A Guide to Form 941 Corrections and Amendment Form 941-X

A closer look at the process of correcting quarterly payroll tax filings!

Stephanie Glanville | August 10, 2023 | Read time: 9 minute(s) | Corrections, Form 94x Series | No Comments

When it comes to completing your business’ quarterly payroll filing, you may be a pro, but mistakes can happen!

So, you are reviewing a previously filed Form 941, and you notice it…a dreaded error. You checked your records, you checked your calculations, how is this possible? Now what?

Don’t worry, there is no need to enter full panic mode. The IRS created an amendment form for this very reason. Just keep reading, in this blog, we will be covering the purpose of Form 941-X when it should be filed, and what kind of errors it can be used to correct.

Background Information: What Information is Reported on Form 941

Form 941 is a quarterly payroll tax form that certain businesses are required to file with the IRS. This form is used to report the amount of Medicare, social security, and income taxes that employers withhold from their employees’ wages, tips, and other compensation.

Form 941 is also used by employers to report their tax liability for the quarter and claim a payroll tax credit for increasing research activities. Form 941 has the following deadlines:

March 31st – First Quarter Deadline (January, February, March)
July 31st – Second Quarter Deadline (April, May, June)
October 31st – Third Quarter Deadline (July August, September)
January 31st – Fourth Quarter Deadline (October, November, December)

What is Form 941-X

Form 941-X is an amendment form for Form 941. This form allows employers to correct a variety of clerical errors made on a previously filed and accepted Form 941 or Form 941-SS (quarterly payroll form for employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands).

When employers notice an error on a previously filed Form 941, they should complete Form 941-X. There are only a few exceptions to this rule which we will cover later in the article. Employers must file a separate Form 941-X for each Form 941 that needs to be amended.

It is also important to mention that the IRS doesn’t allow for the e-filing of Form 941-X. After completing Form 941-X, it should be printed and mailed to the IRS.

What information can not be corrected by Filing Form 941-X

First, it is important to note that Form 941-X should never be used to correct amounts on a different type of payroll tax form. For example, if your business files Form 944, 945, or 943, Form 941-X will not help you file an amended tax return.

Remember, Form 941-X is designed to correct administrative errors only, you can’t correct tax withholding amounts if these were withheld incorrectly.

There are a few things that can not be corrected using Form 941-X, this includes,

Federal income tax withheld for prior years due to non-administrative errors.
Incorrect amount of additional Medicare tax withheld for a prior year.
If you failed to file Form 941 for a previous quarter, you should not file Form 941-X, instead, you must file the late 941 form.
If your only errors are related to the number of employees that you paid wages to.
Federal tax liabilities on 941 Schedule B

What Information Can be Corrected by Filing Form 941-X

Based on the IRS instructions for Form 941-X, the following information can be amended by filing a Form 941-X:

Wages, tips, and other compensation amounts
Taxable social security wages
Taxable social security tips
Taxable Medicare wages and tips
Taxable wages and tips subject to Additional Medicare Tax withholding
Deferred amounts of the employer’s share of social security tax
Deferred amounts of the employee share of social security tax
The qualified small business payroll tax credit for increasing research activities
Amounts reported on Form 941 for the credit for qualified sick and family leave wages for leave taken after March 31, 2020, and before April 1, 2021.
Amounts reported on Form 941 for the credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021.
Amounts reported on Form 941 for the employee retention credit
Amounts reported on Form 941 for the COBRA premium assistance credit.

When should Form 941-X be Filed?

While there is no set deadline for filing Form 941-X, the IRS recommends filing the amendment as soon as you notice errors on a previously filed Form 941.

If you have under-reported taxes on Form 941, you will need to file and pay the difference before the next quarterly deadline for the reporting period in which you discovered the error.

If you over-reported taxes on Form 941 and you want to apply the credit to Form 941, file an adjusted return on Form 941-X more than 90 days before the period of limitations on the credit, or the refund for Form 941 will expire.

Form 941-X and the Employee Retention Credit

Form 941-X can be used to claim the Employee Retention Credit (ERC). However, the IRS warns businesses to be very careful when claiming the ERC for past credits, especially if they are enlisting a third party to do this on their behalf.

While employers can no longer claim the credit for current quarters, they are able to claim the credit for qualified wages paid between March 12, 2020, and January 1, 2022. As long as employers use the IRS guidelines to ensure their eligibility, claiming this credit correctly can be a great benefit for their business.

However, there has been a huge rise in the number of third-party providers offering to help businesses claim the ERC for past quarters, here are some major red flags that businesses should be aware of when interacting with these companies.

The provider offers to give your business money up-front for the ERC refund.
The provider offers a quick turnaround on claiming the refund and receiving it.
The provider requires large up-front payments for their services.
The provider shares that TaxBandits handles your ERC refund and processing, this is a major red flag because TaxBandits DOES NOT advise on the ERC in any way.

While there are requitable companies out there, there are many scammers that see an advantageous opportunity. In this case, they may file for your business even if you are not eligible, or worse they may try to access your business’s information and make claims without your knowledge or permission.

You can find more information on reporting fraudulent activity to the IRS here.

TaxBandits Simplifies the Process of Form 941 Amendments

Need to correct certain information on a previously filed Form 941? TaxBandits has you covered! While the IRS doesn’t allow for the e-filing of Form 941-X, TaxBandits enables you to complete the form easily and electronically. Once completed, you can easily download and print the form from your TaxBandits account and mail it to the IRS mailing address.

Ready to get started?