The IRS Will Issue A Revised Form 941-X

This is what you need to know about the revised draft Form 941-X.

As you may know the deadline for Form 941, Employer’s Quarterly Federal Tax Return, was this past friday, July 31, 2020. 

On July 27, 2020, the IRS released a draft of the correction Form 941-X. Once this form is finalized, any employers who notice a mistake on their recently submitted Form 941, will need to complete this form.   

If you are overwhelmed by all the IRS changes that have been coming your way this tax year, don’t worry. The TaxBandits team is keeping track of these changes so you don’t have to! This is what you need to know about the revised draft Form 941-X.

First, let’s start out with some background information on this IRS corrections form. 

What is the Form 941-X?

The Form 941-X is a correction form that is designed to amend certain mistakes made on the Form 941, Employer’s Quarterly Federal Tax Return. This form should be used to correct any incorrect reporting on Form 941 as soon as they become apparent to the filer. 

The Form can be used to amend both the Form 941 and Form 941-SS.

Why Should You File Form 941-X? 

According to the following instructions from the IRS, the following mistakes must be corrected using Form 941-X:

  • Incorrect reporting of wages, tips, and other forms of compensation
  • Incorrect income tax withheld from said wages, tips, and other compensation
  • Taxable social security wages and tips
  • Taxable Medicare wages and tips
  • Taxable wages and tips subject to additional Medicare wages and tax withholding
  • Errors on the attached Form 8974, Qualified Small Business Payroll Tax For Increasing Research Activity
  • As of the second quarter of 2020, any errors regarding the COVID-19 tax credits.

Now that we have covered some background information regarding the Form 941-X, let’s dive into the revisions that this Form has undergone. 

What Revisions Have Been Made To Form 941-X? 

Much like the Form 941, the Form 941-X has undergone significant changes in relation to the COVID-19 tax credits that employers are able to take advantage of. This Form has been expanded to address the following tax credits:

  • Qualified Sick Leave Wages
  • Qualified Family Leave Wages
  • Employee Retention Credit 

The revised draft of Form 941-X has been expanded to 37 lines from it’s original 24 lines. When correcting these tax credits, filers will need to report the original amount reported, the correct amount of credits, and the difference between these amounts. 

Filers are not required to complete every line of this form, only the lines for which the amount reported needs to be amended. 

Let’s walk through this revised draft and make a note of all the additions. This form still has 5 sections including a full explanation of your corrections and the signature of the appropriate official being the last 2 sections on this form. 

The changes regarding COVID-19 tax credits can be found in Part III of the Form 941-X. 

Lines 9 and 10 of this draft now refer to qualified sick and family leave wages. 

Lines 17 and 18 now refer to the nonrefundable sick and family leave credits as well as the non refundable portion of the employee retention credit. 

Line 24 now refers to the amount of social security taxes that employers deferred in response to COVID-19. 

Line 25 refers to the refundable portion of family and sick leave credits. 

Line 26 refers to the refundable portion of the employee retention credits. 

Line 27 is the total of lines 23-36 regarding tax credits. 

Lines 28-34 are also new additions to the Form 941-X, they all refer to qualified expenses due to COVID-19. 

To see the full draft of Form 941-X, check out this link. 

Does TaxBandits Support Form 941-X? 

Yes, TaxBandits supports the current version of Form 941-X. Remember, this revised Form 941-X is only a draft and should not be treated officially or filed to the IRS.

The IRS is expected to finalize this form in the near future. As soon as an official revised Form 941-X becomes available, TaxBandits will support this revised form. 

In the meantime the TaxBandits team is revising our Form 941-X process to accommodate these changes. In the meantime, if you have yet to file your Form 941 for the second quarter of 2020, get started now with TaxBandits!

The best way to avoid further IRS penalties is to complete and transmit your Form 941 as soon as possible. Need a filing solution for Form 941-SS or Form 941-PR? TaxBandits has you covered. 

Form 941

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