Updated Draft Form 941-X and Instructions Available
The IRS has issued a draft copy (dated July 2021) of Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund and Instructions for Form 941-X in anticipation of the changes as a result of the Employee Retention Credit (ERC).
Brief recap: The ERC was enacted by the CARES Act in March 2020 as a result of the pandemic. It is a refundable credit for qualified wages paid to eligible employees after March 12, 2020, and before January 1, 2021. In 2020, the maximum benefit was $5,000 per eligible employee; in 2021, the maximum benefit is $28,000 per eligible employee.
Here are the links to the draft form, instructions, and the ERC.
- Draft copy Form 941-X Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
- Instructions for Form 941-X
- Employee Retention Credit (ERC).
Eligible employers are those who were in operation in 2020 and experienced either:
- A full or partial suspension of the operation of their business as the result of a government order, or
- Experienced a significant decline in gross receipts, defined as 50% for 2020 and 20% for 2021.
The challenge has arisen in the definition of an eligible employee by Rev. Proc 2021-49 as to whether the wages of a shareholder and spouse are eligible wages for purposes of the ERC.