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Claiming the Employee Retention Tax Credit Using Form 941-X

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You determined that your company is eligible for the employee retention credit (“ERC”) and you have calculated the 2020 ERC based on the qualified wages and qualified health plan expenses.   So how do I claim the credit and submit the appropriate paperwork to the IRS if you already filed Form 941? The answer is you need to file an amended 941 or Form 941-X . The details below will provide you with a high-level overview of the necessary line items that need to be completed as well as some tips to be aware of.

Preparing Form 941-X:

  • Use a separate Form 941-X for each Form 941 that you are correcting.  Complete the company information on each page, the “Return You’re Correcting” information in the upper right corner and enter the date you discovered the errors.
  • To claim the Employee Retention Credit as a refund on Form 941-X: a. Check Part 1, Box 2 b. Check Part 2, Box 5d
  • The total amount of the ERC is represented as a negative amount on Line 18 - Nonrefundable Portion and Line 26 – Refundable Portion. a. Worksheet 1 (included in the instructions to Form 941) is used to calculate the Nonrefundable Portion and Refundable Portion of the ERC. b. The Nonrefundable Portion of the ERC (as calculated on Worksheet 1) is the amount that applies against the Employer’s 6.2% share of Social Security tax.   c. The balance remaining is considered the Refundable Portion. d. Keep in mind, the total ERC is fully refundable using Form 941-X because the Employer’s 6.2% share of Social Security tax was paid with the original Form 941 when filed.
  • Qualified wages for the employee retention credit are reported on Form 941-X, Line 30.  Qualified health plan expenses allocable to the employee retention credit are reported on Form 941-X, Line 31.  The sum of Line 30 and Line 31 multiplied by the credit percentage of either 50% (2020) or 70% (2021) should equal the total ERC presented on Lines 18 and 26 (not considering other factors).
  • Line 37 should be used to describe the events that caused the overreported amounts (your eligibility for the credit). Your explanations should provide a significant amount of detail and should include the following elements: a. Form 941-X line number(s) affected. b. Date you discovered the error. c. Difference (amount of the error). d. Cause of the error.

Other Items to Consider:

  • Generally, you may correct overreported taxes (claim the ERC) 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.
  • We also suggest that you check with your payroll provider (if you use one) before you file Form 941-X.

The example above represents a simplified example of how to claim the ERC using Form 941-X.  There are many other factors to consider. To learn more about how the ERC applies to your company's specific circumstances, please reach out to your Meaden & Moore representative .

Based on revisions to the Form 941-X dated April 2022, numerous questions from clients, and our experience in applying for the employee retention credit (“ERC”), we are updating this the blog post with the most common questions that we have received and some answers to help you navigate the Form 941-X when claiming the employee retention credit.

  • How is the employee retention credit is presented on Form 941-X? The employee retention credit is presented on Line 18a and Line 26a of the April 2022 revised Form 941-X. The amount to be credited or refunded to you needs to be presented as a negative number in Column 4. A positive balance in Column 4 represents an amount that you owe.
  • How do I calculate the Nonrefundable Portion and Refundable Portion of the employee retention credit ? The employee retention credit nonrefundable and refundable amounts need to be calculated by following the worksheets that are included on page 28 and page 30 of the Form 941-X instructions. Worksheet 2 is used for qualified wages paid after March 12, 2020 and before July 1, 2021. The Nonrefundable Portion of the employee retention credit for this period is based on social security wages. The balance of the employee retention credit is considered the Refundable Portion. Worksheet 4 is used for qualified wages paid after June 30, 2021 and before January 1, 2022. The Nonrefundable Portion of the employee retention credit for this period is based on Medicare wages. The balance of the employee retention credit is considered the Refundable Portion. These worksheets are not filed with the IRS but should be retained as support. Both the nonrefundable and refundable amounts of the employee retention credit will be refunded to you so do not be confused by the wording “nonrefundable”.
  • How long do I have to apply for the employee retention credit? You may claim the employee retention credit using Form 941-X within 3 years of the date the original Form 941 was filed or 2 years from the date you paid the tax reported on Form 941, whichever is later.
  • How long does it take to get my employee retention credit check from the IRS? The answer is “I do not know.”. It seems like the larger the employee retention credit, the longer it takes theto IRS to review and approve the credit. But keep in mind that the IRS will pay you interest on the employee retention credit that is owed to you. You can also execute a Power of Attorney with your CPA firm. The CPA firm can then call the IRS’ “Our Practitioner Priority Service” support line at 1-800-860-4259 to check on the status of your employee retention credit.

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John Nicklas is a Vice President of the Assurance Service Group. He has 20+ years of experience serving accounting and business advisory needs.

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Step-by-Step How to Guide to Filing Your 941-X ERTC

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941 x worksheet

You're here because you want to file your Employee Retention Tax Credit 941-X payroll tax refund and get your money. 

This is a complex process. And without doing it right, you could be out thousands of dollars.

So, with that said... 

You have two options to file: 

  • Do it yourself.
  • Work with an experienced professional.  

Do it yourself. 

We've developed this step-by-step how to guide to help you understand and file your Employee Retention Tax Credit 941-X payroll tax refund. Please remember, this article was written as a general guide and is not meant to replace consulting with tax experts.

Work with an experienced professional. 

Filing your 941-X is complicated. 

So, if you want a professional that's successfully prepared and filed payroll tax returns for over twenty years to do it for you, schedule a free 10 min call to talk with an advisor .

During the free call, we will talk about:

  • How to see if you qualify.
  • How to find out how much money you may be owed. 
  • Transparent pricing for our services. 

Work with an experienced professional.

Step-by-Step Guide to Doing It Yourself

The 941-X tax refund form was created to help you amend the 941 Forms you filed in 2020 and 2021. Now that you’re allowed to have both your PPP loans AND ERTCs, you will need to revise your 941s that you filed with the IRS in previous quarters.

Download Now: Get your free copy of our Step-by-Step How to Guide to Filing  Your 941-X ERTC as a PDF document

Most small business owners will start calculating their ERC amounts in the first quarter of 2020, when the pandemic began. However, since the ERC credits started so late in the first quarter (began March 13, 2020), the IRS required all business to include the first quarter adjustments on with the second quarter adjustments, and file both on the second quarter 2020 941X.

Get your 941-X questions answered by the experts at Baron Payroll

For each quarter that you have qualified wages for the ERC, you will need to file amended 941x payroll tax returns to get your refund checks from the IRS.

If you haven’t applied for an ERC yet, all you need to do is file an amended Form 941X for the quarters you were an eligible employer.

IRS Forms 941, 941-X, and 5884-D Worksheet

IRS About Form 941 , Employer's Quarterly Federal Tax Return

IRS Instructions for Form 941-X

IRS 5884-D Worksheet

Form 941-X - Page 1

941-X-Page1

Make sure you fill-in the required info on page header, such as company name, EIN number, quarter and year.

Step 1: Determine which payroll quarters in 2020 and 2021 your business qualifies for.

Step 2: For all quarters you qualify for, get your original 941, a blank 941-X, and payroll journals for each quarter.

Step 3: Fill out your company info. Select the Return You’re Correcting (941), and the quarter and year you’re correcting.

Step 4: Select the calendar year of the quarter you’re correcting.

Step 5: Select the date you discovered errors in your 941 Form. You can use the date you complete this 941-X Form.

Step 6: In Part 1, select whether you’re doing an Adjusted employment tax return , or a claim – most likely you will select box 2, Claim .

Step 7: In Part 2, check box 3. Then check box 5d, stating that the claim is for tax I didn’t withhold from employee wages.

Form 941-X - Page 2

941-X-Page2

Step 8: On Page 2, Part 3, Line 18a, enter your nonrefundable portion of employee retention credit.

Form 941-X - Page 3

941-X-Page3

Step 9: On Page 3, Part 3, Line 23, combine the amounts on lines 7 through 22 of Column 4.

Step 10: On Page 3, Part 3, Line 26a, enter your refundable portion of employee retention credit.

Step 11: On Page 3, Part 3, Line 27, combine amounts on lines 23 – 26c of column 4 and enter total.

Step 12: On Page 3, Part 3, Line 30, enter your Qualified wages for the employee retention credit.

Form 941-X - Page 4

941-X-Page4

Under most situations, page 4 may be left blank.

Form 941-X - Page 5

941-X-Page5

Step 13: On Page 5, Part 4, Line 43, provide a detailed explanation of how you determined your correction. Such as: Amending return to apply for ERC Credits. Please send refund check to address on file.

Step 14: On Page 5, Part 5, complete and sign as required.

That’s it! You’re all done! Congratulations on filling out your 941-X Refund Form. Simply send the form to the IRS and wait for your refund check.

Baron Payroll’s ERC Resource Center

Contact us at Baron Payroll to learn more about Employee Retention Credits , and all other payroll issues .

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Whoops! Use IRS Form 941-X to Correct Errors Made on Your Quarterly Form

Picture this: You fill out your quarterly Form 941 and submit it to the IRS. Everything seems fine and dandy … until you realize you made a mistake on the form. The panic sets in, and you’re left wondering what to do. Instead of stressing about the blunder, learn how to use IRS Form 941-X to amend your original 941.

What is IRS Form 941-X?

Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, is the form employers use to correct errors on a previously filed IRS Form 941.

As a brief recap, employers use Form 941 , Employer’s Quarterly Federal Tax Return, to report employee wages and payroll taxes each quarter. On Form 941, you must report things like wages paid to employees, FICA (Social Security and Medicare) tax, and federal income taxes.

If you discover an error on a filed Form 941, file Form 941-X to correct the mistake. You can use IRS 941-X to correct the following:

  • 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
  • Taxable wages and tips subject to additional Medicare tax withholding
  • Qualified small business payroll tax credit for increasing research activities

Use Form 941-X to correct underreported and overreported amounts for the above. Do not file Form 941-X if you forgot to file Form 941. Instead, file Form 941.

You can only use Form 941-X for one quarter. For example, if you are reporting errors for Q2 and Q3, you must use a separate 941-X for each quarter.

what is form 941-x

Form 941-X instructions

To fill out Form 941-X, you need the following information:

  • Employer Identification Number ( EIN )
  • Business name
  • Trade name, if applicable
  • Business address

irs form 941-x

Specify the return you’re correcting by putting an “X” in the box next to Form 941. Check off the box next to the quarter you’re correcting (e.g., April, May, June for Quarter 2). Also include the calendar year of the quarter you’re correcting and the date you discovered the Form 941 errors.

irs form 941-x

Form 941-X has five parts. Review all parts and fill out the applicable information in each section when completing your form. Here is a breakdown of the five parts on Form 941-X:

  • Part 1 : Mark whether the form is for an adjusted employment tax return or claim (you can only check off one)
  • Part 2 : Complete the certifications and answer questions about why you’re filing the form.
  • Part 3 : Enter the corrections for this quarter. Include the total corrected amount, the previously reported amount, and the difference. Double-check your calculations in this section to ensure they are accurate.
  • Part 4 : Explain your corrections for this quarter.
  • Part 5 : Print and sign your name along with the date. Don’t fill out the “Paid Preparer Use Only” section if you did not use a paid preparer.

For more information about how to fill out Form 941-X, check out the IRS’s Instructions for Form 941-X.

Where to mail form 941-X

You can mail your completed 941-X form to the IRS. The mailing address you use depends on your business’s location. Check out the IRS’s “ Where to File Your Taxes ” table to find out where to mail your form.

What is the IRS Form 941-X due date?

The due date for filing Form 941-X depends on if you underreported or overreported tax.

Underreported tax

For underreported taxes, you can submit a Form 941 correction and pay taxes by the due date for the quarter when you discovered the error. The due dates for filing Form 941-X for underreported taxes are:

  • April 30 for errors discovered in Q1
  • July 31 for errors discovered in Q2
  • October 31 for errors discovered in Q3
  • January 31 for errors discovered in Q4

So, are there any penalties for underreported taxes? Typically, correcting an underreported amount will not result in penalties or interest as long as you do the following:

  • File Form 941-X by the due date
  • Pay the amount you owe (line 27) by the time you file
  • Enter the date you discovered the error
  • Explain your corrections in detail

You may have to pay interest if you knowingly underreported taxes, received a notice and demand for payment, or received a notice of determination under section 7436.

Overreported tax

For overreported taxes, you can submit Form 941-X within three years from the date you filed the incorrect Form 941, or within two years from the date you paid the tax reported on Form 941, whichever is later.

When it comes to overreported tax, you can either apply the overpaid taxes as a credit to Form 941 or claim a refund.

To apply the overpaid taxes as a credit to Form 941, file Form 941-X soon after you discover the error, but at least 90 days before the period of limitations expires (e.g., three-year period).

If you want to claim a refund for the overpaid taxes, file Form 941-X any time before the period of limitations expires.

Form 941-X and COVID-19

COVID-19 has shaken plenty of things up in the business world, including what you need to report on Forms 941 and 941-X. Thanks to COVID-19, the IRS revised Form 941-X and its instructions for the third and fourth quarters of 2020.

So, what kind of changes will you see on Form 941-X? Employers must now use line 24 to correct the deferral of the employer and employee share of Social Security taxes for Q3 and Q4 2020. In Q2 2020, line 24 was used to only correct the deferral of the employer share of Social Security tax .

Line 33 on Form 941-X also got revamped. However, line 33 was only renumbered to line 33a. And, the IRS added another line, 33b, to the form.

Use line 33a to report qualified wages paid March 13, 2020 – March 31, 2020 for the Employee Retention Credit for Q2 of 2020. Use line 33b to correct the portion of the deferred amount of the employee’s share of Social Security tax for the third and fourth quarters of 2020.

According to the IRS , employers can correct the following coronavirus-related information on the revised Form 941-X 2020:

  • Deferred amount of the employer share of Social Security tax
  • Deferred amount of the employee share of Social Security tax
  • Amounts reported on Form 941 for the qualified sick and family leave wage(s) credit, including adjustments to Form 941, lines 5a(i), 5a(ii), 11b, 13c, 19, and 20
  • Amounts reported on Form 941 for the Employee Retention Credit , including adjustments to Form 941, lines 11c, 13d, 21, and 22, (for the second quarter of 2020, also Form 941, lines 24 and 25).

Stop right there! Make sure you are using the correct version of the 2020 Form 941-X. Use the most recent version (Rev. October 2020) for quarters 3 and 4 of 2020.

For more information about correcting coronavirus-related information using a Form 941 amended return, contact the IRS.

We understand how painful running payroll can be. That’s why Patriot’s payroll software is easy-to-use, affordable, and built to save you time and money. Want to see what the hype is about? Try it out for free today with a no-obligation trial!

This article has been updated from its original publication date of May 19, 2011.

This is not intended as legal advice; for more information, please click here.

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How to Claim the Employee Retention Tax Credit using Form 941-X

You determined that your Company is eligible for the employee retention credit (“ERC”) and you have calculated the 2020 ERC based on the qualified wages and qualified health plan expenses.  So how do I claim the credit and submit the appropriate paperwork to the IRS if I already filed Form 941? The answer is you need to file an amended 941 or  Form 941-X . The details below will provide you with a high-level overview of the necessary line items that need to be completed as well as some tips to be aware of.

Preparing Form 941-X:

  • Use a separate Form 941-X for each Form 941 that you are correcting.  Complete the Company information on each page, the “Return You’re Correcting” information in the upper right corner and enter the date you discovered the errors.
  • To claim the Employee Retention Credit as a refund on Form 941-X: a. Check Part 1, Box 2 b. Check Part 2, Box 5d
  • The total amount of the ERC is represented as a negative amount on Line 18 – Nonrefundable Portion and Line 26 – Refundable Portion. a. Worksheet 1 (included in the instructions to the Form 941) is used to calculate the Nonrefundable Portion and Refundable Portion of the ERC. b. The Nonrefundable Portion of the ERC (as calculated on Worksheet 1) is the amount that applies against the Employer’s 6.2% share of Social Security tax.   c. The balance remaining is considered the Refundable Portion. d. Keep in mind, the total ERC is fully refundable using Form 941-X because the Employer’s 6.2% share of Social Security tax was paid with the original Form 941 when filed.
  • Qualified wages for the employee retention credit are reported on Form 941-X, Line 30.  Qualified health plan expenses allocable to the employee retention credit are reported on Form 941-X, Line 31.  The sum of Line 30 and Line 31 multiplied by the credit percentage of either 50% (2020) or 70% (2021) should equal the total ERC presented on Lines 18 and 26 (not considering other factors).
  • Line 37 should be used to describe the events that caused the overreported amounts (your eligibility for the credit). Your explanations should provide a significant amount of detail and should include the following elements: a. Form 941-X line number(s) affected. b. Date you discovered the error. c. Difference (amount of the error). d. Cause of the error.

Other Items to Consider:

  • Generally, you may correct overreported taxes (claim the ERC) 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.
  • We also suggest that you check with your payroll provider (if you use one) before you file Form 941-X.

The example above represents a simplified example of how to claim the ERC using Form 941-X.  There are many other factors to consider. To learn more about how the ERC applies to the specific circumstances of your Company, please  reach out to your Meaden & Moore representative .

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941x Instructions for the IRS Employee Retention Credit

  • Published By: Chad Silver
  • Last Updated: January 13, 2023
  • See More in: IRS Forms

Business tax forms can be complicated, especially if you need to make a change to one. Do you need to adjust one you’ve already submitted, such as IRS Form 941?

Employers use Form 941 to report the amount of income tax, Social Security tax, or Medicare tax they withhold from employee paychecks. 

This is a quarterly federal tax return document that also allows employers to pay their own share of Social Security or Medicare taxes. 

If you’re an employer who needs to make corrections to this form, then you will complete IRS Form 941X. This includes any adjustments required following changes made to COVID-19-related employment tax credits. 

The American Rescue Plan (ARP) changed the way employee retention credit should be applied within Form 941. Today, we’re sharing how to use Form 941X to make those changes and ensure you’re following the most recent tax laws when completing your returns. 

Understanding the IRS Employee Retention Credit

The IRS employee retention credit debuted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. 

It was put in place to motivate employers to keep employees on their payroll, despite the challenges they now faced in the wake of the coronavirus pandemic. To claim the credit, eligible employers reported all of their qualified wages, as well as applicable health insurance costs, to the IRS each quarter.

They would do so using their quarterly employment tax return, which was Form 941 for most companies. The IRS would apply the credit against the employer’s share of Social Security tax. If there was a refundable excess, it would be distributed under normal procedures.

Eligible employers could claim the credit, which was equal to 50% of up to $10,000 in qualifying wages, which included qualifying health plan costs. To qualify, the wages had to have been paid after March 12, 2020, and before January 1, 2021. 

This credit was extended under Section 3134 of the Internal Revenue Code, which was enacted by the ARP and amended by the Infrastructure Investment and Jobs Act (enacted November 15, 2021). Through this extension, the IRS employee retention credit was extended to wages paid after June 30, 2021, and before October 1, 2021. 

For employers designated as a recovery startup business, the timeline extended even further. These businesses could claim the IRS employee retention credit for wages that were paid after September 30, 2021, and before January 1, 2022.

What Is Form 941X?

Taxpayers can use Form 941X to make changes to the original Form 941 that they’ve already filed. As soon as you discover an error on Form 941, you must take the following actions:

  • Correct the error using Form 941X
  • File a separate Form 941-X for each Form 941 you need to correct

In most cases, you will file Form 941X separately from Form 941. The only exception would be if you never filed Form 941 in the first place because you treated your employees as non-employees and the form did not apply to you.

In that case, you may be able to file Form 941 and Form 941X simultaneously. If this scenario applies to you, be sure to contact your local experienced tax attorneys to learn more about how to proceed.

You can use Form 941X to edit and update the following parts of Form 941, among others:

  • Wages, tips, and compensation
  • Income tax withheld from wages, tips, and compensation
  • Taxable Social Security tips
  • Taxable Social Security wages
  • Taxable Medicare tips
  • Taxable Medicare wages
  • Taxable wages and tips associated with Additional Medicare Tax withholding

In addition, employers can also use Form 941X to change the amount of Social Security tax deferred from their share, as well as the deferred amount of the employee share. 

Why Does the IRS Need This Form?

The IRS relies on Form 941X to carry out its laws within the United States. The agency uses the data in this form to calculate and collect the right amount of tax from business owners . 

According to Subtitle C, Employment Taxes, of the IRS Code, employment taxes are imposed throughout the country. This includes federal income tax withholding on wages. 

Changing Amounts Reported for Credits

Employers can also use Form 941X to change the amounts originally reported to apply for certain credits. 

For instance, if you’re at the helm of a small business, you can use this form to apply for additional benefits, such as the Small Business Payroll Tax Credit . This credit provides qualifying companies with resources to increase research activities. 

You can also change the amounts previously reported for the following credits:

  • Qualified sick and family leave wages 
  • Employee retention credit 
  • COBRA premium assistance credit

Note that you will need to complete different sections and lines of the form depending on the amount you’re changing and the credit you’re claiming. The timeline of your submittal also matters.

For example, if you’re an employer changing the amount you reported for sick and family leave wages taken before April 1, 2021, then you’ll adjust the following lines on Form 941:

However, if you’re changing the amount reported for that credit using wages for leave taken after March 31, 2021, then you will adjust lines 11d, 13e, and 23-28.

Correcting Amounts Reported for the Employee Retention Credit

If you previously reported amounts on Form 941 for the employee retention credit, you may need to change or correct those. 

To begin, locate the information that you entered on the following lines on Form 941:

To make changes to any of those sections, you will adjust the following lines on Form 941x:

Again, however, timing matters. If you’re refiguring the employee retention credit for qualified wages paid  after March 12, 2020, and  before July 1, 2021, then you will calculate that amount using a designated worksheet.

However, if you’re refiguring the credit for qualified wages paid  after June 30, 2021, and  before January 1, 2022, you will reference a different worksheet.

While that can be complicated enough to follow, there’s another special consideration to keep in mind. If you want to correct qualified wages paid  after  June 30, 2021, you may also need to complete new line 31b. 

On that line, you will tell the IRS if you are eligible to receive the employee retention credit solely because your business is designated as a recovery startup business. 

It’s best to trust the intricate nature of these tax form adjustments to qualified tax attorneys who are well-versed in business tax consulting . 

Identifying the Correct Worksheets to Use

As mentioned, there are certain worksheets that business leaders will use to calculate how to amend the employee retention credit data on Form 941.

Worksheet 2 (03/12/2020 to 07/01/2021)

Reference Worksheet 2 if you claimed the employee retention credit for wages paid after March 12, 2020, and before July 1, 2021, and need to make changes to it now. 

You will also use this worksheet to configure this credit if you are claiming it for the very first time on Form 941X.

Using Worksheet 2 to Update Form 941X: Non-Refundable Portion 

When adjusting Form 941, it’s important to distinguish between refundable and non-refundable portions. The non-refundable portion centers on credit adjustments associated with the Paycheck Protection Program (PPP).

You can use Worksheet 2 if you didn’t claim the correct credit amount because your business also received a Small Business Interruption Loan under the PPP. 

Originally, employers who accepted these loans were deemed ineligible from claiming the employee retention credit. However, Section 206(c) of the Taxpayer Certainty and Disaster Tax  Relief Act of 2020 removed this restriction. 

Now, eligible employers can claim the credit on any qualified wages that they don’t designate as payroll costs when obtaining PPP loan forgiveness. Wages eligible for the employee retention credit  or  PPP loan forgiveness can be applied to either program, but they cannot count toward both. 

If you need to update Form 941 to reflect those changes, you will use Worksheet 2.

If you’re correcting the non-refundable portion of the credit for qualified wages paid after March 12, 2020, and before July 1, 2021, the original amount you entered is located on Form 941, Line 11c. 

Using Worksheet 2, enter the total corrected amount from Step 2, Line 2j in Column 1. Then, enter the amount you originally recorded in Column 2. Calculate the differences between Columns 1 and 2 and enter the difference in Column 3. 

You will need to copy the amount in Column 3 to Column 4, but change the positive number to a negative one to show the amount as a credit/balance due. If there’s already a negative number in Column 3, change it to a positive number in Column 4. 

Once you’ve followed the instructions in the worksheet and determined your adjusted amount, you will make those changes on Form 941X, Line 18a.

Using Worksheet 2 to Update Form 941X: Refundable Portion

You will use Worksheet 2 to make changes to the refundable portion of the employee tax credit that apply to qualified wages paid after March 12, 2020, and before July 1, 2021.

This amount is originally found on Form 941, Like 13d. 

To update it, enter the total corrected amount from Worksheet 2, Step 2, Line 2k in Column 1. Then, enter the amount you originally reported or previously corrected in Column 2. 

Calculate the difference between Columns 1 and 2 and add this amount to Column 3. Copy it to Column 4, but change the positive to a negative (or vice versa) to notate that a credit is due. Finally, enter the amount from Column 1 on Form 941X, Line 26a. 

Using Worksheet 2 to Update Form 941X: Qualified Health Plan Expenses 

In some cases, you may need to adjust the amount of qualified health plan expenses that you originally reported on Form 941, Line 22. These would be applicable to wages reported on Form 941, Line 21. 

If the changes to those health plan expenses occurred between March 31, 2020, and July 1, 2021, then you will use Worksheet 2 to calculate your new amount. 

To do so, enter the total corrected amount for all employees in Column 1 of the worksheet. In Column 2, enter the amount that you originally reported or previously corrected.

Then, calculate the difference between Columns 1 and 2, and enter that difference in Column 3. You’ll need to copy the amount from Column 3 to Column 4, but change the positive number to a negative number (or vice versa) to properly identify that a tax credit is due.

Finally, enter the corrected amount from Column 1, Worksheet 2, Step 2, Line 2b on Form 941X, Line 31a. 

Worksheet 4 (06/30/2021 to 01/01/2022)

Reference Worksheet 4 if you claimed the employee retention credit for wages paid after June 30, 2021, and before January 1, 2022, and need to make changes to it now. 

Like Worksheet 2, you can also use Worksheet 4 to configure the credit if you are claiming it for the first time on Form 941X.

Using Worksheet 4 to Update Form 941X: Qualified Wages

You can also report changes to qualified wages for the employee retention credit for the time period associated with Worksheet 4.

To do so, enter the total corrected amount from Worksheet 4, Step 2, Line 2i, in Column 1. Enter the amount you originally reported or corrected previously in Column 2. 

Calculate the difference between Columns 1 and 2, and enter it in Column 3. Then, transfer the number from Column 3 to Column 4, changing the positive to a negative (or vice-versa) as required. 

Enter the amount from Column 1 on Form 941X, Line 30.

Using Worksheet 2 to Update Form 941X: Qualified Health Plan Expenses

If you are making changes to your qualified health plan expenses and those changes are allocable to wages paid after June 30, 2021, and before January 1, 2022, then you will use Worksheet 4 to calculate your new amount. 

To do so, enter the corrected amount from Column 1, located on Worksheet 4, Step 2, line 2b, on Form 941X, Line 31a.

Change Your Employee Retention Credit on Form 941X

As you can see, the IRS Employee Retention Credit can be challenging to navigate on your own. It becomes even more complicated if you need to make changes related to the credit on Form 941X. There are many calculations to make, columns to cross-reference, and fields to complete.

While you could tackle it on your own, we’re here to provide the valuable, expert tax advice you need. Our team of trusted tax attorneys can help you break through the jargon and understand your next steps more clearly.

Contact Silver Tax Group today to discuss your tax-related questions and get started. 

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How to File IRS Form 941-X: Instructions & ERC Guidelines

How to File IRS Form 941-X

Learn how eligible employers can amend a previously filed Form 941 to claim the ERTC’s fully refundable portion of all qualified wages paid. To receive your employee retention credit refund check, you are allowed to retroactively file Form 941-x for up to three years beyond your calendar quarter filing date.

Unless your business taxes are long overdue, you’ve most likely already filed your Employer’s Quarterly Federal Tax Return (IRS Form 941) for which you could have previously claimed the employee retention tax credit . On each quarterly Form 941 filed, you would have reported your federal income tax withholding from employee’s pay, including Social Security taxes and Medicare taxes.

The amount of employment taxes withheld as entered on form 941 will now be used to determine the refundable portion of your ERC claim. In some cases, owner wages can be considered qualified wages paid, as long as come from payroll rather than business profits.

If you haven’t yet filed your Form 941 yet, why not learn all about how to qualify for the ERC or simply take our 5 minute-quiz below to see if your are eligible?

ERC Quiz Questions

The internal revenue service Form 941-x is an adjusted Employer’s Quarterly Federal Tax Return Form. An employer is required to file an IRS 941X in the event of an error on a previously filed Form 941. The adjustments also entail administrative errors and alterations to employee retention tax credits.

All errors regarding federal tax liabilities reported on an already filed Form 941 can be corrected with Form 941X. These are steps to take if you detect an error on your original Form 941:

  • Utilize Form 941X to rectify tax-reported mistakes, such as overreported taxes or underreported tax amounts
  • File a different Form 941-X for each inaccurate Form 941

When using Form 941-X to make an ERC claim amendment to a previously filed form 941, you’ll most likely be required to edit or update the following entries:

  • Wages, tips, and compensation
  • Income tax withheld from wages, tips, and compensation
  • Taxable social security wages and taxable social security tips
  • Taxable Medicare wages and taxable Medicare tips
  • Taxable wages and tips associated with additional Medicare tax withholding

As an employer, you can also modify the deferred amount of Social Security tax deferred from your share and that of your employee using Form 941X.

Separate Form

Usually, you are expected to file Form 941X independent of Form 941. You are exempted if you have never documented Form 941, and there was no federal income tax withholding because your employees are non-staffs, and you were not expected to fill out the quarterly federal tax return form.

That being the case, you can concurrently file both Form 941 and Form 941X. Ensure to contact experienced tax attorneys in your locality within the tax period for further guidance if this pertains to you.

Are you tired of waiting for your IRS refund check to arrive, or concerned about a looming 9-12 month wait time? Then, why not look into an  ERC advance payment  where you can get paid in 2-4 weeks? We can also offer your business a free second opinion to make sure no money was left on the table in your initial claim.

Get Approved for an Employee Retention Credit Loan

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Secure your ERC advance through an easy 3-step process. First, get prequalified, then complete a four-minute funding application that’s quicker than finishing your morning cup of coffee.

Once your ERC loan is approved, you can then access funds within 24 hours, and spend them however you see fit.

Worksheet 2

An employer who claimed the ERC wages after March 12, 2020, and before July 1, 2021, will need to reference Worksheet 2. If it is your first time claiming the employee retention tax credit on Form 941X, you will need Worksheet 2 for credit configuration.

Non-Refundable Portion

Distinguishing between refundable and non-refundable tax credits is expedient when adjusting the Federal Tax Return form. The non-refundable portion is based on adjusted ERC connected to the Paycheck Protection Program (PPP).

Initially, businesses that had accepted small business loans were considered ineligible to claim the ERC. However, the clause was removed in the Taxpayer Certainty and Disaster Tax Relief Act of 2020. You can also benefit from payroll tax credit election if your business is at a startup with minimal or no income tax liability.

If your business collected a Small Business Interruption Loan under the Paycheck Protection Program and you cannot claim the correct credit amount, you can make use of Worksheet 2.

PPP Loan Forgiveness

Currently, eliigble employers are able to claim the Employee retention credit on any taxable wages and tips labeled as payroll costs during the PPP loan forgiveness procedure. Qualified wages can be applied either to ERC or PPP loan forgiveness . However, they cannot be used for both programs. Utilize Worksheet 2 to effect those changes on Form 941.

For correction on the non-refundable part of the Credit qualified wages paid between March 12 and July 1, check Line 11c on Form 941 for the actual amount you filed.

In the Column on Worksheet 2, input the total adjusted amount from step 2, Line 2j. After this, input the initial amount you recorded in Column 2. Then, enter the calculated differences between Columns 1 and 2 into Column 3.

For Column 4, enter the exact amount you got for Column 3. However, to indicate the amount as a Credit/balance due, you need to substitute the positive number in Column 3 with a negative when copying to Column 4. Howbeit, if the number in Column 3 is negative, convert it to positive in Column 4.

Now, after duly observing all the instructions in Worksheet 2, and you have ascertained the adjusted amount of federal tax liabilities reported on Form 941, the next step is to effect the changes. Enter the changes on Line 18a, Form 941X.

Refundable Portion

For the refundable portion of ERC that applies to qualified wages paid after March 12 and July 1, 2021, utilize Worksheet 2 to make necessary alterations.

You would originally find this amount in Line 13d of Form 941.

To change it, input in Column 1 the adjusted amount from worksheet 2, Step 2, Line 2k. Afterward, enter your previously adjusted amount in Column 2.

Then, as you earlier did for ERC non-refundable portion, calculate the disparity between the first and the second Column, and enter the amount in the third Column. Also, copy it to Column 4, and change the positive number to a negative number to positive to indicate Credit due. Lastly, go to Line 26a on Form 941X and input the amount from Column 1.

Health Expenses

Occasionally, the amount of your originally reported qualified Medicare expenses in Line 22 of Form 941 may require some alterations. The changes would apply to wages entered on Form 941, Line 21.

In this case, you will need to use Worksheet 2 to determine your new amount of qualified health plan expenses between March 2st and July 1st, 2021.

To do this, input in Column 1 the total adjusted amount for all employees. Go to Column 2 and input the actual or earlier adjusted amount.

After that, calculate the disparity between the first and the second Column, and enter the amount in the third Column. Also, copy it to Column 4, and change the positive number to negative or negative number to positive to indicate Credit due.

Lastly, on Line 31a of Form 941X, input the amount you have on Line 2b, Step 2, Column 1.

Worksheet 4

Worksheet 4 is to be referenced by employers needing to make immediate changes to claimed ERC for wages salaried between July 1, 2021, and December 31, 2022. Worksheet 4 is used similarly to worksheet 2; if you’re claiming the Credit for the first time, you can use Worksheet 4 for credit configuration.

Qualified Wages

You can as well record alterations to qualified wages for the ERC spanning the period ascribed to Worksheet 4.

You can do this by entering in Column 1 the total adjusted amount from Line 2i, Step 2, on Worksheet 4. Go to Column 2 and input the initially reported or earlier adjusted amount

Then calculate the disparity between Columns 1 and 2, and enter the amount in the third Column. Also, copy it to Column 4, and change the positive number to negative or the negative number to positive as required.

Finally, on Form 941X, Line 30, input the amount from Column 1.

In case of changes to the amount of your originally reported qualified Medicare expenses, with the alterations associated with wages salaried between July 1, 2021, and December 31, 2021, you will need to use Worksheet 4 to determine your new amount.

To do this, input the total adjusted amount you have in Column 1, Worksheet 4 on Line 31a of Form 941X.

Worksheet 1

While not related to an employee retention credit refund , the Paid Sick and Family Leave Credit is often referred to as the ERC for self-employed. Worksheet 1 allows you to calculate the recoverable and non-refundable components of paid sick and family leave wages, which you also need to file a Form 941-x to claim.

This somewhat unknown business tax credit , the IRS paid sick leave credit was first introduced in the Families First Coronavirus Response Act (FFCRA), then amended in the Disaster Tax Relief Act of 2020 to include leave taken before April 1, 2021.

941 x worksheet

IRS Finalizes Revised Versions of Form 941-X, Instructions

By Michael Trimarchi

Michael Trimarchi

Finalized versions of the further-revised Form 941-X , Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, and its instructions were released Nov. 13 by the IRS.

The form and instructions were not changed from recent draft versions.

The instructions, which were earlier revised in July, address additional changes to the form, including the modified Line 24, which now is used to correct data regarding deferrals of the employer and employee shares of Social Security tax for the third and fourth quarters of 2020. Form 941-X was last revised Oct. 2.

Additionally, Line 33 was renumbered as Line 33a ...

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For Retro ERC, Use Form 941-X

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Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, may be your key to getting all the Covid relief your business is entitled to. It’s a 30-page form and the rules are complex, but here are the basics.

First, understand how to use Form 941-X. According to the IRS: “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.”

Claiming the ERC

With that in mind, consider the special instructions for Form 941-X—and the worksheets it contains—as they relate to the ERC.

Worksheet #2:  You must use this worksheet if you claimed the employee retention credit for qualified wages paid after March 12, 2020, and before July 1, 2021, on your original Form 941 and you correct any amounts used to figure the employee retention credit for qualified wages paid after March 12, 2020, and before July 1, 2021. You’ll also use this worksheet to figure this credit if you’re claiming it for the first time on Form 941-X. If you’re a third-party payer, you must complete this worksheet for each client for which it is applicable, on a client-by-client basis.

Worksheet #4:  You must use this worksheet if you claimed the employee retention credit for qualified wages paid after June 30, 2021, and before January 1, 2022, on your original Form 941 and you correct any amounts used to figure the employee retention credit for qualified wages paid after June 30, 2021, and before January 1, 2022. As above, you’ll also use this worksheet to figure this credit if you’re claiming it for the first time on Form 941-X. If you’re a third-party payer, you must complete this worksheet for each client for which it is applicable, on a client-by-client basis.

These are just the basics. The details can get complicated, and the IRS estimates the recordkeeping involved takes over 31 hours. Call us so we can help you get everything you’re entitled to. Meanwhile, you can download  Form 941-X and its extensive instructions  from the IRS site.

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Your 2023 W-2 is now available. To access it, log into your Employee Self-Service portal (GMS Connect)

New 2024 Form 941 And Schedule Updates

New 2024 Form 941 And Schedule Updates

The Internal Revenue Service (IRS) has recently released the 2024 Form 941, Employer’s Quarterly Federal Tax Return, along with Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, and Schedule R, Allocation Schedule for Aggregate Form 941 Filers. These updated forms, along with instructions, are now available here.

As a business owner, learn how these changes will affect your tax reporting by reading on.

What Employers Should Know

Employers are advised to start using the March 2024 revision of Form 941 beginning with the first quarter of 2024. The IRS expects this revision to be utilized for all four quarters of the year. In addition, a notable change is the removal of COVID-19-related lines from the Form 941. This means the lines previously used to report COVID-19-related credits have been eliminated from the form. Employers will need to be mindful of this adjustment when completing their tax returns for 2024.

Form instructions update

The Form 941 instructions have been updated to align with the changes to the form. In addition, the updated instructions no longer include any worksheets. Employers should familiarize themselves with the revised instructions to ensure accurate completion of the form.

Implications

Employers are encouraged to familiarize themselves with the updated Form 941 and related schedules to ensure compliance with the latest reporting requirements. They may also need to review and adjust their internal processes and systems to accommodate the changes introduced in the updated forms. This could involve updating payroll and tax reporting software and training staff on the revised requirements to facilitate smooth and accurate reporting.

Where GMS Steps In

Given the dynamic nature of tax regulations, employers should stay informed about further updates or clarifications related to the revised forms. Regularly monitoring official IRS communications and updates can help employers stay ahead of any additional changes that may impact their tax reporting obligations.

However, partnering with a professional employer organization (PEO) like GMS is here to take on this administrative task that, let’s face it, you don’t want to worry about. Our HR experts offer comprehensive HR, payroll, and compliance solutions that provide small business owners with expertise in managing tax-related matters. Small business owners can leverage the resources of a PEO to ensure seamless adaptation to the revised forms and instructions. This allows business owners to focus on their core business operations, knowing their tax reporting requirements are being effectively managed. Stay on top of regulatory changes and partner with GMS – contact us today.

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IMAGES

  1. Step-by-Step How to Guide to Filing Your 941-X ERTC

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COMMENTS

  1. PDF Instructions for Form 941-X (Rev. April 2023)

    Form 941-X is used to correct errors on Form 941, Employer's Quarterly Federal Tax Return or Claim for Refund. Learn how to file Form 941-X, when to use it, and what worksheets to complete for different credits and adjustments.

  2. Claiming the ERC Using Form 941-X

    The employee retention credit nonrefundable and refundable amounts need to be calculated by following the worksheets that are included on page 28 and page 30 of the Form 941-X instructions. Worksheet 2 is used for qualified wages paid after March 12, 2020 and before July 1, 2021.

  3. PDF Instructions for Form 941-X (Rev. July 2020)

    Use the adjustment process. Check the box on line 1 to apply any credit (negative amount) from line 27 to Form 941 for the quarter during which you file Form 941-X. 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 27.

  4. PDF Form 941-X: Adjusted Employer's QUARTERLY Federal Tax ...

    Check the box on line 1. Pay the amount you owe from line. 27 by the time you file Form 941-X. For the claim process, file a second Form 941-X to correct the overreported amounts. Check the box on line 2. If you're filing Form 941-X You must use both the adjustment process and WITHIN 90 days of the the claim process.

  5. How To Fill Out Form 941-X For The ERC

    Next, move to page three of Form 941-X. On line 23, combine the amounts from column four of lines seven through 22. Move to line 26a and enter the refundable portion of your employee tax credit. Make sure to fill out all four columns for line 26a. Combine the amounts from column four of lines 23 through 26c.

  6. Step-by-Step How to Guide to Filing Your 941-X ERTC

    IRS Instructions for Form 941-X. IRS 5884-D Worksheet. Form 941-X - Page 1. Make sure you fill-in the required info on page header, such as company name, EIN number, quarter and year. Step 1: Determine which payroll quarters in 2020 and 2021 your business qualifies for. Step 2: For all quarters you qualify for, get your original 941, a blank ...

  7. IRS Form 941-X

    Use Form 941-X to correct underreported and overreported amounts for the above. Do not file Form 941-X if you forgot to file Form 941. Instead, file Form 941. You can only use Form 941-X for one quarter. For example, if you are reporting errors for Q2 and Q3, you must use a separate 941-X for each quarter. Form 941-X instructions

  8. PDF Form 941-X Quick Guide

    Form 941-X This quick guide highlights the sections related to the ERTC in the 941-X form. Employee Retention Tax Credit. Empower your future Form 941-X: (Rev. July 2021) Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund Department of the Treasury — Internal Revenue Service OMB No. 1545-0029

  9. How to Claim the Employee Retention Tax Credit using Form 941-X

    Use a separate Form 941-X for each Form 941 that you are correcting. Complete the Company information on each page, the "Return You're Correcting" information in the upper right corner and enter the date you discovered the errors. To claim the Employee Retention Credit as a refund on Form 941-X: a. Check Part 1, Box 2. b.

  10. 941x Instructions for the IRS Employee Retention Credit

    File a separate Form 941-X for each Form 941 you need to correct; ... 2021, the original amount you entered is located on Form 941, Line 11c. Using Worksheet 2, enter the total corrected amount from Step 2, Line 2j in Column 1. Then, enter the amount you originally recorded in Column 2. Calculate the differences between Columns 1 and 2 and ...

  11. How to File IRS Form 941-X: Instructions & ERC Guidelines

    For correction on the non-refundable part of the Credit qualified wages paid between March 12 and July 1, check Line 11c on Form 941 for the actual amount you filed. In the Column on Worksheet 2, input the total adjusted amount from step 2, Line 2j. After this, input the initial amount you recorded in Column 2.

  12. PDF Instructions for Form 941-X (Rev. July 2021)

    You must use this worksheet if you claimed the employee retention credit for wages paid after March 12, 2020, and before July 1, 2021, on your original Form 941 and you correct any amounts used to figure the employee retention credit for wages paid after March 12, 2020, and before July 1, 2021. You'll also use this worksheet to figure this ...

  13. Finalized Revised Form 941-X Instructions Issued by IRS

    Finalized instructions for the revised 2021 Form 941-X were issued Sept. 13 by the Internal Revenue Service. The instructions provide guidance for completing the updated Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, which has not been finalized. The draft Form 941-X, released July 22, contains multiple new ...

  14. PDF Instructions for Form 941 (Rev. March 2024)

    Refund, after filing Form 941, to claim the credit for qualified sick and family leave wages paid in 2024. Filing a Form 941-X before filing a Form 941 for the quarter may result in errors or delays in processing your Form 941-X. Reminders Use the March 2024 revision of Form 941 to report taxes for the first quarter of 2024; don't use an

  15. IRS Finalizes Revised Versions of Form 941-X, Instructions

    The finalized versions of the revised Form 941-X and its instructions were released by the IRS. The form and instructions were not changed from recent draft releases. Finalized versions of the further-revised Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, and its instructions were released Nov. 13 by the IRS.

  16. For Retro ERC, Use Form 941-X

    Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, may be your key to getting all the Covid relief your business is entitled to. ... Worksheet #2: You must use this worksheet if you claimed the employee retention credit for qualified wages paid after March 12, 2020, and before July 1, 2021, on your original Form ...

  17. PDF Form 941-X Quick Guide

    April 1, 2021 (Form 941 or 941-SS, line 13c). —.= See instructions 26a. Refundable portion of employee retention credit (Form 941 or 941-SS, line 13d). —. =. See instructions. 26b. Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 (Form 941 or 941-SS, line 13e). —.= See ...

  18. IRS Form 941 worksheets

    These changes are based on Form 8974 changes for the first quarter of 2023. Worksheet 1: Step 1. Line 1i - Enter the amount from Form 941, Part 1, line 11a (credit from Form 8974). Worksheet 2: Step 1. Line 1g - Enter the amount from Form 8974, line 16, for this quarter. Line 1h - Employer share of Medicare tax remaining.

  19. New 2024 Form 941 And Schedule Updates

    Friday, March 29, 2024. The Internal Revenue Service (IRS) has recently released the 2024 Form 941, Employer's Quarterly Federal Tax Return, along with Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, and Schedule R, Allocation Schedule for Aggregate Form 941 Filers. These updated forms, along with instructions, are now ...