How to File a 941-X for the Employee Retention Credit

Employers can file Form 941-X up to three years after the original payroll tax due date, which is normally April 15. The Employee Retention Credit (ERC) can only be filed using an IRS Form 941-X, “Employer's Adjusted Quarterly Federal Tax Return or Request for Refund”. A 941-X will be submitted separately for each calendar quarter for which the ERC is requested. While the original 941 forms are due on the last day of the month following the end of each quarter and, generally, amendments to federal tax returns must be filed within three years of the original due date, the 941-X amendments are a little different. If your Form 941 didn't request the correct amount for the 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. 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 haven't yet applied for an ERC, all you have to do is file a modified Form 941X for the quarters in which you worked as an eligible employer.

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. If you are another external payer who did not file Schedule R (Form 94) along 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.The portion of the credit used to cover the employer's share of social security tax is allowed in the first calendar quarter starting from the date the qualifying small business filed its income tax return. If you didn't check the box on line 18b of the Form 941 you originally filed and this question still doesn't apply, don't check the box on line 31b. However, if your only errors on Form 941 relate to the number of employees who received wages (Form 941, line) or to the federal tax liabilities reported on Form 941, Part 2, or in Schedule B (Form 94, Tax Responsibility Report for Biweekly Program Depositors), do not file Form 941-X.They can say that amendments can be submitted up to three years after the filing date of each quarterly payroll tax, resulting in a different deadline for applying for the ERC for each calendar quarter.

If you overreported taxes on Form 941, you can choose to file a request for a refund or reduction on Form 941-X any time before the expiration of the statute of limitations for credit or refund on Form 941. For each quarter in which you have a qualifying salary for the ERC, you will have to file 941 amended payroll tax returns to receive your refund checks from the IRS. This practical step-by-step guide is designed to help you understand and file your payroll tax refund from the 941-X Employee Withholding Tax Credit. If you request their consent to file a request for Social Security or Medicare taxes, you must inform your employees that you cannot request a refund of any additional Medicare taxes on their behalf.

Zachary Kadner
Zachary Kadner

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