IRS Form 941x Instructions ERC Explained

941-X Instructions Employee Retention Credit Form

First Steps to ERTC Tax Credits: Form 941 x

During the pandemic, in the years 2020 and 2021, the unemployment rate surged, and hundreds of thousands of companies all around the United States were forced to shut doors and lay off employees. Luckily, many businesses could weather the storm, thanks to tax incentives and other federal assistance—the employee retention tax credit (ERTC or ERC) being one of them.

The ERTC (included in the CARES Act) was developed to provide a sizable tax break on qualifying wages to assist employers in retaining employees. Although the applicable period has technically ended, employers can still take advantage of this credit. The following is an in-depth guide that will walk you through the ERTC, Form 941-X for ERTC, and the filing process for employers.

What is Employee Retention Tax Credit (ERTC)?

The Employee Retention Tax Credit, ERTC or ERC for short, is a refundable tax credit that you, an employer, can claim on qualified wages. The ERTC was first formed as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to assist small and medium-sized businesses in continuing to pay their working staff throughout the economic difficulty during the pandemic.

Form 941 vs. Form 941-X

The original version of Form 941 was revised in 2022 to become Form 941-X. This update has been designed to assist in making necessary changes for 2020 and 2021. Now that you’re allowed to have Paycheck Protection Program (PPP) loans in addition to ERTC, you’ll need to make some changes to Form 941 that you previously submitted to the IRS for the tax quarters before this one.

How to Fill Out 941-X Employee Retention Credit Form

941 x Instructions for Claiming ERC

Employers that have experienced a plunge in gross revenue due to the pandemic are eligible to apply for the Employee Retention Tax Credit (ERTC). However, those who did not qualify for the ERTC during the first two quarters of 2021 and want to take advantage of it may still do so by filing Form 941-X. Here’s an overview of 941 x instructions ERC and the necessary line items that must be completed.

  • Make sure to fill out a new Form 941-X for each Form 941 that needs to be updated.
  • Fill in the required details on the header, such as the company name, year, and EIN.
  • On the Form, check Part 1, Box 2, and Part 2, Box 5d to claim the ERTC as a refund.
  • Fill in the amount of your non-refundable sum or the salary of the ERC on Line 18a.
  • Proceed to Line 23 to add the totals from Lines 7 through Lines 22 of Column 4.
  • Add the total on line 27 of the following page to the figures found in 23–26c of Column 4.
  • Add the employee retention credit’s qualified revenue to Line 30 of your Form 941.
  • On line 43, explain the reasoning that led you to your decision.

By following the steps above, you can submit Form 941 x. To begin, make the changes you planned to Form 941 and then claim the ERTC for those changes simultaneously. Nevertheless, you must complete the Form with the correct information and present all necessary documentation together with Form 941 x. Comfortable with IRS rules and regulations? Here are the complete 941 X instructions from their website. In case of difficulty, always turn to an ERTC Expert for guidance.

Deadlines for ERTC Application

The application deadline for the ERTC is April 15, 2024; this applies to all quarters in 2020, while the deadline of April 15, 2025, applies to all of the quarters of 2021. Amendments to federal tax returns must be filed within three years of the original due dates. However, filing 941-X amendments is a bit different because the original Form 941 is due by the last day of the month that follows the end of each quarter. (You can always call 360-641-7709 to see if your qualify).

Top Tips on Filing ERTC IRS Application

Now that you know how to fill out the 941x Form, the entire process may seem straightforward, but in reality, employers face many everyday struggles with getting results. Considering that, at this point, you may still have inquiries about the next steps of the ERTC procedure, the following are some additional suggestions to guide you along the way and help you receive the credit you deserve.

  • Keep track of everything in case you’re ever subjected to an audit.
  • Fill out Form 941-X before it’s too late (April 15 of the succeeding year).
  • You may still apply even if you didn’t have a company in 2019:
  • Go through the instructions provided by the IRS to figure out the next steps.
  • Claim the ERTC even if you got a Paycheck Protection Program (PPP) loan.
  • For federal tax purposes, avoid including the credit in your gross income.
  • Work with an ERTC expert to ensure you comply.

Our ERTC Experts Can Help

Trying to keep up with tax law changes may be complex—which is where we come in to educate employers like yourself about the ERTC, the largest government incentive program in history.

We can assist you in accurately filing out the 941-X Employee Retention Credit Form and submitting it on time. Additionally, we help you determine how to handle the ERTC in conjunction with the PPP loan participation. For a free consultation, call us at 360 641-7709 or complete this eligibility form today!

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