IRS Form 941 Mistakes: What Happens If You Mess Up?

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You attempted, in good faith, to complete Form 941 — but you later discovered errors. Thankfully, the IRS allows you to fix your mistakes with a special form.

Read on to learn more:

Common Form 941 Mistakes

Worried that you’ve made a mistake with Form 941? You’re certainly not alone; the following errors are especially common:

  • Incorrect calculations or typos that lead to over or under-reporting
  • Incorrect wage reporting
  • Incorrect tip reporting
  • Issues with COBRA premium assistance credits

Fixing Your Mistake: Form 941-X

The IRS is more forgiving than you think. A filing mistake won’t automatically lead to heavy penalties. Fines are least likely if you catch the problem early and strive to make amends. In most cases, this means filing form 941-X. This form should be filed separately from Form 941. A separate 941-X document should be filed for every Form 941 that requires a correction.

Deadline For Completing Form 941-X

With Form 941-X, sooner is always better. Deadlines limit your ability to fix errors several years after they’re made. In most cases, Form 941-X must be completed within three years of the initial filing, or two years following the date of tax payment.

What If I’m Assessed a Penalty?

Don’t seek penalty refunds on Form 941-X. Instead, complete a Claim for Refund and Request for Abatement (Form 843). This form was designed, in part, to acknowledge that the IRS assesses penalties not to generate revenue, but rather, to deter noncompliance among taxpayers.

Requesting abatement may alter how you file Form 941-X. Typically, the IRS requests that you include both under and overreported figures on the same form. If, however, you also complete Form 843, you’ll need to file an initial Form 941-X correcting underreported amounts, followed by a second 941-X with overreporting corrections.

Need intelligent insight on how to deal with IRS Form 941-X? The Highland Tax Group team is standing by. Speak with an experienced enrolled agent at 720-398-6088, or learn more on our website.