IRS Releases Revised Form 941-X
The Internal Revenue Service (IRS) recently released a revised version of Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.
COBRA Premium Assistance Credit May Only Be Claimed on Form 941-X
For tax periods beginning after 2013, the COBRA premium assistance credit may only be claimed on Form 941-X. Employers are longer able to claim the credit on either Form 941 or Form 941-SS. Employers are instructed to first file the Form 941 or Form 941-SS and then file the Form 941-X. Employers should not file the Form 941-X in advance of their regular filing.
Social Security Tax Rates May Differ
Depending on the period being amended, different social security tax rates may be in effect. For years other than 2011 and 2012, the employee and employer social security tax rates are 6.2% each or a total of 12.4%. For 2011 and 2012, the employee tax rate is 4.2% and the employer tax rate is 6.2% for a total of 10.4%. The correct rate should be used for the period being amended.
Contact Vision Payroll for Questions on Form 941-X
Contact Vision Payroll if you have further questions on Form 941-X.
Can We Still Claim a HIRE Act Credit for the Second Quarter?
This week’s question comes from Phil, a small-business owner. We just realized that one of our employees who we hired in April is eligible for the HIRE Act Credit. Can we still claim a HIRE Act credit for the second quarter? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act)
, employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act
, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010.
HIRE Act Credit Still Available for Second Quarter
Employers may still claim the credit for the second quarter by filing Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.
IRS Releases Revised Form 941-X to Claim HIRE Act Credit for Previous Quarters
On September 11, 2010, the Internal Revenue Service (IRS) released a revised Form 941-X which employers can use to claim the HIRE Act credit for previous quarters. The new form adds lines 11a-11c to adjust for the credit. The new lines are for the following:
- 11a. Number of qualified employees first paid exempt wages/tips this quarter.
- 11b. Number of qualified employees paid exempt wages/ tips this quarter.
- 11c. Exempt wages/tips paid to qualified employees this quarter.
Vision Payroll Is Ready to Help
Contact Vision Payroll if you need assistance filing Form 941-X to claim the HIRE Act credit for previous quarters.
In a response to Representative Jeff Miller (R-FL), the Internal Revenue Service (IRS), in Information Letter 2010-0010, outlines the process to use after the close of the payroll tax year to correct errors that result in overwithholding of federal payroll taxes. The ability to correct such errors depends on when the errors are discovered and the type of tax that was overwithheld.
An employer may correct an error of overwithholding of Federal Insurance Contributions Act (FICA) tax within the statute of limitations for such taxes by using Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim a refund or make an interest-free adjustment.
An employer can correct an overpayment of income tax withholding using either the interest-free adjustment process or the claim for refund process. “An interest-free adjustment for an overcollection of income tax withholding can only be made if the employer discovers the error and repays or reimburses the employee within the same calendar year as the payment of the wages.” Notwithstanding this rule, an overpayment due to an administrative error may be corrected after the calendar year. The claim for refund process is available only “if the employer did not actually withhold the amount from the employee.”
Further details are available in the instructions for Form 941-X.
Contact Vision Payroll immediately if you need to file Form 941-X in order to maximize available amendment options.
This week’s question comes from Paul, a business owner. I have an ex-employee who qualifies for payroll tax forgiveness under the HIRE Act. We haven’t been able to get the signed Form W-11 yet. What is the deadline for obtaining Form W-11? Under the HIRE Act, for otherwise qualifying employees, employers are not required to pay the matching portion of OASDI or social security tax. Qualified employees must sign Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, to allow employers to claim the payroll tax forgiveness. Employers must obtain the signed Form W-11 before claiming any payroll tax forgiveness. Therefore, to claim the exemption for the second quarter of 2010, employers must obtain the signed Form W-11 before August 3, 2010 in order to file by the deadline of August 2, 2010. Employers that made timely deposits in full payment of their taxes for a quarter have ten more days after the due date to file Form 941, Employer’s QUARTERLY Federal Tax Return. Employers that do not receive signed Form W-11 until after they’ve filed Form 941 may not claim the payroll tax forgiveness on Form 941, but must file Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim the exemption. Contact Vision Payroll if you have further questions on the deadline for obtaining Form W-11.
This week’s question comes from Doug, head of HR. I heard that the new tax law will impact employees eligible for COBRA. How does the American Recovery and Reinvestment Act of 2009 (the Act) change COBRA continuation health coverage? Answer: Under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA, certain former employees are allowed to continue health care coverage under their former’s employer’s group plan. The former employees must pay the cost of the health care premiums.
The Act made significant changes to COBRA continuation coverage. Under the Act, certain covered employees are required to pay only thirty-five percent of the premiums and their former employers must pay the remaining sixty-five percent. Employers may claim a credit on Form 941, Employer’s QUARTERLY Federal Tax Return, for the premiums paid for eligible employees.
The Internal Revenue Service recently released an updated Form 941 to reflect this law change and will soon release other updated forms, such as Form 941-X Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.
Over the next several days, Vision Payroll will be posting additional articles on implementing the changes to COBRA continuation coverage required by the Act as well as other changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.