Complete Form 941-X for 2021

1. What is Form 941-X?

Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund Form) is used to correct any errors made on Form 941. If you find an error on a previously filed Form 941, you must correct this error using Form 941-X.

Note: Be sure to file a separate Form 941-X for each tax period for which there was an error.

Criteria for Filing Form 941-X

The following information is required when filing Form 941-X:

• Underreported taxes - reporting less income or revenue than was actually received
• Overreported taxes - reporting more income or revenue than was actually received

If you are filing Form 941-x for underreported taxes, you must make a tax payment when you file the Form. When reporting overreported taxes, you can claim either a refund or an abatement for your next return.

2. When is Form 941-X Required?

You will need to file Form 941-X if you discover an error on a previously filed IRS Form 941. Use Form 941-X to correct:

• 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

You do not need to file a 941-X Form if your errors relate to the number of employees who received wages or Part 2 of Form 941.

Do I need to report 941 Schedule B errors on Form 941-X?

No. You can report errors on Form 941 related to the number of employees who received wages or the federal tax liabilities reported on Form 941. Don’t file Form 941-X for corrections on the Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors.

3. What are the changes to the Form 941-X for the 3rd quarter of 2021

Due to the changes under the American Rescue Plan (ARP), the Form 941-X has also changes related to the COVID-19 tax credits as follows:

• If there are any corrections to the Form 941, lines 11d, 13e, 23, 24, 25, 26, 27, and 28 (the credit for qualified sick and family leave wages for leave taken after March 31, 2021), they are reported on Form 941-X, lines 18b, 26b, 35, 36, 37, 38, 39, and 40, respectively.
• If there are any corrections to the Form 941, lines 11c, 13d, 21, and 22 (the employee retention credit), they are reported on Form 941-X, lines 18a, 26a, 30, and 31a, respectively. Note: Line 31b has to be checked if you are eligible for employee retention credit because of recovery startup business.
• If there are any corrections to the amounts reported on Form 941, lines 11e, 11f, and 13f, for the COBRA premium assistance credit, those are reported on Form 941-X, lines 18c, 18d, and 26c, respectively.

4. Errors that can be Corrected By Filing Form 941-X

• Underreported amounts ONLY
• Overreported amounts ONLY
• Both underreported and overreported amounts

5. Deadline to File Form 941-X

There is no specific deadline for filing Form 941-X. You must file this form when you find any errors in your previously submitted Form 941. However, a time frame is applicable to report overreported and underreported taxes.

The IRS calls this time frame a “period of limitations.” For the purpose of the period of limitations, 941 Forms for a calendar year are considered filed on April 15 of the succeeding year, even if they were filed before that date.

For overreported taxes, you should file Form 941-X within 3 years of the date that the original Form 941 was filed or 2 years from the date you paid the tax reported on Form 941.

For underreported taxes, you should file Form 941-X within 3 years of the date that the original Form 941 was filed.

6. Are there any penalties for underreporting taxes?

Typically, correcting an underreported amount will not subject you to penalties or interest if you follow these guidelines:

• File on time
• Pay the amount shown on Line 20 at the time you file the 941-X Form
• Enter the date you discovered the error
• Explain your corrections in detail

You will have to pay interest if:

• The underreported taxes are related to an issue raised in an examination of a prior period
• You knowingly underreported taxes
• You received a notice and demand for payment
• You received a Notice of Determination of Worker Classification

Note: If you receive this notice after filing your 941-X Form, reply with an explanation.

7. Where to mail Form 941-X?

The mailing address to which you should send your Form 941-X depends on your location.