Organizations can still apply for the Employee Retention Credit (ERC) by modifying their Form 941-X for the quarters in which they were eligible employers. When employers who reported less than payroll tax file a modified Form 941-X or a correct form for an interest-free adjustment, they must make the necessary corrections as soon as they identify themselves and pay the amount due. If you have already paid the correct amount of the employer's share of social security taxes during a calendar quarter during the payroll tax deferral period, you cannot defer the payment later by filing Form 941-X. For example, these instructions do not indicate who is eligible to apply for the credit for qualified wages for family and sick leave, the Employee Retention Credit (ERC), or the COBRA premium assistance credit.
The Statute of Limitations (SOL) period for filing Form 941-X refund requests is three years from the date the employer filed its first return or two years from the date the tax was paid. If you are correcting the qualifying wages for the Employee Retention Credit that you reported on line 21 of Form 941, enter the total amount corrected for all employees in column 1.In previous years, you can only correct the administrative errors of withholding federal income tax (that is, errors in which the amount reported on line 3 of Form 941 is not the amount that you actually withheld from an employee's salary) and the errors to which the section 3509 rates apply. Check the box on line 3 to certify that you filed or file forms W-2 or W-2c with the Social Security Administration (SSA), as required, showing the correct salary and tax amounts for your employees. Do not modify your federal tax liability record on Form 941, line 16 or Schedule B (Form 94) if your Form 941-X is filed on time.
The ERC is fully refundable because the eligible employer can receive a refund if the amount of the ERC is greater than the applicable employment taxes owed by the eligible employer. However, if your only errors on Form 941 relate to the number of employees who received wages (Form 941, line) or to the federal tax liabilities reported on Form 941, Part 2, or in Schedule B (Form 94, Tax Responsibility Report for Biweekly Program Depositors), do not file Form 941-X. You are certifying that you have adjusted the federal income tax or additional Medicare tax withheld from employees only for the current calendar year. However, the credit shown on line 27 of Form 941-X may not be fully available on Form 941 or Form 944 if the Internal Revenue Service (IRS) corrects it during processing or if you owe other taxes, penalties, or interest. Then, enlisting a tax advisor's help to modify Form 941 can help your company get maximum benefits from their Employee Retention Credit.
Check the box on line 4b to certify that any overstated amount is only for employer participation taxes for employees you couldn't find or those who didn't give you a return described in line 4a. Report corrections of unreported and overreported tax amounts for same tax period on single Form 941-X unless requesting a refund or reduction. If requesting consent to file request for Social Security or Medicare taxes, employers must inform their employees that they cannot request a refund of any additional Medicare taxes on their behalf.