In every business, there is a key responsibility for filing employment tax, like Forms 940 and 941. Through these forms, paying and reporting federal unemployment and payroll taxes are possible. Sometimes, mistakes need to be corrected properly because they happen while filing. It makes you sure that you can amend or correct forms 940 and 941 accurately and in compliance with IRS rules. In this blog, we’ll guide you through an explanation of how to amend or correct these forms 940 and 941 quickly or easily to run your business smoothly.
What is Form 940?
A tax form that is used by U.S. employers to pay federal unemployment taxes (FUTA) and make reports is called Form 940. With the help of taxes, many workers who lost their jobs get funded unemployment benefits. These forms must need to be filed every year by employers, even if no taxes are due. Through this, you can view how much FUTA taxes they have owed and paid in wages. To support the unemployment system, employees don’t need to pay this tax, only it can be paid by employers to the IRS.
What is Form 941?
Form 941 is also one of the tax forms, which is used to report the federal income tax by U.S. employers with social security and medicare taxes withheld from the paychecks of employees. Shares of social security and medicare taxes are also used to pay through employers to file them with the IRS every quarter. You can view the total wages paid, taxes withheld, and any adjustments in this form. Form 941 helps you to make sure that the tax contributions are correctly recorded and sent to the government on time for both employers and employees.
When and Why You Need to Amend the Forms?
When you find or identify a mistake after filing, like reporting the wrong wages, taxes, and credits, at that time, you immediately need to amend or correct the Forms 940 and 941. In other words, correcting the errors that are in the IRS is the meaning of Amend.
If any errors have been made by you in your FUTA tax, then you need an amended form for form 940. And, to fix the mistakes in income tax, social security, or medicare accounts, you need to file the form 941-X quickly for form 941. Amending makes you sure by keeping your business in good standing with the IRS, keeping the records of taxes correct, and also prevents penalties.
Steps to Amend or Correct Form 940
It is important to use the form 940 from the exact year when it actually begins to be filed, if you really want to amend or correct forms 940. For example, if you have already originally started filing the form in 2019, then you have to file the 2019 Form 940 compulsory for your needs. For the year 2018, if you want to correct the return, then file the 2018 quickly on form 940. For the return, if you have e-filed the original form, no matter, you only need it to file by using a paper form 940.
If you still want more detailed information about this, then visit the instructions of the IRS for 940 forms before correcting or amending the returns. Here are some simple and clear detailed explanations of how to amend form 940, mentioned in the following ways.
- Download the form 940 for the same year from the IRS website to correct it to get the right form.
- Check the labeled box and mark it as Amended at the top of the form, and tell the IRS that you’re fixing it for earlier submission.
- In wages and tax information, add the correct details, including all the updated figures, not just the changes.
- Provide the reasons with an explanation of why you’re amending, just like adjusting a credit or an incorrect tax rate.
- Use the correct numbers to find the owe that you have more tax to recalculate or refund the amount due.
- If needed, attach any documents to support that will help you to explain your corrections.
- Send a mail of amended form to the IRS at the same address that was used during the original form 940 filing.
- Make a copy to keep a record of the amended form or any notes.
You can avoid future IRS issues and keep your tax filing accurate with the help of amending.
Methods to Amend or Correct Form 941
Here are some simple and clear detailed explanations of how to amend form 941, mentioned in the following ways.
Gather Documents to Find the Errors
- Collect the wages, social security, and medicare to identify the issues with federal income tax, tax credits, like somewhere the deposits are applied incorrectly.
- Pull out the original Forms 941 from the IRS to provide notices related to the quarter with payroll records, payroll reports, and Form W-2.
Decide Which Process to Use on Form 941-X
Adjustment process
While fixing the underreported tax amount, use this; otherwise, you’ll pay the amount due. For the adjustment process, check the box carefully on line 1 of 941-X.
Claim process
- If you want a refund of an overpayment, then use this process to make it successful.
- If both the amounts that you have are underreported and overreported, you must file them separately in 941-X forms for the same quarter.
Obtain the Current Form 941-X and Its Instructions
Use the PDF of instructions with the latest Form 941-X. Because, recently, the IRS revised the instructions/forms due to always using the current version.
Complete Form 941-X Carefully
- While correcting, fill one Form 941-X per quarter.
- Check for appropriate adjustment or claim.
- View the original amount of change where the column format was present, and also the corrected amounts.
- To provide a clear and concise explanation for each correction, if applicable, attach the supporting documentation of payroll reports, W-2 corrections, and IRS notices. Because the IRS wants to see the reasons why you changed it.
Pay Any Tax that You have Owned
When you file 941 -X to reduce the penalties or interest on the balance due if it is created by a correction, then pay it quickly. If you use the adjustment process and owe tax, you must follow the payment instructions in the 941-X to pay.
Decide E-file vs Mail
- Mail: You can mail the 941-X directly to the IRS address by following the instructions.
- E-file: Check the instructions for your current payroll provider for the e-file option, because the IRS has now allowed e-file for the return of some amended employment taxes. Follow your vendor’s procedure if you want to e-file.
Keep Copies During Completion and Follow-Up
Sometimes, the IRS takes a long time to process, so keep all the extra copies of all supporting documents, proof of payments, submitted 941-X, and certified mail or confirmation, in case they need more information during completion of the process.
Conclusion
In conclusion, we hope that you have understood the process of how to amend or correct Forms 940 and 941 and got a clear and simple explanation on this topic to run smoothly and effectively. We think this whole blog has become very helpful and resourceful for you. If you have any queries on this topic, you may contact our tech support with ProAdvisor assistance.