How to Fill Out Form 941-X for the Employee Retention Credit
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The Employee Retention Credit is a refundable tax credit for employers equal to 50% of qualified wages (including allocable qualified health plan expenses) paid to employees after March 12, 2020 and before January 1, 2021.
If you are an employer who paid qualified wages to your employees during this time period, you may be eligible to claim the Employee Retention Credit. To claim the credit, you must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for
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Introduction
The Employee Retention Credit (ERC) is a refundable tax credit for eligible employers equal to 50% of qualifying wages (including allocable qualified health plan expenses) that they pay to their employees.
To claim the credit, employers must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, for each quarter in which they incur eligible payroll expenses. Form 941-X must be filed for each quarter no later than the due date of the return for the following quarter. For example, an employer that paid eligible wages in Quarter 1 of 2020 must file Form 941-X no later than July 31, 2020.
This guide will provide instructions on how to fill out Form 941-X.
What is Form 941-X?
Form 941-X is an amended version of Form 941, which is used by employers to report withheld federal income tax and Social Security and Medicare taxes. Form 941-X is used to make corrections to an employer’s previously filed Form 941. For example, if an employer discovers that they overstated the amount of taxes withheld from their employees’ paychecks, they would file a Form 941-X to correct the error.
When is Form 941-X filed?
Employers use Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, to correct information reported on their quarterly Form 941, Employer’s Quarterly Federal Tax Return.
Generally, employers file Form 941-X:
-To correct an overpayment of tax reported on Form 941;
-To adjust the amount of taxes due because of an earlier refund claim that was not allowed; or
-To claim a refund due to the employer being eligible for the employee retention credit.
Employers file Form 941-X for each quarter in the calendar year. The form must be filed within 3 years after the date on which the return was required to be filed or within 2 years after the date that the tax was actually paid, whichever period expires later.
How is Form 941-X filed?
Form 941-X is filed by amending an employer’s quarterly federal tax return, Form 941. The form and instructions can be found on the IRS website.
To file Form 941-X, the employer must:
1. Complete Part I of the form to identify the employer, the tax return being amended, and the tax period being amended.
2. In Part II of the form, calculate the amount of credit that is being claimed. The IRS provides detailed instructions on how to calculate the credit.
3. Include a statement with Form 941-X detailing why the corrections are being made and how they were calculated.
4. Sign and date Form 941-X, and include the Employer Identification Number (EIN) of the business.
5. Mail Form 941-X to the address where Form 940 or Form 944 is normally filed. Do not send Form 941-X to the address where quarterly Forms 941 are normally sent.
What information is required on Form 941-X?
To complete Form 941-X, you’ll need to provide the following information:
-The name, address, and Employer Identification Number (EIN) of your business
-The tax period for which you’re filing the form
-The total number of employees you had during the tax period
-The amount of qualified wages paid to employees during the tax period
-The amount of credit claimed on the form
What are the consequences of not filing Form 941-X?
If you do not file Form 941-X, you will not be able to claim the employee retention credit. In addition, if you do not file Form 941-X and you are later audited, you may be subject to penalties and interest.
How can I get help with Form 941-X?
If you have questions about the Employee Retention Credit, you can call the IRS at 800-829-4933. You can also contact your local IRS office.
