Organizations can still apply for the Employee Retention Credit (ERC) by modifying their Form 941 X for the quarters in which they were eligible employers. Eligible businesses can file retroactive claims for salaries paid in previous tax quarters. This applies when the affected employees did not give their consent to file a request for reimbursement of the employee's share in Social Security and Medicare taxes, could not find them, or did not provide the return described in line 5b. You must check the box on line 2 if you have a credit (a negative amount) on line 2 and the limitation period for the credit or refund on Form 941 will expire within 90 days of the date you file Form 941-X.
However, you cannot file a Form 941-X to correct the incorrect amount of additional Medicare tax that was actually withheld from an employee the previous year, including the amount they paid on behalf of their employee, rather than deducting it from the employee's pay (resulting in additional taxable wages). If you filed the required informational statements for some employees but didn't file them for other employees, be sure to use the rates applicable to each employee when calculating the amounts in column 4 and show your calculations on line 43. If your Form 941 didn't request the correct amount for the Employee Retention Credit (ERC) because you received a small business interruption loan under the Paycheck Protection Program (PPP), you can file Form 941-X and complete worksheet 2 to request the correct amount of the credit. If you are another external payer who did not file Schedule R (Form 94) together with Form 941 because you did not meet these requirements, but who now file Form 941-X to declare these credits or the deferral of employer or employee participation in social security taxes for your clients, you must now file Schedule R (Form 94) and attach it to Form 941-X. If you didn't check the box on line 18b of the Form 941 you originally filed, but are now applying for the Employee Retention Credit as a recovering startup, check the box on line 31b.
If you checked the box on line 18b of the Form 941 that you originally filed and you are still qualifying for the Employee Retention Credit only because your company is a recovering startup, check the box on line 31b. You cannot use any credit shown on another Form 941-X to pay the amount you owe, even if you filed the request for the amount due and the credit at the same time. If you overreported taxes on Form 941 and chose to apply the credit to Form 941 or Form 944, file an adjusted return on Form 941-X shortly after discovering the error, but more than 90 days before the statute of limitations for the credit or refund on Form 941 expires.