Form 941-X | How to Fill Out, Due Dates, Penalties, & More
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Use Form 941-X to Correct Payroll Tax Errors

Use Form 941-X to correct errors on your quarterly payroll report.

You submitted the Form 941 quarterly report for employee wages and payroll tax withholding. Then you realized you made an error. What can you do? You should file Form 941-X.

What is Form 941-X?

Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, is the form used to correct errors on a previously filed IRS Form 941 quarterly report.

When do you need a Form 941-X?

You need to file Form 941-X if you discover an error on a previously filed Form 941. But, you do not need to file the 941-X form if your errors relate to the number of employees who received wages or Part 2 of Form 941.

You can use Form 941-X to correct:

  • Wages, tips, and other compensation
  • Income tax withheld from wages, tips, and other compensation
  • Taxable Social Security wages and tips
  • Taxable Medicare wages and tips
  • Taxable wages and tips subject to Additional Medicare Tax
  • Credits for COBRA premium assistance payments

You can correct underreported and overreported amounts.

Do not file Form 941-X if you forgot to file a Form 941. Instead, file a Form 941.

How do you fill out Form 941-X?

When you fill out Form 941-X, you report your underreported or overreported amounts. You must give a detailed explanation of your corrections on line 23 of the form.

On the form, negative amounts show reductions in tax (meaning you initially overpaid) and positive numbers show additional tax (meaning you initially underpaid). To display negative numbers, enter a minus sign before the number. For example, -34.86. If you type Form 941-X and your computer will not let you use the minus sign, you can put negative numbers in parentheses. For example, (34.86).

If you need to correct several Forms 941, use a different Form 941-X for each quarter.

If you are correcting both underreported and overreported taxes, and you are requesting a refund or abatement, file one Form 941-X to correct the underreported taxes and another 941-X form to correct the overreported taxes.

When is Form 941-X due?

The due date for Form 941-X depends on the type of error you made.

For overreported taxes, you can submit Form 941-X within three years from the date you filed the incorrect Form 941, or within two years from the date you paid the tax reported on Form 941, whichever is later. This time period is called the period of limitations.

If you want to apply the overpaid taxes as a credit to Form 941, file Form 941-X soon after you discover the error, but at least 90 days before the period of limitations expires. If you want to claim a refund for the overpaid taxes, you can file a 941-X form any time before the period of limitations expires.

For underreported taxes, you can submit a Form 941 correction and pay taxes by the due date for the quarter when you discovered the error. The due dates for filing Form 941-X for underreported taxes are:

  • April 30 for errors discovered in the first quarter.
  • July 31 for errors discovered in the second quarter.
  • October 31 for errors discovered in the third quarter.
  • January 31 for errors discovered in the fourth quarter.

Are there penalties for underreported taxes?

In most cases, correcting an underreported amount will not subject you to penalties or interest if you follow these guidelines:

  • File on time.
  • Pay the amount shown on line 20 by the time you file the 941-X form.
  • Enter the date you discovered the error.
  • Explain your corrections in detail.

You will have to pay interest if:

  • The underreported taxes related to an issue raised in an examination of a prior period.
  • You knowingly underreported taxes.
  • You received a notice and demand for payment.
  • You received a Notice of Determination of Worker Classification.

If you receive a notice after you file your 941-X form, reply with an explanation.

More information on Form 941-X

If you want more information on Form 941-X, look at the Instructions for Form 941-X.

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This article was originally published on 5/19/2011.