The F941 Refund: Filing, Regulations, and Status Check

Employers who suffered revenue losses or were forced to shut down entirely or partially due to the COVID-19 outbreak were eligible for a very generous payroll tax credit from the Internal Revenue Service. From April 1, 2020, to September 30, 2021, the credit was available for wages paid. As well as recovery start-up enterprises that were eligible to claim it for all salaries paid through the end of 2021. Businesses that didn’t immediately claim the credit can do so by requesting an F941 refund.

You receive a financial reimbursement by filing Form F941 (or F-941). If you operate a pass-through business, such as a sole proprietorship or a partnership, you can use the return to pay for business expenses. But you can also keep the money yourself. Although requesting an F941 refund is rather simple, the refund process could take a while. Although it can be annoying, the wait is worthwhile.

This article will assist you by outlining the requirements and filing process for making an F941 refund claim.

An F941 Refund: What Is It?

Retroactive reimbursement of a COVID-19 payroll tax credit is known as an F941 refund.

To assist firms with reducing wage costs during the pandemic, the payroll tax credit was offered for the final three months of 2020 and the first three months of 2021. Employers were permitted to use the credit to reduce their payroll payments if they had claimed it on their initial payroll tax forms. If they had accumulated a credit, they wouldn’t need to make as many payroll deposits.

Refunds are available to those who failed to claim the credit on their 941 forms submitted in 2020 and 2021. However, they have to wait for the IRS to deliver them their refund. As it was for folks who claimed it on their original taxes, there won’t be an automatic credit.

Additionally, these firms must keep making payroll tax deposits. They are unable to deduct their payroll tax deposits from a prospective return.

How to File an F941 Refund Request

If you want to request an F941 refund, you must modify your 941 payroll tax forms. Before doing so, you should confirm that you are eligible for the credit. You can determine your eligibility with the aid of a tax expert or employee retention credit specialist.

Look for Form 941-X

An “X” is used by the IRS to designate a tax return that has been updated. If you want to modify a return, you should enter the same form number you initially submitted followed by an X.

This means that annual filers will use a 944-X while quarterly filers should use a 941-X. This only applies to businesses that make annual payroll tax payments of under $1,000.

Farmers and fishermen who typically report payroll taxes on Form 943 may utilize Form 943-X instead. Make sure you select the appropriate form in addition to the appropriate year. Every year, the IRS updates its forms.

Obtain a Form for Each Quarter You Wish to Modify

A separate 941-X form is required for every quarter you wish to update. As a result, you could need to submit up to six distinct forms: one for each of the final three months of 2020 and the first three months of 2021. Annual filers must submit a different form each year they submit a claim.

Copy the Information From Your Initial Filing

Form 941-X (or any other updated payroll tax form) should have the same essential data that was on your initial form. For example, the salary paid and deposits made each quarter will be the same. The only distinction will be that you’re requesting a credit rather than a refund.

Other adjustments can be made if necessary. Imagine, for instance, that you find out you made a mistake on your initial tax return. When you modify the return, you can fix that. However, if you’re merely refiling to claim the employee retention credit, you shouldn’t make any modifications.

Record the Day You Found the Mistakes

When you submit a corrected Form 941, make sure to include the date you found the mistakes. This usually applies when taxpayers discover a filing error and attempt to fix it by filing an amended return.

In this case, you must utilize the day on which you learned that you qualify for the employee retention credit. While it’s not a mistake, this is when you realized that your return needed to be amended.

Avoid these Common Mistakes When Checking on an F941 Refund

It can be annoying to wait for an F941 refund. Especially if you could need the extra money. Although you would like your return as soon as possible, there isn’t much you can do to hasten the process. By avoiding the following pitfalls, you can protect yourself.

  • Don’t send in any more forms. Sending superfluous forms can result in errors or longer processing delays.
  • Don’t yell at the IRS staff members. Although you may be upset, they don’t set the rules. If you do speak to a live person, try to remain cool.
  • Do not anticipate your accountant to be aware. Even your accountant doesn’t know when the IRS will catch up on the F941 refunds. They can only alter forms and tell you of processing delays.
  • Don’t lose heart. The IRS will finally process the form, even if it may take a while.

While you are awaiting your reimbursement, continue to deposit money into your payroll. Even when you are aware that the IRS has your money, you still cannot halt payroll deposits. There may be fines and penalties if these deposits are not made on time.

Call Your Part Time Accountant for Assistance with F941 Refunds

Refund claims under F941 might be challenging to make. It’s challenging for people, but it’s also challenging for tax experts who don’t frequently deal with this situation.

If you want to request an F941 reimbursement for wages earned during the COVID-19 outbreak, Your Part Time Accountant has the knowledge you need. We can assist you in filling out the necessary paperwork and determining your eligibility for the refund. Don’t miss the deadline or pass up this chance. To see if you are eligible, get in touch with us now.