Few people will forget to report the highly-publicized COBRA subsidy info on the Form 941 – but it might be easy to overlook another lesser-discussed change that’s also effective this quarter. Now, if you discover an error on a previously filed 941, you no longer have to use Form 941c (attached to your normal 941) to make the correction. Instead, use Form 941-X, Employer’s Adjusted Quarterly Federal Tax Return or Claim for Refund (www.irs.gov/pub/irs-pdf/f941x.pdf). The beauty of this stand-alone form: File at any time – you don’t have to wait for quarter-end to send it with your 941. It doesn’t affect the tax liability reported on your current return.
You may file adjusted returns for an:
- underpayment – within the applicable period of limitations for assessing the underpayment, and
- overpayment – before the 90th day prior to the applicable period of limitations on credit or refund expires.
Still pays to be prompt
Of course, just because there’s no “deadline” for filing a 941-X doesn’t mean you have all the time in the world, either. You can only make an adjustment interest-free if you report within a certain timeframe:
1. FIT underpayments when you withheld the incorrect amount – You can file your adjusted return only for errors found during the calendar year in which wages were paid. The return must be filed by the due date for the return period when you discovered the error.
2. FIT overpayments when you withheld the incorrect amount – File your 941x for errors discovered during the calendar year when you paid the wages. Repay the employee within the same year.
To get more help on making corrections:
- Download the 941 instructions from www.irs.gov/pub/irs-pdf/i941.pdf
- Check Section 13 of Publication 15, Circular E, Employer’s Tax Guide (www.irs.gov/pub/irs-pdf/p15.pdf), or
- Go to the IRS Web site and enter “Correcting Employment Taxes” into the “Search” box.
