Owning a business can be deeply satisfying, but it comes with all kinds of tax annoyances — including payroll taxes. Not only do you need to accurately report on and withhold 941 employment taxes, but you are also responsible for ensuring that they reach the IRS on time and in full. Your failure to do so could lead to adverse consequences for your business and in your personal life. If you’ve already messed up your payroll taxes, however, it’s not too late to get your account back on track, as we demonstrate below:
As a business owner, you regularly complete Form 941, in which you report on the extent to which payroll taxes have been withheld from employees’ income. Occasionally, however, you may over or underreport on either income or withheld taxes. These mistakes are common — especially in professions involving tips. Errors should be promptly addressed via IRS Form 941-X: the Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.
Adjust Withholdings Or Seek a Refund
Depending on your situation, Form 941-X can be used for different purposes. If you previously overreported on employee earnings and payroll taxes, you can alert the IRS via Form 941-X and then withhold less in the future. If you underreported, you’ll follow a similar approach, but with greater future withholdings. Otherwise, a claims process is available to secure refunds or abatements for overreported taxes. To qualify for a refund, you’ll need to certify that you’ve already reimbursed affected employees.
If you messed up on your 941 employment taxes, seek assistance from a tax expert as soon as possible. Contact the Highland Tax Group today to learn more about your options.