Insights
We are proud to be named a West Coast Regional Leader for 2024
Revised Form 941-X
TAX ALERT |
Authored by RSM US LLP
The much anticipated final version of the second quarter (Q2) Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund has been released by the Internal Revenue Service (IRS). The Form 941-X generally follows the changes to the Form 941 released in June.
The revised Form 941 and Form 941-X include significant changes needed to report the payroll tax credits offered under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which became effective in March. These include the employee retention credit, paid family leave and sick leave credits and the Employer FICA deferral.
The availability of the revised Form 941-X will provide relief to employers who were unable to take the employee retention credit by retaining the applicable employment taxes during pay cycles in the second quarter or by asking for a refund under the Form 941 or Form 7200 (which was not available for payroll tax credit refunds from Q1 or Q2 after August). Such employers can now request the credits from late March and all of the second quarter as a refund on the Form 941-X. The IRS FAQs indicate that a Q2 Form 941 X will be needed to obtain the payroll tax credits arising in Q1 and Q2 (that is, an employer cannot simply report the credits arising from Q1 and Q2 on a Q3 Form 941). It is not clear how long it will take to get the Form 941 refunds. In the past, Form 941 refunds could be fairly slow, but the IRS has suggested that they are trying to expedite the CARES and FFCRA refunds.
The IRS notes that employers with employee retention credits or FFCRA paid leave credits arising in Q1 should amend the Q1 941-X to make changes. All credits related to the FFCRA and CARES Act payroll tax credits for the end of Q1 and for Q2 should be claimed on the Q2 Form 941. Any changes to the credits should be made on the revised 941-X Form.
There are numerous changes to the Q2 941-X. The form now spans five pages as opposed to the previous three pages. Some of the specific changes are as follows:
- Line 9 - qualified sick leave wages
- Line 10 - qualified family leave wages
- Line 17 - nonrefundable portion of credit for qualified sick- and family-leave wages.
- Line 18 - nonrefundable portion of employee retention credit.
- Line 24 - deferred amount of the employer share of social security tax.
- Line 25 - refundable portion of credit for qualified sick- and family-leave wages.
- Line 26 - refundable portion of employee retention credit
- Line 28 - qualified health plan expenses allocable to qualified sick-leave wages
- Line 29 - qualified health plan expenses allocable to qualified family-leave wages.
- Line 30 - qualified wages for the employee retention credit
- Line 31 - qualified health plan wages reported on Form 941, Line 21.
- Line 32 - credit from Form 5884-C, Line 11, for Q2 (Form 5844-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans).
- Line 33 - qualified wages paid March 13 to March 31, 2020, for the employee retention credit; (only to be used to correct the second-quarter 2020 filing of Form 941)
- Line 34 - qualified health plan expenses allocable to wages reported of Form 941, ; (only to be used to correct the second-quarter 2020 filing of Form 941)
The instructions include a Worksheet which can be used to help report the Q1 and Q2 employee retention credits or FFCRA credits. The revised Form should not be used to claim credits related to the CARES Act or FFCRA for the third quarter 2020. Such refunds arising out of qualified wages paid in Q3 can be filed on the Form 941 Q3 or on the Form 7200 (for up to one month after the end of the quarter, according to the Form instructions). The IRS is working on revising third quarter 941-X to allow for changes to the third quarter 941 filings.
Let's Talk!
Call us at +1 213.873.1700, email us at solutions@vasquezcpa.com or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Karen Field, Lorraine Bodden, Sapna Pillai and originally appeared on 2020-09-22.
2020 RSM US LLP. All rights reserved.
https://rsmus.com/what-we-do/services/tax/compensation-and-benefits/employee-benefits-programs/revised-form-941-x.html
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.