Final Form 941-X Instructions Detail COVID-19 Changes

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The IRS has issued the final instructions for the revised Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund. The instructions detail changes to the form to account for the COVID-19 tax relief.

Background. Form 941, Employer’s Quarterly Federal Tax Return, is used by employers to report, on a quarterly basis: a) federal income tax, social security tax, Medicare tax and Additional Medicare tax withheld from employee compensation; and b) the employer’s share of social security and Medicare taxes.

Form 941-X is used by employers to correct errors on a previously filed Form 941.

In response to the COVID-19 health emergency, the Families First Coronavirus Response Act (FFCRA) and Coronavirus, Aid, Relief and Economic Security Act (CARES Act) were signed into law. These bills provide credits for paid sick leave and expanded family and medical leave, the employee retention credit, and a deferral of certain employment taxes. The IRS then revised Form 941 to include line items for reporting the COVID-19 tax credits and the employment tax deferral. The IRS has also issued a new draft version of Form 941-X that reflects the changes made to the latest version of Form 941.

Form 941-X instructions. The IRS has now issued final instructions for the draft version of Form 941-X.

The instructions note that employers can now use Form 941-X to report corrections to the following items reported on Form 941:

  • Amounts for the credit for qualified sick and family leave wages.
  • Amounts for the employee retention credit.
  • The deferred amount of the employer share of social security tax.