Specific Instructions:

Part 1: Select ONLY One Process

Because Form 941-X may be used to file either an adjusted employment tax return or a claim for refund or abatement, you must check one box on either line 1 or line 2. Do not check both boxes.

1. Adjusted Employment Tax Return

Check the box on line 1 if you are correcting underreported amounts or overreported amounts and you would like to use the adjustment process to correct the errors.

If you are correcting both underreported amounts and overreported amounts on this form, you must check this box. If you check this box, any negative amount shown on line 20 will be applied as a credit (tax deposit) to your Form 941 or Form 944 for the period in which you are filing this form. See Example—You want your overreported tax applied as a credit to Form 941 above.

If you owe tax.   Pay the amount shown on line 20 by the time you file Form 941-X. Generally, you will not be charged interest if you file on time, pay on time, enter the date you discovered the error, and explain the correction on line 23.

If you have a credit.   You overreported employment taxes (you have a negative amount on line 20) and want the IRS to apply the credit to Form 941 or Form 944 for the period during which you filed Form 941-X. The IRS will apply your credit on the first day of the Form 941 or Form 944 period during which you filed Form 941-X. However, the credit you show on Form 941-X, line 20, may not be fully available on your Form 941 or Form 944 if the IRS corrects it during processing or you owe other taxes, penalties, or interest. The IRS will notify you if your claimed credit changes or if the amount available as a credit on Form 941 or Form 944 was reduced because of unpaid taxes, penalties, or interest.

  
Do not check the box on line 1 if you are either: (a) correcting overreported amounts and the period of limitations on credit or refund for Form 941 will expire within 90 days of the date you file Form 941-X, or (b) claiming a credit for COBRA premium assistance payments and you reduced your deposits in anticipation of the credit. Instead, in either case, check the box on line 2 to file a Form 941-X under the claim process. See Is There a Deadline for Filing Form 941-X, earlier. Also see the instructions for lines 19a and 19b, later.

2. Claim

Check the box on line 2 to use the claim process if you are correcting overreported amounts only and you are claiming a refund or abatement for the negative amount (credit) shown on line 20. Do not check this box if you are correcting any underreported amounts on this form.

You must check the box on line 2 if you have a credit and the period of limitations on credit or refund for Form 941 will expire within 90 days of the date you file Form 941-X. See Is There a Deadline for Filing Form 941-X, earlier.

The IRS usually processes claims shortly after they are filed. The IRS will notify you if your claim is denied, accepted as filed, or selected to be examined. See Pub. 556, Examination of Returns, Appeal Rights, and Claims for Refund, for more information.

Unless the IRS corrects Form 941-X during processing or you owe other taxes, penalties, or interest, the IRS will refund the amount shown on line 20, plus any interest that applies.

You may not file a refund claim to correct federal income tax or Additional Medicare Tax actually withheld from employees.

Part 2: Complete the Certifications

You must complete all certifications that apply by checking the appropriate boxes. If all of your corrections relate to underreported amounts, complete line 3 only; skip lines 4 and 5 and go to Part 3. If your corrections relate to overreported amounts, you have a duty to ensure that your employees' rights to recover overpaid employee social security and Medicare taxes that you withheld are protected. The certifications on lines 4 and 5 address the requirement to:

  • Repay or reimburse your employees for the overcollection of employee social security and Medicare taxes, or

  • Obtain consents from your employees to file a claim on their behalf.

3. Filing Forms W-2 or Forms W-2c

Check the box on line 3 to certify that you filed or will file Forms W-2 or Forms W-2c with the SSA, as required, showing your employees' correct wage and tax amounts. See the General Instructions for Forms W-2 and W-3 for detailed information about filing requirements. References to Form W-2 on Form 941-X and in these instructions also apply to Forms W-2AS, W-2CM, W-2GU, and W-2VI unless otherwise noted.

You must check the box on line 3 to certify that you filed Forms W-2 or Forms W-2c even if your corrections on Form 941-X do not change amounts shown on those forms. For example, if your only correction to Form 941 involves misstated tax adjustments (see the instructions for line 13, later), check the box on line 3 to certify that you already filed all required Forms W-2 and W-2c with the SSA.

4. Certifying Overreporting Adjustments

If you overreported federal income tax, social security tax, Medicare tax, or Additional Medicare Tax and checked the box on line 1, check the appropriate box on line 4. You may need to check more than one box. If you obtained written statements from some employees but you could not locate or secure the cooperation of the remaining employees, check all applicable boxes. Provide a summary on line 23 of the amount of the corrections both for the employees who provided written statements and for those who did not.

4a.   Check the box on line 4a if your overreported amount includes each affected employee's share of overcollected taxes. You are certifying that you repaid or reimbursed the employee's share of current and prior year taxes and you received written statements from the employees stating that they did not and will not receive a refund or credit for the prior year taxes. You are certifying that you adjusted federal income tax or Additional Medicare Tax withheld from employees for the current calendar year only.

Example.

The following is an example of the written statement that is required from employees.

Employee name

Employer name

I have received a repayment of $_________ as overcollected social security and Medicare taxes for 20___. I have not claimed a refund of or credit for the overcollected taxes from the IRS, or if I did, that claim has been rejected; and I will not claim a refund or a credit of the amount.

Employee signature

Date

   Do not send these statements to the IRS. Keep them for your records. Generally, all employment tax records must be kept for at least 4 years.

4b.   Check the box on line 4b to certify that your overreported amount is only for the employer share of taxes on those employees who you were unable to find or those who would not (or could not) give you a statement described on line 4a.

4c.   Check the box on line 4c to certify that your overreported amount is only for federal income tax, social security tax, Medicare tax, or Additional Medicare Tax that you did not withhold from your employees.

5. Certifying Claims

If you are filing a claim for refund or abatement of overreported federal income tax, social security tax, Medicare tax, or Additional Medicare Tax and checked the box on line 2, check the appropriate box on line 5. You may need to check more than one box. If you obtained written statements or consents from some employees but you could not locate or secure the cooperation of the remaining employees, check all applicable boxes. Provide a summary on line 23 of the amount of the corrections for both the employees who provided statements or consents and for those who did not. You may not file a refund claim to correct federal income tax or Additional Medicare Tax actually withheld from employees.

5a.   Check the box on line 5a if your overreported tax includes each affected employee's share of social security and Medicare taxes. You are certifying that you repaid or reimbursed to the employees their share of social security and Medicare taxes. For refunds of employee social security and Medicare taxes overcollected in prior years, you are certifying that you received written statements from those employees stating that they did not and will not receive a refund or credit for the prior year taxes.

5b.   Check the box on line 5b if your overreported tax includes each affected employee's share of social security and Medicare taxes and you have not yet repaid or reimbursed the employee share of taxes. You are certifying that you received consent from each affected employee to file a claim on the employee share of those taxes and you received written statements from those employees stating that they did not and will not receive a refund or credit for the prior year taxes.

Example.

The following is an example of the consent and written statement that is required from employees when you are filing a claim for refund and have not yet paid or reimbursed the employee share of taxes.

Employee name

Employer name

I give my consent to have my employer (named above) file a claim on my behalf with the IRS requesting $_________ in overcollected social security and Medicare taxes for 20___. I have not claimed a refund of or credit for the overcollected taxes from the IRS, or if I did, that claim has been rejected; and I will not claim a refund or a credit of the amount.

Employee signature

Date

Do not send these statements to the IRS. Keep them for your records. Generally, all employment tax records must be kept for at least 4 years.

In certain situations, you may not have repaid or reimbursed your employees or obtained their consents prior to filing a claim, such as in cases where the period of limitations on credit or refund is about to expire. In those situations, file Form 941-X, but do not check a box on line 5. Tell us on line 23 that you have not repaid or reimbursed employees or obtained consents. However, you must certify that you have repaid or reimbursed your employees or obtained consents before the IRS can grant the claim.

5c.   Check the box on line 5c to certify that your overreported tax is only for the employer share of social security and Medicare taxes. Affected employees did not give you consent to file a claim for refund for the employee share of social security and Medicare taxes, they could not be found, or would not (or could not) give you a statement described on line 5b.

5d.   Check the box on line 5d to certify that your overreported amount is only for federal income tax, social security tax, Medicare tax, or Additional Medicare Tax that you did not withhold from your employees.

Part 3: Enter the Corrections for This Quarter

What Amounts Should You Report in Part 3?

On lines 6–11, columns 1 and 2, show amounts for all of your employees, not just for those employees whose amounts you are correcting.

If a correction that you report in column 4 includes both underreported and overreported amounts (see the instructions for line 21, later), give us details for each error on line 23.

Because special circumstances apply for lines 12–17, 19a, and 19b, read the instructions for each line carefully before entering amounts in the columns.

If you previously adjusted or amended Form 941 by using Form 941-X or because of an IRS examination change, show amounts in column 2 that include those previously reported corrections.

6. Wages, Tips, and Other Compensation

If you are correcting the wages, tips, and other compensation you reported on Form 941, line 2, enter the total corrected amount for ALL employees in column 1. In column 2, enter the amount you originally reported. In column 3, enter the difference between columns 1 and 2. This line does not apply to Form 941-SS.

If you or the IRS previously corrected the amount reported on Form 941, line 2, enter in column 2 the amount after any previous corrections.

line 6 (column 1)      
- line 6 (column 2)      
line 6 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Example —Wages, tips, and other compensation increased.

You reported $9,000 as total wages, tips, and other compensation on line 2 of your 2014 first quarter Form 941. In May of 2014, you discovered that you had overlooked $1,000 in tips for one of your part-time employees. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) 10,000.00  
Column 2 (Form 941, line 2) - 9,000.00  
Column 3 (difference) 1,000.00  

Example —Wages, tips, and other compensation decreased.

You reported $9,000 as wages, tips, and other compensation on line 2 of your 2014 first quarter Form 941. In May of 2014, you discovered that you included $2,000 in wages for one of your employees twice. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) 7,000.00  
Column 2 (Form 941, line 2) - 9,000.00  
Column 3 (difference) -2,000.00  

Example—Auto allowance; wages, tips, and other compensation increased.

You paid one of your employees a $500 monthly auto allowance from October through December 2013, and did not treat the payments as taxable wages. In February 2014, you realized that the payments were wages because they were not reimbursements of deductible business expenses that were substantiated and paid under an accountable plan. You correct the error by treating the auto allowance as wages subject to income, social security, and Medicare taxes. Report the additional $1,500 of wages on lines 6, 8, and 10.

The amount on line 6, column 1, should be used on your Forms W-2 or Forms W-2c. This amount should also be used for any business expense deduction on your income tax return (or amended return) for wages paid.

7. Federal Income Tax Withheld from Wages, Tips, and Other Compensation

If you are correcting the federal income tax withheld from wages, tips, and other compensation you reported on Form 941, line 3, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2. This line does not apply to Form 941-SS.

line 7 (column 1)      
- line 7 (column 2)      
line 7 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Copy the amount in column 3 to column 4. Include any minus sign shown in column 3.

Generally, you may correct federal income tax withholding errors only if you discovered the errors in the same calendar year you paid the wages. However, you may correct federal income tax withholding errors for prior years if the amounts shown on Form 941 do not agree with the amounts you actually withheld, that is, an administrative error or if section 3509 rates apply. See section 13 of Pub. 15 (Circular E) for more information about corrections during the calendar year and about administrative errors. See section 2 of Pub. 15 (Circular E) for more information about section 3509.

Example—Failure to withhold income tax when required.

You were required to withhold $400 of federal income tax from an employee's bonus that was paid in December of 2013 but you withheld nothing. You discovered the error on March 15, 2014. You cannot file Form 941-X to correct your 2013 fourth quarter Form 941 because the error involves a previous year and the amount previously reported for the employee represents the actual amount withheld from the employee during 2013.

Example—Administrative error reporting income tax.

You had three employees. In the fourth quarter of 2013, you withheld $1,000 of federal income tax from employee A, $2,000 from employee B, and $6,000 from employee C. The total amount of federal income tax you withheld was $9,000. You mistakenly reported $6,000 on line 3 of your 2013 fourth quarter Form 941. You discovered the error on March 14, 2014. This is an example of an administrative error that may be corrected in a later calendar year because the amount actually withheld from employees' wages differs from the amount reported on Form 941. Use Form 941-X to correct the error. Enter $9,000 in column 1 and $6,000 in column 2. Subtract the amount in column 2 from the amount in column 1.

Column 1 (corrected amount) 9,000.00  
Column 2 (Form 941, line 3) - 6,000.00  
Column 3 (difference) 3,000.00  

Report the $3,000 as a tax correction in column 4.

Be sure to explain the reasons for this correction on line 23.

8. Taxable Social Security Wages

The 2011 and 2012 employee tax rate for social security was 4.2%.

If you are correcting the taxable social security wages you reported on Form 941, line 5a, column 1, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.

line 8 (column 1)      
- line 8 (column 2)      
line 8 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Multiply the amount in column 3 by .124 (.104 for corrections to a 2011 or 2012 return) and enter that result in column 4.

line 8 (column 3)    
x .124   (Use .104 for corrections to a 2011 or 2012 return.)
line 8 (column 4)   If the amount in column 3 used a minus sign, also use a minus sign in column 4.

Note.

If you are correcting only the employer share of tax on a decrease to social security wages, use .062 (6.2%) when multiplying the amount shown in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, enter the properly calculated amount in column 4. Be sure to show your calculations on line 23.

Example—Social security wages decreased.

Following Example—Wages, tips, and other compensation decreased in the instructions for line 6, the wages that you counted twice were also taxable social security wages. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) 7,000.00  
Column 2 (Form 941, line 5a, column 1) - 9,000.00  
Column 3 (difference) -2,000.00  

Use the difference in column 3 to determine your tax correction.

Column 3 (difference)   -2,000.00  
Tax rate (12.4%)   x .124  
Column 4 (tax correction)   -248.00  

Be sure to explain the reasons for this correction on line 23.

Note.

If the example above was for a correction to a 2011 or 2012 return, the amount in column 3 would be multiplied by .104.

9. Taxable Social Security Tips

The 2011 and 2012 employee tax rate for social security was 4.2%.

If you are correcting the taxable social security tips you reported on Form 941, line 5b, column 1, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.

line 9 (column 1)      
- line 9 (column 2)      
line 9 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Multiply the amount in column 3 by .124 (.104 for corrections to a 2011 or 2012 return) and report that result in column 4.

line 9 (column 3)    
x .124   (Use .104 for corrections to a 2011 or 2012 return.)
line 9 (column 4)   If the amount in column 3 used a minus sign, also use a minus sign in column 4.

Note.

If you are correcting only the employer share of tax on a decrease to social security tips, use .062 (6.2%) when multiplying the amount shown in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, report the properly calculated amount in column 4. Be sure to show your calculations on line 23.

Example—Social security tips increased.

Following the Example—Wages, tips, and other compensation increased in the instructions for line 6, the tips that you overlooked were also taxable social security tips. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) 10,000.00  
Column 2 (Form 941, line 5b, column 1) - 9,000.00  
Column 3 (difference) 1,000.00  

Use the difference in column 3 to determine your tax correction.

Column 3 (difference)   1,000.00  
Tax rate (12.4%)   x .124  
Column 4 (tax correction)   124.00  

Be sure to explain the reasons for this correction on line 23.

Note.

If the example above was for a correction to a 2011 or 2012 return, the amount in column 3 would be multiplied by .104.

10. Taxable Medicare Wages and Tips

If you are correcting the taxable Medicare wages and tips you reported on Form 941, line 5c, column 1, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.

line 10 (column 1)      
- line 10 (column 2)      
line 10 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Multiply the amount in column 3 by .029 (2.9% tax rate) and enter that result in column 4.

line 10 (column 3)      
x .029      
line 10 (column 4)   If the amount in column 3 used a minus sign, also use a minus sign in column 4.

Note.

If you are correcting only the employer share of tax on a decrease to Medicare wages and tips, use .0145 (1.45%) when multiplying the amount in column 3. If you are correcting both shares of tax for some employees and only the employer share for other employees, enter the properly calculated amount in column 4. Be sure to explain your calculations on line 23.

Example—Medicare wages and tips decreased.

Following Example—Wages, tips, and other compensation decreased in the instructions for line 6, the wages that you counted twice were also taxable Medicare wages and tips. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) 7,000.00  
Column 2 (Form 941, line 5c, column 1) - 9,000.00  
Column 3 (difference) -2,000.00  

Use the difference in column 3 to determine your tax correction.

Column 3 (difference)   -2,000.00  
Tax rate (2.9%)   x .029  
Column 4 (tax correction)   -58.00  

Be sure to explain the reasons for this correction on line 23.

11. Taxable Wages and Tips Subject to Additional Medicare Tax Withholding

If you are correcting the taxable wages and tips subject to Additional Medicare Tax withholding that you reported on Form 941, line 5d, column 1, enter the total corrected amount in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.

line 11 (column 1)      
- line 11 (column 2)      
line 11 (column 3)   If the amount in column 2 is larger than the amount in column 1, use a minus sign in column 3.

Multiply the amount in column 3 by .009 (0.9% tax rate) and enter that result in column 4.

line 11 (column 3)      
x .009      
line 11 (column 4)   If the amount in column 3 used a minus sign, also use a minus sign in column 4.

Generally, you may correct errors to wages and tips subject to Additional Medicare Tax withholding only if you discovered the errors in the same calendar year the wages and tips were paid to employees. However, you may correct errors to wages and tips subject to Additional Medicare Tax withholding for prior years if the amounts shown on Form 941 do not agree with the amounts you actually withheld, that is, an administrative error or if section 3509 rates apply.

Example—Failure to withhold Additional Medicare Tax when required.

Employee A's wages exceeded the $200,000 withholding threshold for Additional Medicare Tax in November 2014. The total wages paid to Employee A for 2014 were $225,000. You were required to withhold $225 ($25,000 x .009) but you withheld nothing and did not report an amount on line 5d of your fourth quarter 2014 Form 941. You discover the error on March 16, 2015. You cannot file Form 941-X to correct your 2014 fourth quarter Form 941 because the error involves a previous year and the amount previously reported for the employee represents the actual amount withheld from the employee during 2014.

Example—Administrative error reporting Additional Medicare Tax withheld.

Employee B's wages exceeded the $200,000 withholding threshold for Additional Medicare Tax in November 2014. The total wages paid to Employee B for 2014 were $225,000. You withheld $225 ($25,000 x .009) from the employee's wages. However, on your fourth quarter 2014 Form 941 you mistakenly reported $2,500 on line 5d, column 1, and Additional Medicare Tax withheld of $22.50 on line 5d, column 2. You discover the error on March 16, 2015. This is an example of an administrative error that may be corrected in a later calendar year because the amount actually withheld differs from the amount reported on Form 941. Use Form 941-X, line 11, to correct the error as shown below.

Column 1 (corrected amount) 25,000.00  
Column 2 (Form 941, line 5d, column 1) - 2,500.00  
Column 3 (difference) 22,500.00  

Use the difference in column 3 to determine your tax correction.

Column 3 (difference)   22,500.00  
Tax rate (0.9%)   x .009  
Column 4 (tax correction)   202.50  

Be sure to explain the reasons for this correction on line 23.

12. Section 3121(q) Notice and Demand—Tax on Unreported Tips

Enter any corrections, including amounts reported on Form 941, line 5e (for quarters ending in 2011 or 2012), and amounts reported on Form 941, line 5f (for quarters ending after 2012), to the tax due from a Section 3121(q) Notice and Demand on line 12. The IRS issues a Section 3121(q) Notice and Demand to advise an employer of the amount of tips received by employees who failed to report or underreported tips to the employer. An employer is not liable for the employer share of the social security and Medicare taxes on unreported tips until a Section 3121(q) Notice and Demand for the taxes is made to the employer by the IRS.

13. Tax Adjustments

Use line 13 to correct any adjustments reported on Form 941, lines 7–9. Enter in column 1 the total corrected amount for Form 941, lines 7–9.

Enter in column 2 the total originally reported or previously corrected amounts from Form 941, lines 7–9. In column 3, enter the difference between columns 1 and 2.

line 13 (column 1)    
-line 13 (column 2)    
line 13 (column 3)    

You may need to report negative numbers in any column. Make sure that the difference you enter in column 3 accurately represents the change to adjustments originally reported or previously corrected on Form 941, lines 7–9.

Copy the amount in column 3 to column 4. Include any minus sign shown in column 3.

On line 23, describe what you misreported on Form 941. Tell us if your adjustment is for fractions of cents, third-party sick pay, tips, or group-term life insurance.

Example—Current quarter's third-party sick pay underreported.

You reported $6,900 (shown as “-6,900.00”) as a third-party sick pay adjustment (reduction to tax) on line 8 of your 2013 second quarter Form 941. You did not report any amounts on lines 7 and 9. Your third-party sick pay adjustment should have been $9,600 (shown as “-9,600.00”) because your third-party sick pay payer withheld that amount of social security and Medicare taxes from your employees. You discovered the error in April of 2014. To correct the error, figure the difference on Form 941-X as shown.

Column 1 (corrected amount) -9,600.00  
Column 2 (Form 941, line 8) - (6,900.00)  
Column 3 (difference) -2,700.00  

Here is how you would enter the numbers on Form 941-X.

Column 1 Column 2 Column 3
(corrected amount) (Form 941, line 8) (difference)
-9,600.00 -6,900.00 -2,700.00

Report “-2,700.00” as your correction in column 4.

In this example, you are claiming a credit for $2,700 in overreported tax for your 2013 second quarter Form 941. Always enter the same amount in column 4 (including any minus sign) that you enter in column 3.

Be sure to explain the reasons for this correction on line 23.

14–17. Special Additions to Wages for Federal Income Tax, Social Security Tax, Medicare Tax, and Additional Medicare Tax

Section 3509 provides special rates for the employee share of income tax, social security tax, Medicare tax, and Additional Medicare Tax withholding when workers are reclassified as employees in certain circumstances. The applicable rate depends on whether you filed required information returns. An employer cannot recover any tax paid under this provision from the employees. The full employer share of social security tax and Medicare tax is due for all reclassifications.

Note.

Section 3509 rates are not available if you intentionally disregarded the requirements to withhold taxes from the employee, or if you withheld income tax but did not withhold social security and Medicare taxes. Section 3509 rates are also not available for certain statutory employees.

On lines 14–17 enter only corrections to wages resulting from reclassifying certain workers as employees when section 3509 rates are used to calculate the taxes.

If the employer issued the required information returns, use the section 3509 rates as follows.

  • For social security taxes, use the employer rate of 6.2% plus 20% of the employee rate of 6.2% (4.2% for 2011 and 2012), for a total rate of 7.44% (7.04% for 2011 and 2012) of wages.

  • For Medicare taxes, use the employer rate of 1.45% plus 20% of the employee rate of 1.45%, for a total rate of 1.74% of wages.

  • For Additional Medicare Tax; 0.18% (20% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax.

  • For income tax withholding, the rate is 1.5% of wages.

If the employer did not issue the required information returns, use the section 3509 rates as follows.

  • For social security taxes, use the employer rate of 6.2% plus 40% of the employee rate of 6.2% (4.2% for 2011 and 2012), for a total rate of 8.68% (7.88% for 2011 and 2012) of wages.

  • For Medicare taxes, use the employer rate of 1.45% plus 40% of the employee rate of 1.45%, for a total rate of 2.03% of wages.

  • For Additional Medicare Tax; 0.36% (40% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax.

  • For income tax withholding, the rate is 3.0% of wages.

Unlike other lines on Form 941-X, enter in column 1 only the corrected wages for workers being reclassified, not the amount paid to ALL employees. Enter in column 2 previously reported wages (if any) to reclassified employees. To get the amount for column 4, use the applicable section 3509 rates. If you filed the required information returns for some employees but did not file them for other employees, be sure to use the applicable rates for each employee when calculating the amounts in column 4 and show your calculations on line 23. The tax correction in column 4 will be a positive number if you increased the amount of wages you previously reported. See the instructions for line 22 for more information.

18. Subtotal

Combine the amounts from column 4 on lines 7–17.

Example.

You entered “1,400.00” in column 4 on line 7, “-500.00” in column 4 on line 8, and “-100.00” in column 4 on line 10. Combine these amounts and enter “800.00” in column 4 on line 18.

Line 7 1,400.00  
Line 8 -500.00  
Line 10 -100.00  
Line 18 800.00  

19a.Claiming or Correcting the COBRA Premium Assistance Credit

Effective for tax periods beginning after December 31, 2013, the COBRA premium assistance credit cannot be claimed on Form 941 or 941-SS. Instead, use Form 941-X, lines 19a and 19b, to claim the credit.

Enter 65% of the total COBRA premium assistance payments for all assistance eligible individuals in column 1. Report the premium assistance payments on this line only after the assistance eligible individual's 35% share of the premium has been paid. For COBRA coverage provided under a self-insured plan, COBRA premium assistance is treated as having been made for each assistance eligible individual who paid 35% of the COBRA premium. Do not include the assistance eligible individual's 35% of the premium in the amount entered on this line.

For tax periods ending before January 1, 2014, enter any COBRA premium assistance payments previously claimed on Form 941 or 941-SS, line 12a, in column 2. For tax periods beginning after December 31, 2013, enter -0- in column 2, unless you are correcting a COBRA premium assistance payment previously reported on a Form 941-X. If you or the IRS previously corrected the amount reported, the amount entered in column 2 should take into account all previous corrections.

Enter the difference between column 1 and 2 in column 3. Copy the amount in column 3 to column 4. However, to properly show the amount as a credit or balance due item, enter a positive number in column 3 as a negative number in column 4 or a negative number in column 3 as a positive number in column 4.

The COBRA premium assistance credit is treated as a credit on the first day of the return period (that is, January 1, April 1, July 1, or October 1). However, because the credit is now claimed on Form 941-X filed AFTER submission of the Form 941, an employer that reduces its required deposits in anticipation of the credit will receive a system-generated notice reflecting a balance due and associated penalties and interest, if applicable. The balance due, including any related penalties and interest, resulting from the reduction in deposits in anticipation of the credit will be abated when the credit is applied. Such abatement will generally occur without any further action from the employer. Alternatively, to prevent triggering a system-generated balance due notice, the employer can make its deposits without a reduction in anticipation of the COBRA premium assistance credit and follow these instructions for claiming the COBRA premium assistance credit.

For more information on the COBRA premium subsidy, visit IRS.gov and enter “COBRA” in the search box.

19b.Number of Individuals Provided COBRA Premium Assistance on line 19a

Enter the total number of assistance eligible individuals provided COBRA premium assistance in column 1. Count each assistance eligible individual who paid a reduced COBRA premium in the quarter as one individual, whether or not the reduced premium was for insurance that covered more than one assistance eligible individual. For example, if the reduced COBRA premium was for coverage for a former employee, spouse, and two children, you would include one individual in the number entered on line 19b for the premium assistance entered on line 19a. Further, each individual is reported only once per quarter. For example, an assistance eligible individual who made monthly premium payments during the quarter would only be reported as one individual on line 19b for that quarter.

For tax periods ending before January 1, 2014, enter the number of assistance eligible individuals provided COBRA premium assistance previously reported on Form 941 or 941-SS, line 12b, in column 2. For tax periods beginning after December 31, 2013, enter -0- in column 2, unless you are correcting a previously filed Form 941-X. If you or the IRS previously corrected the number of individuals reported, the number entered in column 2 should take into account all previous corrections.

20. Total

Combine the amounts on lines 18 and 19a of column 4 and enter the result on line 20.

Your credit.   If the amount entered on line 20 is less than zero, for example, “-115.00,” you have a credit because you overreported your federal employment taxes.
  • If you checked the box on line 1, include this amount on Form 941, line 11 (“Total deposits” line), for the quarter during which you filed Form 941-X or Form 944, line 8 (“Total deposits” line), for the year during which you filed Form 941-X. Do not make any changes to your record of federal tax liability reported on Form 941, line 14, or Schedule B (Form 941), if your Form 941-X is filed timely. The amounts reported on the record should reflect your actual tax liability for the period.

  • If you checked the box on line 2, you are filing a claim for refund or abatement of the amount shown.

  If your credit is less than $1, we will send a refund or apply it only if you ask us in writing to do so.

Amount you owe.   If the amount on line 20 is a positive number, you must pay the amount you owe by the time you file Form 941-X. You may not use any credit that you show on another Form 941-X to pay the amount you owe, even if you filed for the amount you owe and the credit at the same time.

  If you owe tax and are filing a timely Form 941-X, do not file an amended Schedule B (Form 941) unless you were assessed an FTD penalty caused by an incorrect, incomplete, or missing Schedule B (Form 941). Do not include the tax increase reported on Form 941-X on any amended Schedule B (Form 941) you file.

  If you owe tax and are filing a late Form 941-X, that is, after the due date for Form 941 for the quarter in which you discovered the error, you must file an amended Schedule B (Form 941) with the Form 941-X. Otherwise, the IRS may assess an “averaged” FTD penalty. The total tax reported on the “Total liability for the quarter” line of Schedule B (Form 941), must match the corrected tax (Form 941, line 10, combined with any correction reported on Form 941-X, line 18), less any previous abatements and interest-free tax assessments.

Payment methods.

You may pay the amount you owe on line 20 electronically using the Electronic Federal Tax Payment System (EFTPS), by credit or debit card, or by a check or money order.

  • The preferred method of payment is EFTPS. For more information, visit www.eftps.gov, call EFTPS Customer Service toll free at 1-800-555-4477 or 1-800-733-4839 (TDD), or see Pub. 966, Electronic Federal Tax Payment System: A Guide To Getting Started.

  • To pay by credit or debit card, visit the IRS website at  
    www.irs.gov/e-pay.

  • If you pay by check or money order, make it payable to “United States Treasury.” On your check or money order, be sure to write your EIN, “Form 941-X,” and the quarter and year corrected.

  You do not have to pay if the amount you owe is less than $1.

Previously assessed FTD penalty.

If line 20 reflects overreported tax and the IRS previously assessed a failure-to-deposit (FTD) penalty, you may be able to reduce the penalty. For more information, see the Instructions for Schedule B (Form 941).

Part 4: Explain Your Corrections for This Quarter

21. Correction of Both Underreported and Overreported Amounts

Check the box on line 21 if any corrections you entered on lines 7-19a, column 3, reflect both underreported and overreported amounts.

Example.

If you had an increase to social security wages of $15,000 for employee A and a decrease to social security wages of $5,000 for employee B, you would enter $10,000 on line 8, column 3. That $10,000 represents the net change from corrections.

On line 23, you must explain the reason for both the $15,000 increase and the $5,000 decrease.

22. Did You Reclassify Any Workers?

Check the box on line 22 if you reclassified any workers to be independent contractors or nonemployees. Also check this box if the IRS (or you) determined that workers you treated as independent contractors or nonemployees should be classified as employees. On line 23, give us a detailed reason why any worker was reclassified and, if you used section 3509 rates on lines 14–17, for any worker reclassified as an employee, explain why section 3509 rates apply and what rates you used.

Return not filed because you did not treat any workers as employees.   If you did not previously file Form 941 because you mistakenly treated all workers as independent contractors or as nonemployees, file a Form 941 for each delinquent quarter.

  On each Form 941 for which you are entitled to use section 3509 rates, complete the following steps.
  • Write Misclassified Employees in bold letters across the top margin of page 1.

  • Enter a zero on line 10 (“Total taxes after adjustments”).

  • Complete the signature area.

  • Attach a completed Form 941-X (see instructions next).

  On each Form 941-X complete the following steps.
  • Complete the top of Form 941-X, including the date you discovered the error.

  • Enter the wage amounts on lines 14–17, column 1.

  • Enter zeros on lines 14–17, column 2.

  • Complete columns 3 and 4 as instructed in Part 3.

  • Provide a detailed statement on line 23.

  • Complete the signature area.

  
If you cannot use section 3509 rates (for example, because the workers you treated as nonemployees were certain statutory employees), file a Form 941 for each delinquent quarter. Write “ Misclassified Employees ” in bold letters across the top margin of page 1 of each Form 941. Complete Form 941 using the Instructions for Form 941. Attach a Form 941-X to each Form 941. Complete the top of Form 941-X, including the date you discovered the error, and provide a detailed explanation on line 23.

23. Explain Your Corrections

Treasury regulations require you to explain in detail the grounds and facts relied upon to support each correction. On line 23, describe in detail each correction you entered in column 4 on lines 7-17 and 19a. Also use line 23 to describe corrections made on line 19b. If you need more space, attach additional sheets, but be sure to write your name, EIN, “Form 941-X,” the quarter you are correcting (for example, “Quarter 2”), and the calendar year of the quarter you are correcting on the top of each sheet.

You must describe the events that caused the underreported or overreported amounts. Explanations such as “social security and Medicare wages were overstated” or “administrative/payroll errors were discovered” are insufficient and may delay processing your Form 941-X because the IRS may need to ask for a more complete explanation.

Provide the following information in your explanation for each correction.

  • Form 941-X line number(s) affected.

  • Date you discovered the error.

  • Difference (amount of the error).

  • Cause of the error.

You may report the information in paragraph form. The following paragraph is an example.

The $1,000 difference shown in column 3 on lines 6, 8, and 10 was discovered on May 15, 2014, during an internal payroll audit. We discovered that we included $1,000 of wages for one of our employees twice. This correction removes the reported wages that were never paid.

For corrections shown on lines 14–17, column 3, explain why the correction was necessary and attach any notice you received from the IRS.

Part 5. Sign Here

You must complete all three pages of Form 941-X and sign it on page 3. If you do not sign, processing of Form 941-X will be delayed.

Who must sign the Form 941-X?   The following persons are authorized to sign the return for each type of business entity.
  • Sole proprietorship—The individual who owns the business.

  • Corporation (including a limited liability company (LLC) treated as a corporation)—The president, vice president, or other principal officer duly authorized to sign.

  • Partnership (including an LLC treated as a partnership) or unincorporated organization—A responsible and duly authorized member, partner, or officer having knowledge of its affairs.

  • Single member LLC treated as a disregarded entity for federal income tax purposes—The owner of the LLC or a principal officer duly authorized to sign.

  • Trust or estate—The fiduciary.

  Form 941-X may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.

Alternative signature method.   Corporate officers or duly authorized agents may sign Form 941-X by rubber stamp, mechanical device, or computer software program. For details and required documentation, see Rev. Proc. 2005-39. You can find Rev. Proc. 2005-39, 2005-28 I.R.B. 82, at www.irs.gov/irb/2005-28_IRB/ar16.html.

Paid Preparer Use Only

A paid preparer must sign Form 941-X and provide the information in the Paid Preparer Use Only section of Part 5 if the preparer was paid to prepare Form 941-X and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give you a copy of the return in addition to the copy to be filed with the IRS.

If you are a paid preparer, enter your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, enter the firm's name and the EIN of the firm. You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal. For more information about applying for a PTIN online, visit the IRS website at www.irs.gov/ptin. You cannot use your PTIN in place of the EIN of the tax preparation firm.

Generally, you are not required to complete this section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, advising the client on determining whether its workers are employees or independent contractors for federal tax purposes.

How Can You Order Forms, Instructions, and Publications from the IRS?

Visit the IRS website at www.irs.gov/formspubs.

Call 1-800-TAX-FORM (1-800-829-3676).

Additional Information

You may find the following products helpful when using Form 941-X.

  • Form W-2, Wage and Tax Statement

  • Form W-3, Transmittal of Wage and Tax Statements

  • General Instructions for Forms W-2 and W-3

  • Form W-2AS, American Samoa Wage and Tax Statement

  • Form W-2CM, Wage and Tax Statement (Northern Mariana Islands)

  • Form W-2GU, Guam Wage and Tax Statement

  • Form W-2VI, U.S. Virgin Islands Wage and Tax Statement

  • Form W-3SS, Transmittal of Wage and Tax Statements

  • Form W-2c, Corrected Wage and Tax Statement

  • Form W-3c, Transmittal of Corrected Wage and Tax Statements

  • Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit

  • Instructions for Form 843

  • Instructions for Form 941

  • Instructions for Schedule B (Form 941)

  • Instructions for Form 941-SS

  • Pub. 15 (Circular E), Employer's Tax Guide

  • Pub. 80 (Circular SS), Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands

  • Pub. 966, Electronic Federal Tax Payment System: A Guide To Getting Started


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