How to Correct IRS Form 941 Errors

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IRS Form 941 is the Employer's Quarterly Federal Tax Return. It must be filed each quarter by employers to report on income taxes and FICA taxes—Social Security and Medicare—that have been withheld from employees' pay. It also reports FICA taxes payable by the employer.

Form 941 is not a payment form. It documents the total amounts withheld from employee pay for both FICA taxes and federal income taxes for the previous quarter, the amounts payable by the employer for its share of FICA taxes, and amounts already deposited for these payroll taxes from the previous quarter

Form 941 must be submitted to the Internal Revenue Service within 30 days after the end of each quarter. 

Errors in Completing Form 941

The most common type of error made when completing Form 941 is entering the wrong amount in one of the boxes. 

According to the IRS, these errors include wages, tips, and other compensation, income tax withheld from wages, tips, and other compensation, taxable Social Security wages and tips, taxable Medicare wages and tips, taxable wages and tips subject to Additional Medicare Tax withholding, and credits for COBRA premium assistance payments for the extension of health care plans for terminated employees.

Errors in these amounts can lead to over-reporting which results in paying too much, or under-reporting and paying too little. You can choose to make an adjustment if you under-reported or if you both under-reported and over-reported. You can make a claim if you just over-reported.

You cannot make an adjustment and a claim on the same form. You must use separate 941X forms. 

How to Correct Errors on Form 941

The IRS requires businesses to report Form 941 errors on Form 941X, the Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. Form 941X is a stand-alone form that relates line-by-line to Form 941.

When to File Form 941

Form 941 is due on a quarterly basis at the end of the month following the end of the quarter. The first quarter of the year ending March 31 should be submitted by April 30, the second quarter ending June 30 should be submitted by July 31, the third quarter ending September 30 should be submitted by October 31, and the fourth quarter ending December 31 should be submitted by January 31 of the new year.

If the due date is a weekend or holiday, submit by the next business day. 

You can file Form 941X at any time you discover an error. You don't have to wait until the end of the quarter to file it with the next employment tax return.

Form 941X Overview

Form 941X has five sections. Section 1 asks if this form is for an adjusted return or for a claim. You can't check both.

Section 2 asks some questions to find out what you did, what you didn't do, and to get more details about why you're filing this form. 

Section 3 copies the original 941 form and asks you to correct the sections that were done incorrectly. You must include the total corrected amount, the previously reported amount, and the difference. Be sure to check your math as you complete this section. 

Section 4 asks for a detailed explanation of why you are making these corrections.

Section 5 requires your signature and the signature of a paid preparer if you used one. 

Completing Form 941X

You can only use the form for one quarter. If you're reporting errors for more than one quarter, you must use a separate form for each. 

The process differs slightly if you file less than 90 days from the expiration of the period of limitations on credits or refunds for Form 941 or more than 90 days from this date. The instructions included with the form explain what you must do in each circumstance. 

If your error affected employee withholding, you must obtain a written consent from each affected employee. You'll have to certify this statement:

"I have a written statement from each employee stating that he or she has not claimed (or the claim was rejected) and will not claim a refund or credit for the over-collection."

If you cannot get written consent from each employee, you can only make changes in the employer portion.

You must include a detailed explanation of how you determined your corrections.