IRS Issues Updated Form 941-X for 2014

Author: Rena Pirsos, XpertHR Legal Editor

May 8, 2014

The IRS has updated and released the 2014 Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, and the Instructions for Form 941-X. Employers must use this form to correct the following types of errors made on a previously filed Form 941:

  • 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 withholding; and
  • Credits for COBRA premium assistance payments.

Employers are reminded that:

  • Form 941-X must be filed on paper, not electronically;
  • A separate Form 941-X must be filed for each Form 941 being corrected; and
  • Forms 941-X must be filed separately from Forms 941.

In addition, neither of the two forms may be used to request an abatement of assessed interest or penalties (Form 843 should be used for that purpose).

New for 2014

The following changes have been made for 2014:

  • Claiming the COBRA premium assistance credit. Effective for tax periods starting in 2014, employers must claim the COBRA credit on Form 941-X, Lines 19a and 19b, rather than Form 941 or 941-SS. In addition, Form 941-X should be filed after Form 941 or 941-SS is filed for the quarter to prevent errors and processing delays.
  • Social Security tax rate for 2014. The employee/employer Social Security tax rate is 6.2% each (12.4% total). The 2011 and 2012 rates were 4.2% for employees and 6.2% for employers (10.4% total). The correct rates must be reported for the relevant year on Lines 8 and 9.
  • Period of limitations to make certain corrections expired. Generally, an employer may correct overreported taxes on a previously filed Form 941, if the employer files Form 941-X within three years of the date Form 941 was filed or two years from the date the employer paid the tax reported on Form 941, whichever is later. For purposes of the limitations period, Form 941 for a calendar year is considered filed on April 15 of the succeeding year if filed before that date.
  • New address boxes. New boxes have been added to the form requesting "Foreign country name," "Foreign province/county" and "Foreign postal code" information.
  • Line 3 "Note" revised. The "Note" under Line 3 has been revised to read: "If you are correcting underreported amounts only, go to Part 3 on page 2 and skip Lines 4 and 5. If you are correcting overreported amounts, for purposes of the certifications on Lines 4 and 5, Medicare tax does not include Additional Medicare Tax. Form 941-X cannot be used to correct overreported amounts of Additional Medicare Tax unless the amounts were not withheld from employee wages or an adjustment is being made for the current year."
  • New Line 17. A new Line 17, Special addition to wages for Additional Medicare Tax, has been added.
  • Lines eliminated. The following lines on Form 941-X have been eliminated:
    • Line 13a, Number of qualified employees first paid exempt wages/tips this quarter; Line 13b, Number of qualified employees paid exempt wages/tips this quarter; and Line 13c, Exempt wages/tips paid to qualified employees this quarter;
    • Line 19, Advance earned income credit (EIC) payments made to employees;
    • Line 20c, Number of qualified employees paid exempt wages/tips March 19-31, 2010; and Line 20d, Exempt wages/tips paid to qualified employees March 19-31, 2010; and
    • The limitations period to correct the qualified employer's Social Security tax exemption or credit under the HIRE Act and advance earned income credit payments expired for most employers on April 15, 2014. Accordingly, the lines formerly used for these corrections have been removed from Form 941-X. If the limitations period for any of these corrections is still open, an employer should file the April 2013-revised Form 941-X.
  • Lines renumbered. The following lines on the form have been renumbered:
    • Line 14, Tax adjustments, is now Line 13 (Form 941 or 941-SS, Lines 7-9);
    • Lines 15, 16 and 17 are now Lines 14, 15 and 16;
    • Line 20a, COBRA premium assistance payments, and Line 20b, Number of individuals provided COBRA premium assistance, are now Lines 19a and 19b;
    • Line 21, Total, and Line 22 have been combined and renumbered as Line 20; and
    • Lines 23, 24 and 25 are now Lines 21, 22 and 23.
  • The 2014 instructions for Form 941-X also include reminders regarding:
    • Correcting wages and tips subject to AMT;
    • Aggregate Form 941;
    • Section 3121(q) Notice and Demand - Tax due on unreported tips;
    • Retroactive increases in excludible transit benefits for 2012; and
    • Correcting the COBRA premium assistance credit.

The Internal Revenue Service provides a website that employers can check to stay abreast of the latest information about developments related to Form 941-X and its instructions, such as legislation enacted after they were published.