered the error, and � explain in detail the grounds and facts relied on to support the correction. No correction will be eligible for interest-free treatment if (a) the amounts underreported relate to an issue that was raised in an examination of a prior period, (b) you knowingly underreported your employment tax liability, (c) you received a notice and demand for payment after assessment, or (d) you received a Notice of Determination of Worker Classification.
How Should You Complete Form 941-X?
Use One Form 941-X for Each Quarter You Are Correcting.
Use a separate Form 941-X for each Form 941 that you are correcting. For example, if you found errors on your Forms 941 for the third and fourth quarters of 2008, file one Form 941-X to correct the 2008 third quarter Form 941. File a second Form 941-X to correct the 2008 fourth quarter Form 941.
The new process for adjusting or filing a claim for Form 941 is outlined below. If you underreported the tax. If you underreported the tax on a previously filed Form 941, check the box on line 1 and pay any additional amount you owe when you file Form 941-X. For details on how to make a payment, see the instructions for line 18 on page 8. Example -- You underreported employment taxes: On June 20, 2009, you discover an error that results in additional tax on your 2008 fourth quarter Form 941. File Form 941-X by July 31, 2009 and pay the amount you owe when you file. See When Should You File Form 941-X? on page 2. Do not attach Form 941-X to your 2009 second quarter Form 941. If you overreported the tax. If you overreported the tax on a previously filed Form 941, you may choose to: � use the adjustment process. Check the box on line 1 to apply any credit (negative amount) from line 18 to Form 941 for the quarter during which you file Form 941-X, or � use the claim process. Check the box on line 2 to file a claim on Form 941-X requesting a refund or abatement of the amount shown on line 18. To ensure that the IRS has enough time to process a
Enter your EIN, name, and address in the spaces provided. Also enter your name and EIN on the top of pages 2 and 3, and on any attachments. If your address has changed since you filed your Form 941, enter the corrected information and the IRS will update your address of record.
Return You Are Correcting. . .
In the box at the top of page 1 of Form 941-X, check the type of return (Form 941 or Form 941-SS) you are correcting. Check the appropriate box for the one quarter you are correcting. Enter the calendar year of the Form 941 you are correcting. Enter the quarter and calendar year on pages 2 and 3, and on any attachments.
You must enter the date you discovered errors. If you are reporting several errors that you discovered at different times, enter the earliest date you discovered them here. On line 21 report any subsequent dates and related errors.
You must provide all of the information requested at the top of page 1 of Form 941-X. You must check one box (but not both) in Part 1. You must check the box on line 3 and any applicable boxes on lines 4 and 5. In Part 3, if any line does not apply, leave it blank. Complete Parts 4 and 5 as instructed.
TIP credit for an overreporting adjustment in the quarter
during which you file Form 941-X, you are encouraged to file Form 941-X correcting the overreported amount in the first two months of a quarter. For example, if you discover an overreported amount in March, June, September, or December, you may want to file Form 941-X in the first two months of the next quarter (However, there must be 90 days remaining on the period of limitations when you file Form 941-X. See the Caution on page 2). This should ensure that the IRS will have enough time to process the Form 941-X so that the credit will be posted before you file Form 941, thus avoiding an erroneous balance due notice from the IRS. See the example below. (If you
currently file Form 944 instead of Form 941 and will claim a credit on Form 944, file Form 941-X before December in any year before the expiration of the period of limitations on Form 941. In the year of the expiration of the period of limitations on Form 941, file Form 941-X at least 90 days before the expiration date.) Example -- You want your overreported tax applied as a credit to Form 941: On June 22, 2009, you discover you overreported your tax on your 2008 fourth quarter Form 941 and want to choose the adjustment process. To allow the IRS enough time to process the credit, you file Form 941-X on July 1, 2009.
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 18, plus any interest that applies.
You must complete all certifications that apply by checking the appropriate boxes. If all of your corrections relate to underreported amounts, complete line 3 only; skip lines 4 and 5 and go to Part 3. If your corrections relate to overreported amounts, you have a duty to assure that your employees' rights to recover overpaid employee social security and Medicare taxes that you withheld are protected. The certifications on lines 4 and 5 address the requirement to (a) repay or reimburse your employees for the overcollection of employee social security and Medicare taxes or (b) obtain consents from your employees to file a claim on their behalf.
Because Form 941-X may be used to file either an adjusted employment tax return or a claim for refund or abatement, you must check one box in either line 1 or line 2. Do not check both boxes.
Check the box on line 3 to certify that you filed or will file Forms W-2 or Forms W-2c, as required, showing your employees' correct wage and tax amounts. See the Instructions for Forms W-2 and W-3 and the Instructions for Forms W-2c and W-3c for detailed information about filing requirements. References to Form W-2 on Form 941-X and in these instructions also apply to Forms W-2AS, W-2CM, W-2GU, and W-2VI unless otherwise noted. You must check the box on line 3 to certify that you filed Forms W-2 or Forms W-2c even if your corrections on Form 941-X do not change amounts shown on those forms. For example, if your only correction to Form 941 involves misstated tax adjustments (see the instructions for line 11), check the box on line 3 to certify that you already filed all required Forms W-2 and W-2c.
Check the box on line 1 if you are correcting underreported amounts or overreported amounts and you would like to use the adjustment process to correct the errors. If you are correcting both underreported amounts and overreported amounts on this form, you must check this box. If you check this box, any negative amount shown on line 18 will be applied as a credit (tax deposit) to your Form 941 or Form 944 for the period in which you are filing this form. See Example -- You want your overreported tax applied as a credit to Form 941 above. If you owe tax. Pay the amount shown on line 18 when you file Form 941-X. Generally, you will not be charged interest if you file on time, pay on time, enter the date you discovered the error, and explain the correction on line 21. If you have a credit. You overreported employment taxes (you have a negative amount on line 18) and want the IRS to apply the credit to Form 941 or Form 944 for the period during which you filed Form 941-X. The IRS will apply your credit on the first day of the Form 941 or Form 944 period during which you filed Form 941-X. However, the credit you show on line 18 of Form 941-X may not be fully available on your Form 941 or Form 944 if the IRS corrects it during processing or you owe other taxes, penalties, or interest. The IRS will notify you if your claimed credit changes or if the amount available as a credit on Form 941 or Form 944 was reduced because of unpaid taxes, penalties, or interest. Do not check the box on line 1 if you are correcting overreported amounts and the period of limitations on CAUTION credit or refund for Form 941 will expire within 90 days of the date you file Form 941-X. Instead, check the box on line 2. See Is There a Deadline for Filing Form 941-X? on page 2.
If you overreported federal income tax, social security tax, or Medicare tax and checked the box on line 1, check the appropriate box on line 4. You may need to check more than one box. If you obtained written statements from some employees but you could not locate or secure the cooperation of the remaining employees, check all applicable boxes. Provide a summary in line 21 of the amount of the corrections for both the employees who provided written statements and for those who did not. 4a. Check the box on line 4a if your overreported amount includes each affected employee's share of overcollected taxes. You are certifying that you repaid or reimbursed the employee's share of current and prior year taxes and you received written statements from the employees stating that they did not and will not receive a refund or credit for the prior year taxes. You are certifying that you adjusted federal income tax withheld from employees for the current calendar year only. Example. The following is an example of the written statement that is required from employees. Employee name Employer name I have received a repayment of $_________ as overcollected social security and Medicare taxes for 20___. I have not claimed a refund of or credit for the overcollected taxes from the IRS, or if I did, that claim has been rejected; and I will not claim a refund or a credit of the amount. Employee signature Date Do not send these statements to the IRS. Keep them for your records. 4b. Check the box on line 4b to certify that your overreported amount is only for the employer share of taxes on those employees who you were unable to find or those who would not (or could not) give you a statement described on line 4a. 4c. Check the box on line 4c to certify that your overreported amount is only for federal income tax, social security tax, and Medicare tax that you did not withhold from your employees.
Check the box on line 2 to use the claim process if you are correcting overreported amounts only and you are claiming a refund or abatement for the negative amount (credit) shown on line 18. Do not check this box if you are correcting ANY underreported amounts on this form. You must check the box on line 2 if you have a credit and the period of limitations on credit or refund for Form 941 will expire within 90 days of the date you file Form 941-X. See Is There a Deadline for Filing Form 941-X? on page 2. The IRS usually processes claims shortly after they are filed. The IRS will notify you if your claim is denied, accepted as filed, or selected to be examined. See Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, for more information.
If you are filing a claim for refund or abatement of overreported federal income tax, social security tax, or Medicare tax and checked the box on line 2, check the appropriate box on line 5. You may need to check more than one box. If you obtained written statements or consents from some employees but you could not locate or secure the cooperation of the remaining employees, check all applicable boxes. Provide a summary in line 21 of the amount of the corrections for both the employees who provided statements or consents and for those who did not. You may not file a refund claim to correct federal income tax actually withheld from employees. 5a. Check the box on line 5a if your overreported tax includes each affected employee's share of social security and Medicare tax. You are certifying that you repaid or reimbursed to the employees their share of prior year social security and Medicare tax and you received written statements from those employees stating that they did not and will not receive a refund or credit for the prior year taxes. 5b. Check the box on line 5b if your overreported tax includes each affected employee's share of social security and Medicare tax and you have not yet repaid or reimbursed the employee share of taxes. You are certifying that you received consent from each affected employee to file a claim on the employee share of those taxes and you received written statements from those employees stating that they did not and will not receive a refund or credit for the prior year taxes. Example. The following is an example of the consent and written statement that is required from employees when you are filing a claim for refund and have not yet paid or reimbursed the employee share of taxes. Employee name Employer name I give my consent to have my employer (named above) file a claim on my behalf with the IRS requesting $_________ in overcollected social security and Medicare taxes for 20___. I have not claimed a refund of or credit for the overcollected taxes from the IRS, or if I did, that claim has been rejected; and I will not claim a refund or a credit of the amount. Employee signature Date Do not send these statements to the IRS. Keep them for your records. In certain situations, you may not have repaid or reimbursed your employees or obtained their consents prior to filing a claim, such as in cases where the period of limitations on credit or refund is about to expire. In those situations, file Form 941-X, but do not check a box on line 5. Tell us on line 21 that you "have not repaid or reimbursed employees or obtained consents." However, you must certify that you have repaid or reimbursed your employees or obtained consents before the IRS can grant the claim. 5c. Check the box on line 5c to certify that your overreported tax is only for the employer share of social security and Medicare tax. Affected employees did not give you consent to file a claim for refund for the employee share of social security and Medicare tax, they could not be found, or would not (or could not) give you a statement described on line 5b. 5d. Check the box on line 5d to certify that your overreported amount is only for federal income tax, social security tax, and Medicare tax that you did not withhold from your employees.
If a correction that you report in column 4 includes both underreported and overreported amounts (see the instructions for line 19), give us details for each error on line 21. Because special circumstances apply for lines 11 through 14 and 16 through 17b, read the instructions for each line carefully before entering amounts in the columns. If you previously adjusted or amended Form 941 using Form 941c, Form 941-X, Form 843, an "amended" Form CAUTION 941, by filing a "supplemental" Form 941, or because of an IRS examination change, show amounts in column 2 that include those previously reported corrections.
If you are correcting the wages, tips, and other compensation you reported on line 2 of Form 941, enter the total corrected amount for ALL employees in column 1. In column 2, enter the amount you originally reported. In column 3, enter the difference between columns 1 and 2. This line does not apply to Form 941-SS. If you (or the IRS) previously corrected the amount reported on line 2 of Form 941, enter in column 2 the amount after any previous corrections.
line 6 (column 1) -line 6 (column 2) line 6 (column 3)
If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.
Example -- Wages, tips, and other compensation increased: You reported $9,000 as total wages, tips, and other compensation on line 2 of your 2008 third quarter Form 941. In July of 2009, you discovered that you had overlooked $1,000 in tips for one of your part-time employees. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 2 of Form 941) Column 3 (difference) 10,000.00 - 9,000.00 1,000.00
Example -- Wages, tips, and other compensation decreased: You reported $9,000 as wages, tips, and other compensation on line 2 of your 2008 fourth quarter Form 941. In December of 2009, you discovered that you included $2,000 in wages for one of your employees twice. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 2 of Form 941) Column 3 (difference) 7,000.00 - 9,000.00 - 2,000.00
Example -- Auto allowance; wages, tips, and other compensation increased: You paid one of your employees a $500 monthly auto allowance from October through December 2008 and did not treat the payments as taxable wages. However, in February 2009, you realized that the payments were wages because they were not reimbursements of deductible business expenses that were substantiated and paid under an accountable plan. Therefore, you must correct the error and treat the auto allowance as wages subject to income, social security, and Medicare taxes. Use Form 941-X to report the additional $1,500 of wages on line 6 and any underreported amounts on lines 8 and 10. For line 6 of Form 941-X only, there is no entry in
TIP column 4. Instead, use the amount in column 1 when
you prepare your Forms W-2 or Forms W-2c.
Part 3: Enter the Corrections for This Quarter.
In columns 1 and 2 of lines 6 through 10, show amounts for all of your employees, not just for those employees whose amounts you are correcting.
If you are correcting the federal income tax withheld from wages, tips, and other compensation you reported on line 3 of Form 941, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2. This line does not apply to Form 941-SS.
line 7 (column 1) -line 7 (column 2) line 7 (column 3)
the instructions for line 6, the wages that you counted twice were also taxable social security wages. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 5a of Form 941) Column 3 (difference) 7,000.00 - 9,000.00 - 2,000.00
Copy the amount in column 3 to column 4. Include any minus sign shown in column 3. Generally, you may correct federal income tax withholding errors only if you discovered the errors in CAUTION the same calendar year you paid the wages. However, you may correct federal income tax withholding errors for prior years if the amounts shown on Form 941 do not agree with the amounts you actually withheld, that is, an administrative error. See section 13 of Pub. 15 (Circular E) for more information about corrections during the calendar year and about administrative errors. Example -- Failure to withhold income tax when required: You were required to withhold $400 of federal income tax from an employee's bonus that was paid in December of 2008 but you withheld nothing. You discovered the error on March 15, 2009. You cannot file Form 941-X to correct your 2008 fourth quarter Form 941 because the error involves a previous year and the amount previously reported for the employee represents the actual amount withheld from the employee during 2008. Example -- Administrative error reporting income tax: You had three employees. In the fourth quarter of 2008, you withheld $1,000 of federal income tax from employee A, $2,000 from employee B, and $6,000 from employee C. The total amount of federal income tax you withheld was $9,000. You mistakenly reported $6,000 on line 3 of your 2008 fourth quarter Form 941. You discovered the error on March 16, 2009. This is an example of an administrative error that may be corrected in a later calendar year because the amount actually withheld from employees' wages differs from the amount reported on Form 941. Use Form 941-X to correct the error. Enter $9,000 in column 1 and $6,000 in column 2. Subtract the amount in column 2 from the amount in column 1.
Column 3 (difference) Tax rate (12.4%) Column 4 (tax correction) -2,000.00 x .124 -248.00
If you are correcting the taxable social security tips you reported on line 5b, column 1 of Form 941, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.
line 9 (column 1) -line 9 (column 2) line 9 (column 3)
Multiply the amount in column 3 by .124 (12.4% tax rate) and report that result in column 4.
line 9 (column 3) x .124 line 9 (column 4)
If the amount in column 3 used a minus sign, also use a minus sign in column 4.
Column 1 (corrected amount) Column 2 (from line 3 of Form 941) Column 3 (difference)
9,000.00 - 6,000.00 3,000.00
Report the 3,000.00 as a tax correction in column 4. Be sure to explain the reasons for this correction on line 21.
If you are correcting the taxable social security wages you reported on line 5a, column 1 of Form 941, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.
line 8 (column 1) -line 8 (column 2) line 8 (column 3)
Note. If you are correcting only the employer share of tax on a decrease to social security tips, use .062 (6.2%) when multiplying the amount shown in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, report the properly calculated amount in column 4. Be sure to show your calculations on line 21. Following the Example -- Wages, tips, and other compensation increased in the instructions for line 6, the tips that you overlooked were also taxable social security tips. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 5b of Form 941) Column 3 (difference) 10,000.00 - 9,000.00 1,000.00
Column 3 (difference) Tax rate (12.4%) Column 4 (tax correction) 1,000.00 x .124 124.00
Multiply the amount in column 3 by .124 (12.4% tax rate) and enter that result in column 4.
line 8 (column 3) x .124 line 8 (column 4)
Note. If you are correcting only the employer share of tax on a decrease to social security wages, use .062 (6.2%) when multiplying the amount shown in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, enter the properly calculated amount in column 4. Be sure to show your calculations on line 21. Example -- Social security wages decreased: Following Example -- Wages, tips and other compensation decreased in
If you are correcting the taxable Medicare wages and tips you reported on line 5c, column 1 of Form 941, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.
line 10 (column 1) -line 10 (column 2) line 10 (column 3)
Multiply the amount in column 3 by .029 (2.9% tax rate) and enter that result in column 4.
line 10 (column 3) x .029 line 10 (column 4)
In this example, you are claiming a credit for $2,700 in overreported tax for your 2008 second quarter Form 941. Always enter the same amount in column 4 (including any minus sign) that you enter in column 3. Be sure to explain the reasons for this correction on line 21.
Note. If you are correcting only the employer share of tax on a decrease to Medicare wages and tips, use .0145 (1.45%) when multiplying the amount in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, enter the properly calculated amount in column 4. Be sure to explain your calculations on line 21. Example -- Medicare wages and tips decreased: Following Example -- Wages, tips and other compensation decreased in the instructions for line 6, the wages that you counted twice were also taxable Medicare wages and tips. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 5c of Form 941) Column 3 (difference) 7,000.00 - 9,000.00 - 2,000.00
Do not use line 11 to report corrections to amounts reported on lines 7d through 7g of pre-2009 Forms 941.
12�14. Special Additions to Wages for Federal Income Tax, Social Security Tax, and Medicare Tax
Section 3509 provides special rates for the employee share of social security and Medicare taxes and income tax withholding when workers are reclassified as employees in certain circumstances. The applicable rate depends on whether you filed required information returns. An employer cannot recover any tax paid under this provision from the employees. The full employer share of social security and Medicare tax is due for all reclassifications. Note. Section 3509 rates are not available if you intentionally disregarded the requirements to withhold taxes from the employee, or if you withheld income tax but did not withhold social security and Medicare tax. Section 3509 rates are also not available for certain statutory employees. On lines 12, 13, and 14 enter only corrections to wages resulting from reclassifying certain workers as employees when section 3509 rates are used to calculate the taxes. Unlike other lines on Form 941-X, enter in column 1 only the corrected wages for workers being reclassified, not the amount paid to ALL employees. Enter previously reported wages to reclassified employees (if any) in column 2. To get the amount for column 4, use the applicable section 3509 rates. The tax correction in column 4 will be a positive number if you increased the amount of wages you previously reported. See the instructions for line 20 for more information. If you misreported the taxes from worker reclassification
Column 3 (difference) Tax rate (2.9%) Column 4 (tax correction) -2,000.00 x .029 -58.00
11. Tax Adjustments
Do not enter an amount on line 11 unless you need to correct any adjustments reported on lines 7a through 7c of a previously filed Form 941. Use line 11 to correct any adjustments shown on lines 7a through 7c. Add the corrected amounts on lines 7a through 7c. Enter that total in column 1. Add the originally reported or previously corrected amounts from lines 7a through 7c. Enter that total in column 2. In column 3, enter the difference between columns 1 and 2.
line 11 (column 1) -line 11 (column 2) line 11 (column 3)
TIP on line 7f or line 7g on a pre-2009 Form 941, you may
correct the amount using lines 12 through 14 of Form 941-X. Be sure to complete all of the columns and provide a detailed explanation on line 21.
You may need to report negative numbers in any
TIP column. Make sure that the difference you enter in
column 3 accurately represents the change to adjustments originally reported or previously corrected on lines 7a through 7c of Form 941. Copy the amount in column 3 to column 4. Include any minus sign shown in column 3. On line 21, describe what you misreported on Form 941. Tell us if your adjustment is for fractions of cents, third-party sick pay, tips, or group-term life insurance. Example -- Current quarter's third-party sick pay underreported: You reported $6,900 (shown as "-6,900.00") as a third-party sick pay adjustment (reduction to tax) on line 7b of your 2008 second quarter Form 941. You did not report any amounts on lines 7a and 7c. Your third-party sick pay adjustment should have been $9,600 (shown as "-9,600.00") because your third-party sick pay payer withheld that amount of social security and Medicare taxes from your employees. You discovered the error in April of 2009. To correct the error, figure the difference on Form 941-X as shown.
Column 1 (corrected amount) Column 2 (from line 7b of Form 941) Column 3 (difference) -9,600.00 - (6,900.00) -2,700.00
Combine the amounts on lines 7 through 14 of column 4. Example: You entered "1,400.00" in column 4 of line 7, "-500.00" in column 4 of line 8, and "-100.00" in column 4 of line 10. Combine these amounts and enter "800.00" in column 4 of line 15.
Line 7 Line 8 Line 10 Line 15 1,400.00 -500.00 -100.00 800.00
16. Advance Earned Income Credit (EIC) Payments Made to Employees
If you are correcting the advance earned income credit (EIC) payments made to your employees that you reported on line 9 of Form 941, enter the total corrected amount for ALL employees in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2. This line does not apply to Form 941-SS.
line 16 (column 1) -line 16 (column 2) line 16 (column 3)
Here is how you would enter the numbers on Form 941-X.
Column 1 (corrected amount) -9,600.00 Column 2 (from line 7b, Form 941) -6,900.00 Column 3 (difference) -2,700.00
Report "-2,700.00" as your correction in column 4.
Copy the amount in column 3 to column 4. However, to properly show the correction as a credit or balance due CAUTION item, enter a positive number in column 3 as a negative number in column 4 or a negative number in column 3 as a positive number in column 4. Remember, negative amounts in column 4 represent credits and positive amounts in column 4 represent additional tax. Examples: If line 16, column 3 shows "560.00," enter "-560.00" in column. 4. If line 16, column 3 shows "-990.00," enter "990.00" in column. 4. Example -- Advance EIC payments increased: You filed your 2008 fourth quarter Form 941 reporting zero (line left blank) on line 9. On February 17, 2009, you discovered that you forgot to report the $1,000 in advance EIC payments you made on behalf of John Smith, one of your employees. You made no other EIC payments for your other employees. This is an example of an administrative error. To correct the error, file Form 941-X showing the following.
Column 1 (corrected amount) Column 2 (from Form 941, line 9) Column 3 (difference)
1,000.00 0.00 1,000.00
Column 4 (tax correction) -1,000.00
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. If you owe tax and are filing a timely Form 941-X, do not file an amended Schedule B (Form 941) unless you were assessed an FTD penalty caused by an incorrect, incomplete, or missing Schedule B (Form 941). Do not include the tax increase reported on Form 941-X on any amended Schedule B (Form 941) you file. If you owe tax and are filing a late Form 941-X, that is, after the due date for Form 941 for the quarter in which you discovered the error, you must file an amended Schedule B (Form 941) with the Form 941-X. Otherwise, the IRS may assess an "averaged" FTD penalty. Payment methods. You may pay the amount you owe on line 18 electronically using the Electronic Federal Tax Payment System (EFTPS), by credit card, or by a check or money order. � The preferred method of payment is EFTPS. For more information, visit www.eftps.gov, call EFTPS Customer Service at 1-800-555-4477 toll free, or get Pub. 966, The Secure Way to Pay Your Federal Taxes. � To pay by credit card, visit the IRS website at www.irs.gov and click on the electronic IRS link. � If you pay by check or money order, make it payable to "United States Treasury." On your check or money order, be sure to write your EIN, "Form 941-X," and the quarter and year corrected.
Be sure to explain the reasons for this correction on line 21. See section 13 of Pub. 15 (Circular E) for more information about administrative errors and corrections CAUTION during the calendar year. The same rules that apply to withheld federal income taxes also apply to advance earned income credit (EIC) payments made to employees.
Do not use a federal tax deposit coupon (Form 8109 or Form 8109-B) to make a payment with Form 941-X.
17a. COBRA premium assistance payments
If you are correcting the total COBRA premium assistance payments reported on line 12a of Form 941, report on this line the COBRA premium assistance payments you made. Only report the premium assistance payments you made for the assistance eligible individuals who have paid their reduced premiums. This amount should be 65% of the total COBRA premiums for assistance eligible individuals without regard to the reduction. Do not include any amounts paid to you by the COBRA assistance eligible individuals. For COBRA coverage provided under a self-funded plan, COBRA premium assistance payments are treated as having been made for each assistance eligible individual who pays 35% of the COBRA premium.
You do not have to pay if the amount you owe is less than $1. Previously assessed FTD penalty. If line 18 reflects overreported tax and the IRS previously assessed a failure-to-deposit (FTD) penalty, you may be able to reduce the penalty. For more information, see the Instructions for Schedule B (Form 941).
Check the box on line 19 if any corrections you entered on lines 7 through 14 and line 16 in column 3 reflect both underreported and overreported amounts. Example: If you had an increase to social security wages of $15,000 for employee A and a decrease to social security wages of $5,000 for employee B, you would enter $10,000 on line 8, column 3. That $10,000 represents the net change from corrections. On line 21, you must explain the reason for both the $15,000 increase and the $5,000 decrease.
Enter the total number of individuals provided COBRA premium assistance payments reported on line 17a.
18. Total deposits and COBRA credit
Combine lines 15, 16, and 17a, and enter the result on line 18. Your credit. If the amount entered on line 18 is less than zero, for example, "-115.00," you have a credit because you overreported your federal employment taxes. � If you checked the box on line 1, include this amount on line 11 ("Total deposits") of Form 941 for the quarter during which you filed Form 941-X. (If you currently file Form 944 or Form 944-SS because your filing requirement changed, include the credit on line 10.) Do not make any changes to your record of federal tax liability reported on line 17 of Form 941 or Schedule B (Form 941), if your Form 941-X is filed timely. The amounts reported on the record should reflect your actual tax liability for the period. � If you checked the box on line 2, you are filing a claim for refund or abatement of the amount shown. If your credit is less than $1, we will send a refund or apply it only if you ask us in writing to do so. Amount you owe. You must pay the amount you owe when you file Form 941-X. You may not use any credit that you show
Check the box on line 20 if you reclassified any workers to be independent contractors or nonemployees. Also check this box if the IRS (or you) determined that workers you treated as independent contractors or nonemployees should be classified as employees. On line 21, give us a detailed reason why any worker was reclassified and, if you used section 3509 rates on lines 12 through 14, for any worker reclassified as an employee, explain why section 3509 rates apply and what rates you used. Return not filed because you did not treat any workers as employees. If you did not previously file Form 941 because you mistakenly treated all workers as independent contractors or as nonemployees, file a Form 941 for each delinquent quarter. On each Form 941 for which you are entitled to use section 3509 rates,
the top margin of page 1, � enter a zero on line 10 ("Total taxes after adjustment for advance EIC"), � complete the signature area, and � attach a completed Form 941-X (see instructions below). On each Form 941-X, � complete the top of Form 941-X, including the date you discovered the error, � enter the wage amounts in column 1 of lines 12 through 14, � enter zeros in column 2 of lines 12 through 14, � complete columns 3 and 4 as instructed in Part 3, � provide a detailed statement on line 21, and � complete the signature area. If you cannot use section 3509 rates (for example, because the workers you treated as nonemployees CAUTION were certain statutory employees), file a Form 941 for each delinquent quarter. Write "Misclassified Employees" in dark, bold letters across the top margin of page 1 of each Form 941. Complete Form 941 using the Instructions for Form 941. Attach a Form 941-X to each Form 941. Complete the top of Form 941-X, including the date you discovered the error, and provide a detailed explanation on line 21.
� write "Misclassified Employees" in dark, bold letters across
Form 941-X may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed. Alternative signature method. Corporate officers or duly authorized agents may sign Form 941-X by rubber stamp, mechanical device, or computer software program. For details and required documentation, see Rev. Proc. 2005-39. You can find Rev. Proc. 2005-39 on page 82 of Internal Revenue Bulletin 2005-28 at www.irs.gov/pub/irs-irbs/irb05-28.pdf.
A paid preparer must sign Form 941-X and provide the information in the Paid preparer's use only section of Part 5 if the preparer was paid to prepare Form 941-X and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give you a copy of the return in addition to the copy to be filed with the IRS. If you are a paid preparer, write your SSN or your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, write the firm's name and the EIN of the firm. You can apply for a PTIN using Form W-7P, Application for Preparer Tax Identification Number. You cannot use your PTIN in place of the EIN of the tax preparation firm. Generally, you are not required to complete this section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, advising the client on determining whether its workers are employees or independent contractors for federal tax purposes.
Treasury regulations require you to explain in detail the grounds and facts relied upon to support each correction. On line 21, describe in detail each correction you entered in column 4 on lines 7 through 14 and line 16. If you need more space, attach additional sheets, but be sure to write your name, EIN, quarter, and calendar year on the top of each sheet. You must describe the events that caused the underreported or overreported amounts. Explanations such as "social security and Medicare wages were overstated" or "administrative/payroll errors were discovered" are insufficient and may delay processing your Form 941-X because the IRS may need to ask for a more complete explanation. The following is the information we need in your explanation for each error you are correcting. � Form 941-X line number(s) affected � Date you discovered the error � Difference (amount of the error) � Cause of the error You may report the information in paragraph form. The following paragraph is an example. "The $1,000 difference shown in column 3 of lines 6, 8, and 10 was discovered on May 15, 2009, during an internal payroll audit. We discovered that we included $1,000 of wages for one of our employees twice. This correction removes the reported wages that were never paid." For corrections shown on lines 12 through 14, explain why the correction was necessary and attach any notice you received from the IRS.
Call 1-800-829-3676.
Visit the IRS website at www.irs.gov.
You may find the following products helpful when using Form 941-X. � Form W-2, Wage and Tax Statement � Form W-3, Transmittal of Wage and Tax Statements � Instructions for Forms W-2 and W-3 � Form W-2AS, American Samoa Wage and Tax Statement � Form W-2CM, Wage and Tax Statement (Northern Mariana Islands) � Form W-2GU, Guam Wage and Tax Statement � Form W-2VI, U.S. Virgin Islands Wage and Tax Statement � Form W-3SS, Transmittal of Wage and Tax Statements � Instructions for Forms W-2AS, W-2GU, W-2VI, and Form W-3SS � Form W-2c, Corrected Wage and Tax Statement � Form W-3c, Transmittal of Corrected Wage and Tax Statements � Instructions for Forms W-2c and W-3c � Instructions for Form 843 � Instructions for Form 941 � Instructions for Schedule B (Form 941) � Instructions for Form 941-SS � Pub. 15 (Circular E) � Pub. 80 (Circular SS) � Pub. 966, The Secure Way to Pay Your Federal Taxes
You must complete all three pages of Form 941-X and sign it on page 3. If you do not sign, processing of Form 941-X will be delayed. Who must sign the Form 941-X? Form 941-X must be signed by one of the following: � Sole proprietorship -- The individual who owns the business. � Corporation (including a limited liability company (LLC) treated as a corporation) -- The president, vice president, or other principal officer duly authorized to act. � Partnership (including an LLC treated as a partnership) or unincorporated organization -- A responsible and duly authorized member or officer having knowledge of its affairs. � Single member LLC treated as a disregarded entity for federal income tax purposes -- The owner of the LLC or a principal officer duly authorized to act. � Trust or estate -- The fiduciary.
Privacy Act and Paperwork Reduction Act Notice We ask for the information on Form 941-X to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Subtitle C, Employment Taxes, of the Internal Revenue Code imposes employment taxes on wages, including income tax withholding. This form is used to determine the amount of taxes that you owe. Section 6011 requires you to provide the requested information if the tax is applicable to you. Section 6109 requires filers and paid preparers to provide their identifying number. If you fail to provide this information in a timely manner, you may be subject to penalties and interest. You are 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 and records relating to a form or 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 section 6103. However, section 6103 allows or requires the IRS to disclose or give the information shown on your tax return to others as described in the Code. For example, we may disclose your information to the Department
of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. The time needed to complete and file Form 941-X will vary depending on individual circumstances. The estimated average time is:
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . Learning about the law or the form . . . . . . . . . . . . . Preparing and sending the form to the IRS . . . . . . . . 16 hr., 15 min. 30 min. 47 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making Form 941-X simpler, we would be happy to hear from you. You can write to: Internal Revenue Service, Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 941-X to this address. Instead, see Where Should You File? on page 2.