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Note. If you are correcting only the employer share of tax on a

a Section 3121(q) Notice and Demand to advise an employer of

decrease to social security tips, use .062 (6.2%) when

the amount of tips received by employees who failed to report

multiplying the amount shown in column 3. If you are correcting

or underreported tips to the employer. An employer is not liable

both shares of tax for some employees and only the employer

for the employer share of the social security and Medicare

share for other employees, report the properly calculated

taxes on unreported tips until a Section 3121(q) Notice and

amount in column 4. Be sure to show your calculations on line

Demand for the taxes is made to the employer by the IRS.

24.

Lines 12a – 12c apply only for corrections to quarters

Following the Example — Wages, tips, and other

ending after March 31, 2010, and before January 1,

compensation increased in the instructions for line 6, the tips

2011.

CAUTION

that you overlooked were also taxable social security tips. To

12. Employer’s Social Security Tax Exemption

correct the error, figure the difference on Form 941-X as shown.

Complete lines 12a – 12c to correct the payroll tax exemption for

Column 1 (corrected amount)

10,000.00

the employer’s share (6.2%) of social security tax on exempt

Column 2 (from line 5b, column 1 of Form 941)

- 9,000.00

wages/tips paid to one or more qualified employees.

Column 3 (difference)

1,000.00

An employer must be a qualified employer to qualify for the

Use the difference in column 3 to determine your tax

employer’s social security tax exemption. A qualified employer

correction.

is any employer other than Federal, State, and any related

government entities. All public institutions of higher education

Column 3 (difference)

1,000.00

and Indian tribal governments are also qualified employers.

Tax rate (12.4%)

x .124

For more information regarding the employer’s social

Column 4 (tax correction)

124.00

security tax exemption visit IRS.gov and enter the keywords

Be sure to explain the reasons for this correction on line 24.

HIRE Act in the search box.

12a. Number of qualified employees first paid exempt

Note. If the example above was for a correction to a 2011

wages/tips this quarter. Enter on line 12a (column 2) the

return, the amount in column 3 would be multiplied by .104.

number of qualified employees originally reported on line 6a of

10. Taxable Medicare Wages and Tips

the previously filed Form 941. If you are not correcting line 6a of

If you are correcting the taxable Medicare wages and tips you

the previously filed Form 941 and are making a correction on

reported on line 5c, column 1 of Form 941, enter the total

line 12b, enter the amount from line 6a of the previously filed

corrected amount in column 1. In column 2, enter the amount

Form 941 on line 12a.

you originally reported or as previously corrected. In column 3,

A qualified employee is an employee who:

enter the difference between columns 1 and 2.

•

Begins employment with you after February 3, 2010, and

before January 1, 2011;

line 10 (column 1)

•

Certifies by signed affidavit (Form W-11, Hiring Incentives to

- line 10 (column 2)

Restore Employment (HIRE) Act Employee Affidavit, or similar

line 10 (column 3)

If the amount in column 2 is larger than the

statement) under penalties of perjury that he or she has not

amount in column 1, use a minus sign in

been employed for more than 40 hours during the 60-day

column 3.

period (including 2009) ending on the date the employee begins

Multiply the amount in column 3 by .029 (2.9% tax rate) and

employment with you;

enter that result in column 4.

•

Is not employed by you to replace another employee unless

the other employee separated from employment voluntarily or

line 10 (column 3)

for cause (including downsizing); and

x .029

•

Is not related to you. An employee is related to you if he or

line 10 (column 4)

If the amount in column 3 used a minus sign,

she is your child or a descendant of your child, your sibling or

also use a minus sign in column 4.

stepsibling, your parent or ancestor of your parent, your

Note. If you are correcting only the employer share of tax on a

stepparent, your niece or nephew, your aunt or uncle, or your

decrease to Medicare wages and tips, use .0145 (1.45%) when

in-law. An employee is also related to you if he or she is related

multiplying the amount in column 3. If you are correcting both

to anyone who owns more than 50% of your outstanding stock

shares of tax for some employees and only the employer share

or capital and profits interest or is your dependent or a

for other employees, enter the properly calculated amount in

dependent of anyone who owns more than 50% of your

column 4. Be sure to explain your calculations on line 24.

outstanding stock or capital and profits interest. If you are an

Example — Medicare wages and tips decreased:

estate or trust, see section 51(i)(1) and section 152(d)(2) for

Following Example — Wages, tips and other compensation

more details.

decreased in the instructions for line 6, the wages that you

Exempt wages/tips are the wages/tips paid to qualified

counted twice were also taxable Medicare wages and tips. To

employees for which the employer is exempt from paying the

correct the error, figure the difference on Form 941-X as shown.

employer’s 6.2% share of social security tax.

If you make a correction on line 12a, then you must

Column 1 (corrected amount)

7,000.00

complete line 12b.

Column 2 (from line 5c, column 1 of Form 941)

- 9,000.00

Column 3 (difference)

-2,000.00

CAUTION

Use the difference in column 3 to determine your tax

12b. Number of qualified employees paid exempt wages/

correction.

tips this quarter. Enter on line 12b (column 1) the total

corrected number of qualified employees paid exempt wages/

tips to which you applied the social security tax exemption in

Column 3 (difference)

-2,000.00

Tax rate (2.9%)

x .029

the quarter you are correcting. Enter on line 12b (column 2) the

Column 4 (tax correction)

-58.00

total number of qualified employees originally reported on line

6b of the previously filed Form 941. If you are not correcting line

Be sure to explain the reasons for this correction on line 24.

6b of the previously filed Form 941 and are making a correction

11. Section 3121(q) Notice and Demand—Tax on

on line 12a, enter on line 12b the amount from line 6b of the

previously filed Form 941. See the instructions for line 12a for

Unreported Tips

definitions of qualified employee and exempt wages/tips.

Enter any corrections, including amounts reported on line 7c

If you make a correction on line 12b, then you must

(for quarters ending before 2011) and amounts reported on line

complete line 12a.

5e (for quarters ending after 2010), to the tax due from a

Section 3121(q) Notice and Demand on line 11. The IRS issues

CAUTION

-7-

Instructions for Form 941-X (Rev. 1-2011)

Instructions For Form 941-X - Adjusted Employer'S Quarterly Federal Tax Return Or Claim For Refund - 2011 Page 8

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