How to Correct IRS Form 941 Errors

The IRS form 941 is for reporting information regarding taxes withheld from employees, and it is an important document that should be filled out correctly. However, IRS errors can occur and cause some employees to be under-withheld or over-withheld, and sometimes cause an employer to fail to withhold the right amount of money from an employee.


The IRS allows employers to take a credit against tax liabilities for the total wages paid during the year to eligible employees who remained on the payroll for at least a year after the employer filed the employer’s tax return.


Form 941 has been modified in 2020 to incorporate line items related to the tax credit.


Before moving ahead, let us first know about Form 941. 


What Is Form 941?


The IRS Form 941 is filed for employees of most US businesses that pay at least $1,000 in wages to employees during the quarter or $300 in wages during the quarter and have at least 200 employees. 


As a taxpayer, you are required to file Form 941, Employer’s Quarterly Federal Tax Return, if you have employees and make $1,000 or more per quarter. If the taxpayer’s accounting period is a calendar year, the return must be filed by the 15th day of the 4th month after the close of the taxpayer’s accounting period. If the taxpayer’s accounting period is a fiscal year, the return must be filed by the 15th day of the 4th month after the close of the taxpayer’s fiscal year.


As this form is used by the federal government to claim credit for tax withholding when you receive a bonus, Form 941 is also known as a W-2. If the bonus is not already included in your gross income, as is often the case, it may prompt you to file a Form W-2G or a Form W-3G based on your gross income from which to calculate your taxes.


Form 941-X to Correct Form 941 Errors


You must use Form 941-X to correct errors on Form 941. Form 941-X is like Form 941, but you fill it out specifically to correct errors. You must use Form 941-X to correct Form 941 errors. It is not an acceptable substitute for Form 941.


When a business submits Form 941-X to the IRS, it can enter the information it has received from the payer into the form. It must also enter any corrections to the information it has reported for the payer. Filing Form 941-X is a quick and easy way to report your mistakes and correct them.


What Can You Correct With Form 941-X?


Employers can use Form 941-X to correct:

  • Taxable social security wages
  • Taxable Medicare wages and tips
  • Wages, tips, and other payment
  • Taxable social security tips
  • Credits for COBRA premium assistance payment
  • Taxable wages and tips directed to Additional Medicare tax withholding


Final Words

Form 941 must be reported to the IRS (Internal Revenue Service) within thirty days following the end of each quarter. You can use Form 941-X for one quarter only. You need to use a separate form for each if you are reporting errors for more than one quarter. To know more about IRS form 941, attend the Compliance Prime webinar.

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