Which Process Should You Use for Form 941-X?

What Is the 941-X Form?

If you already filed Form 941 and need to make changes to it, you will submit Form 941-X to the IRS as the Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. To enable firms to “report changes to employment taxes and seek refunds of overpayment employment taxes,” the IRS developed X forms, such as 943-X, 944-X, 945-X, and CT-1X.

To make changes to Form 941-X, Form 941 must first have been submitted. When you are ready to apply for the ERTC and need to make changes to Form 941 that you previously submitted, you will use this form.

How and When to Use Form 941-X

There are various alternative ways to use this tax form. But they all involve amending Form 941 that you initially filed with the IRS. You might need to disclose or overreport or make a credible claim that you overlooked.

Making Up for Underpayments

As soon as you realize your Form 941 underpayment, you should correct the mistake. If you don’t submit an amended Form 941-X by the deadline for the subsequent payroll tax return filing, interest on underpayments may begin to accrue.

Getting Credit for Credits Missed

Employers may discover that they failed to claim a credit for which they were qualified. Whether they were unaware of it or failed to assign benefits effectively. Form 941-X is used to submit a refund claim, and you have three years from the initial return filing date or two years from the tax payment date to do so.

The Employee Retention Credit Claim

One credit that you can claim using Form 941-X is the ERTC. The ERTC is a refundable credit that is still available to eligible businesses for three more years after the program’s termination date of September 30, 2021. To claim the ERTC and revise the data you provided on Form 941, use Form 941-X.

You can correct any mistakes or changes on your Form 941 by using Form 941-X. Working with an ERTC specialist will help you learn more about this form and how to use it.

How to Choose the Right Process in 5 Easy Steps

The adjustment process and the claim process are the two ways to submit Form 941-X and fix a Form 941 error. The following five steps will assist you in selecting an approach:

1. Recognize Under and Overreported Incidents

For Form 941-X, you must first understand what underreported and overreported mean. A social security tax deferral or employment tax credit that is underreported is handled the same as an overreported tax amount.

A social security tax deferral or employment tax credit that is overreported is treated similarly to a tax amount that is underreported.

2. Recognize the Details of Each Procedure

When you want to apply a credit toward your payroll tax, which is due the following time you file Form 941, you must use the adjustment method. You are demanding a refund of the overstated tax amounts through the claim process.

3. If You Just Incorporate Underreported Tax Amounts…

If you are just included underreported tax amounts on Form 941-X, the adjustment procedure is applied. This indicates that on your subsequent Form 941 filing, you claim the credit against the payroll tax owed.

4. Incorporate Overreported Tax Amounts

Depending on when you file Form 941-X, either procedure may be necessary for overreported amounts. If you want the amount credited to Form 941 for the period you file, you must choose the adjustment method. Especially if you file more than 90 days before the period of limits on the credit. If you want the payment to be reimbursed to you or waived, choose the claimed method. You must follow the claim procedure if you file your claim within 90 days of the credit’s statute of limitations expiring.

5. For Tax Amounts Both Under- and Over-Reported

You must select a process if you include both underreported and overreported tax amounts on Form 941-X. If the result of combining underreported and overreported amounts is a balance due or creates a credit you’d like to apply, you must pick the adjustment method by filing Form 941-X more than 90 days before the period of limitations expires.

If you want the amount you overreported to be reimbursed or abated, you must select both procedures. The adjustment process for the underreported amount and the claim process for the overreported amount each require two forms to be submitted. You must use both the adjustment method and the claim process, one for underreported amounts and one for overreported amounts if you file within 90 days of the statute of limitations expires.

Depending on the type of repair you’re making and the time frame in which you’re doing it, you’ll employ a different procedure. Making sure you submit Form 941-X while you are still qualified to get the ERTC is crucial. If you have any concerns regarding this procedure, consult an ERTC specialist.

Drawbacks of Using Form 941-X

By following best practices, you can accurately complete Form 941-X to claim the ERTC and avoid missing anything or getting into difficulty with the IRS.

Your Form 941, which is the date you have enough information to fix the errors, must include the date you discovered the inaccuracies. This is when you would decide if you qualified for the ERTC and how much your credit would be.

Make Sure You Meet All ERTC Eligibility Requirements

You should keep in mind that you are still eligible to apply for the ERTC. Even if you obtained a Paycheck Protection Program (PPP) loan during the pandemic.

Check all of your calculations and information several times because even a simple tax form error can cause a delay in the processing of your credit.

Even if Form 941 needs to be corrected to claim the employee retention credit, tax reporting requirements might already be challenging. Speak with an ERTC expert who can provide you with detailed instructions on how to obtain your credit.

Ask Your Questions Right Now!

Even though the program’s deadline was in 2021, you still have time to apply for the ERTC. You can apply for the credit in the past using Form 941-X. So be sure to do it as soon as you learn you qualify.

The staff at Your Part Time Accountant is available to guide you through the process of figuring out if you’re eligible and how to apply for the credit. To learn more about your choices for employee retention credits, get in touch with us right away.