Instructions for Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund

• Legal Form Number: 941-X
• Year: 2023
• Issuer: Treasury Department
• Section: Treasury Department

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Instructions for Form 941-X

(Rev. April 2023)

Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code

unless otherwise noted.

Contents Page

General Instructions: Understanding Form 941-X .... 4

What Is the Purpose of Form 941-X? .......... 4

Where Can You Get Help? ................. 5

When Should You File Form 941-X? .......... 5

Is There a Deadline for Filing Form 941-X? ...... 6

Where Should You File Form 941-X? .......... 6

How Should You Complete Form 941-X? ....... 6

Overview of the Process ................... 7

Specific Instructions: ......................... 8

Part 1: Select ONLY One Process ............ 8

Part 2: Complete the Certifications ............ 8

Part 3: Enter the Corrections for This Quarter ... 10

Part 4: Explain Your Corrections for This

Quarter ............................ 25

Part 5: Sign Here ....................... 26

Worksheet 1. Adjusted Credit for Qualified Sick

and Family Leave Wages for Leave Taken

After March 31, 2020, and Before April 1,

2021 ................................ 27

Worksheet 2. Adjusted Employee Retention Credit

for Qualified Wages Paid After March 12, 2020,

and Before July 1, 2021 .................. 28

Worksheet 3. Adjusted Credit for Qualified Sick

and Family Leave Wages for Leave Taken

After March 31, 2021, and Before October 1,

2021 ................................ 29

Worksheet 4. Adjusted Employee Retention Credit

for Qualified Wages Paid After June 30, 2021,

and Before January 1, 2022 ................ 30

Worksheet 5. Adjusted COBRA Premium

Assistance Credit ....................... 31

How Can You Get Forms, Instructions, and

Publications From the IRS? ................ 31

Future Developments

For the latest information about developments related to

Form 941-X and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form941X.

These instructions have been updated for

changes to the qualified small business payroll tax

credit for increasing research activities reported

on Form 8974. You may use these instructions and the

April 2023 revision of Form 941-X for all years for which

the statute of limitations on corrections hasn't expired.

Before you proceed with these instructions and

completing Form 941-X, you'll need a copy of the

Instructions for Form 941 for the quarter that you're

correcting because these instructions don't repeat all of

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the information included in the Instructions for Form 941.

For example, these instructions don't discuss who is

eligible to claim the credit for qualified sick and family

leave wages, the employee retention credit, or the

COBRA premium assistance credit. Prior revisions of the

Instructions for Form 941 are available at IRS.gov/

Form941 (select the link for “All Form 941 Revisions”

under “Other Items You May Find Useful”).

What's New

Qualified small business payroll tax credit for in-

creasing research activities. For tax years beginning

before January 1, 2023, a qualified small business may

elect to claim up to $250,000 of its credit for increasing

research activities as a payroll tax credit. The Inflation

Reduction Act of 2022 (the IRA) increases the election

amount to $500,000 for tax years beginning after

December 31, 2022. The payroll tax credit election must

be made on or before the due date of the originally filed

income tax return (including extensions). The portion of

the credit used against payroll taxes is allowed in the first

calendar quarter beginning after the date that the qualified

small business filed its income tax return. The election

and determination of the credit amount that will be used

against the employer's payroll taxes are made on Form

6765, Credit for Increasing Research Activities. The

amount from Form 6765, line 44, must then be reported

on Form 8974, Qualified Small Business Payroll Tax

Credit for Increasing Research Activities.

For quarters beginning before January 1, 2023, the

payroll tax credit can be used only against the employer

share of social security tax for the quarter and any

remaining credit is carried forward to the next quarter.

Starting in the first quarter of 2023, the payroll tax credit is

first used to reduce the employer share of social security

tax up to $250,000 per quarter and any remaining credit

reduces the employer share of Medicare tax for the

quarter. Any remaining credit, after reducing the employer

share of social security tax and the employer share of

Medicare tax, is then carried forward to the next quarter.

Form 8974 is used to determine the amount of the credit

that can be used in the current quarter. Corrections to this

credit are made on Form 941-X, line 16. If you make a

correction to Form 941-X, line 16, you must attach a

corrected Form 8974. For more information, see the

Instructions for Form 8974 and go to IRS.gov/

ResearchPayrollTC.

Reminders

If a line on Form 941-X doesn't apply to you, leave

it blank. If you're correcting a quarter that began

before April 1, 2020, you must leave blank lines 9,

10, 17, 18a, 24, 25, 26a, 28, 29, 30, 31a, 32, 33a, and 34.

If you're correcting a quarter that began before July 1,

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2020, you must leave blank line 33b. If you're correcting a

quarter that began before April 1, 2021, you must leave

blank lines 18b, 18c, 18d, 26b, 26c, 35, 36, 37, 38, 39,

and 40. If you're correcting a quarter that began before

July 1, 2021, you must leave blank line 31b. If you're

correcting a quarter that began after December 31, 2021,

you must leave blank lines 18a, 26a, 30, 31a, and 31b.

The COVID-19 related credit for qualified sick and

family leave wages is limited to leave taken after

March 31, 2020, and before October 1, 2021. The

credit for qualified sick and family leave wages, as

enacted under the Families First Coronavirus Response

Act (FFCRA) and amended and extended by the

COVID-related Tax Relief Act of 2020, is for leave taken

after March 31, 2020, and before April 1, 2021, and the

credit for qualified sick and family leave wages under

sections 3131, 3132, and 3133 of the Internal Revenue

Code, as enacted under the American Rescue Plan Act of

2021 (the ARP), is for leave taken after March 31, 2021,

and before October 1, 2021. For more information about

the credit for qualified sick and family leave wages, go to

IRS.gov/PLC.

Corrections to amounts reported on Form 941, lines

5a(i), 5a(ii), 11b, 13c, 19, and 20, for the credit for

qualified sick and family leave wages for leave taken after

March 31, 2020, and before April 1, 2021, are reported on

Form 941-X, lines 9, 10, 17, 25, 28, and 29, respectively.

Corrections to amounts reported on Form 941, lines

11d, 13e, 23, 24, 25, 26, 27, and 28, for the credit for

qualified sick and family leave wages for leave taken after

March 31, 2021, and before October 1, 2021, are reported

on Form 941-X, lines 18b, 26b, 35, 36, 37, 38, 39, and 40,

respectively.

The COVID-19 related employee retention credit has

expired. The employee retention credit enacted under

the Coronavirus Aid, Relief, and Economic Security

(CARES) Act and amended and extended by the

Taxpayer Certainty and Disaster Tax Relief Act of 2020

was limited to qualified wages paid after March 12, 2020,

and before July 1, 2021. The employee retention credit

under section 3134 of the Internal Revenue Code, as

enacted by the ARP and amended by the Infrastructure

Investment and Jobs Act, was limited to qualified wages

paid after June 30, 2021, and before October 1, 2021,

unless the employer was a recovery startup business. An

employer that was a recovery startup business could also

claim the employee retention credit for qualified wages

paid after September 30, 2021, and before January 1,

2022. For more information about the employee retention

credit, including the dates for which the credit may be

claimed, go to IRS.gov/ERC.

Corrections to amounts reported on Form 941, lines

11c, 13d, 21, and 22, for the employee retention credit are

reported on Form 941-X, lines 18a, 26a, 30, and 31a,

respectively. However, how you figure the employee

retention credit for qualified wages paid after March 12,

2020, and before July 1, 2021, is different from how you

figure the credit for qualified wages paid after June 30,

2021, and before January 1, 2022. Also, for corrections to

qualified wages paid after June 30, 2021, you may need

to complete line 31b to tell us if you're eligible for the

employee retention credit solely because your business is

a recovery startup business.

Credit for COBRA premium assistance payments is

limited to periods of coverage beginning on or after

April 1, 2021, through periods of coverage beginning

on or before September 30, 2021. Section 9501 of the

ARP provides for COBRA premium assistance in the form

of a full reduction in the premium otherwise payable by

certain individuals and their families who elect COBRA

continuation coverage due to a loss of coverage as the

result of a reduction in hours or an involuntary termination

of employment (assistance eligible individuals). This

COBRA premium assistance was available for periods of

coverage beginning on or after April 1, 2021, through

periods of coverage beginning on or before September

30, 2021. A premium payee was entitled to the COBRA

premium assistance credit at the time an eligible individual

elects coverage. Therefore, other than in rare

circumstances, due to the COBRA notice and election

period requirements (generally, employers have 60 days

to provide notice and assistance eligible individuals have

60 days to elect coverage), the first quarter of 2022 was

the last quarter in which employers may have been

eligible to claim the COBRA premium assistance credit on

Form 941. Employers eligible to claim the COBRA

premium assistance credit after March 31, 2022, must file

Form 941-X to claim the credit.

For more information on COBRA premium assistance

payments and the credit, see Notice 2021-31, 2021-23

I.R.B. 1173, available at IRS.gov/irb/

2021-23_IRB#NOT-2021-31; and Notice 2021-46,

2021-33 I.R.B. 303, available at IRS.gov/irb/

2021-33_IRB#NOT-2021-46.

Corrections to amounts reported on Form 941, lines

11e, 11f, and 13f, for the COBRA premium assistance

credit are reported on Form 941-X, lines 18c, 18d, and

26c, respectively.

If you claimed the credit for qualified sick and

family leave wages for leave taken after March 31,

2020, and before April 1, 2021, and you make any

corrections on Form 941

‐

X to amounts used to figure this

credit, you'll need to refigure the amount of this credit

using Worksheet 1. You'll also use this worksheet to figure

this credit if you’re claiming it for the first time on Form

941-X. If you claimed the credit for qualified sick and

family leave wages for leave taken after March 31, 2021,

and before October 1, 2021, and you make any

corrections on Form 941

‐

X to amounts used to figure this

credit, you'll need to refigure the amount of this credit

using Worksheet 3. You'll also use this worksheet to figure

this credit if you’re claiming it for the first time on Form

941-X. If you claimed the employee retention credit for

wages paid after March 12, 2020, and before July 1,

2021, and you make any corrections on Form 941

‐

X to

amounts used to figure this credit, you'll need to refigure

the amount of this credit using Worksheet 2. You'll also

use this worksheet to figure this credit if you’re claiming it

for the first time on Form 941-X. If you claimed the

employee retention credit for wages paid after June 30,

2021, and before January 1, 2022, and you make any

corrections on Form 941

‐

X to amounts used to figure this

credit, you'll need to refigure the amount of this credit

CAUTION

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-2- Instructions for Form 941-X (Rev. 4-2023)