The “Nonrefundable Portion of Employee Retention Credit” section is listed as question #18a under Part 3 of Form 941-X, which is needed to claim the employee retention tax credit. Instructions are below for the Nonrefundable Portion of Employee Retention Credit section.
Key 941-X Tax Form Takeaways:
- Correcting Claims for Employee Retention Credit: Learn the specific steps to amend prior claims using Form 941-X to ensure accurate reporting of the nonrefundable portion of the Employee Retention Credit for the correct quarters.
- Impact of PPP Loans on Claims: Understand how the receipt of a Paycheck Protection Program (PPP) loan affects the eligibility for claiming the Employee Retention Credit, and the correct method to adjust claims if PPP loans were received.
- Timeframe for Eligible Wages: Be aware of the specific periods for which eligible wages qualify for the Employee Retention Credit, particularly noting any changes in legislation that might affect claims for different periods.
See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.
Form 941-X:
18a. Nonrefundable Portion of Employee Retention Credit
Part 3: Enter the corrections for this quarter. If any line doesn’t apply, leave it blank.
18a. Nonrefundable portion of employee retention credit* (Form 941 or 941-SS, line 11c)
Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Part 3, “18a. Nonrefundable Portion of Employee Retention Credit“ from Form 941X published by the Department of the Treasury – Internal Revenue Service (IRS), OMB No. 1545-0029, revised in April 2022.
Instructions for Form 941-X:
18a. Nonrefundable Portion of Employee Retention Credit
Use line 18a only for corrections to quarters beginning after March 31, 2020, and before January 1, 2022.
TIP: Section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 removed the restriction on an employer who has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP) from claiming the employee retention credit. The eligible employer can claim the employee retention credit on any qualified wages that aren’t counted as payroll costs in obtaining PPP loan forgiveness. Any wages that could count toward eligibility for the employee retention credit or PPP loan forgiveness can be applied to either of these two programs, but not both. If your Form 941 didn’t claim the correct amount for the employee retention credit because you received a Small Business Interruption Loan under the PPP, you may file Form 941-X and complete Worksheet 2 to claim the correct amount of the credit. For more information, see Notice 2021-20, 2021-11 I.R.B. 922, available at IRS.gov/irb/2021-11_IRB#NOT-2021-20; and Rev. Proc. 2021-33, 2021-34 I.R.B. 327, available at IRS.gov/irb/ 2021-34_IRB#REV-PROC-2021-33.
Instructions for Qualified Wages Paid After March 12, 2020, and Before July 1, 2021
If you’re correcting the nonrefundable portion of the employee retention credit for qualified wages paid after March 12, 2020, and before July 1, 2021, that you reported on Form 941, line 11c, enter the total corrected amount from Worksheet 2, Step 2, line 2j, in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and 2.
Copy the amount in column 3 to column 4. However, to properly show the amount as a credit or balance due item, enter a positive number in column 3 as a negative number in column 4 or a negative number in column 3 as a positive number in column 4. For an example of how to report amounts in columns 1–4 for an employment tax credit, see the instructions for line 17, earlier.
For more information about the employee retention credit for qualified wages paid after March 12, 2020, and before January 1, 2021, see Notice 2021-20. See Notice 2021-23, 2021-16 I.R.B. 1113, available at IRS.gov/irb/ 2021-16_IRB#NOT-2021-23, for more information about the employee retention credit for qualified wages paid after December 31, 2020, and before July 1, 2021. Also see section IV of Notice 2021-49, 2021-34 I.R.B. 316, available at IRS.gov/irb/2021-34_IRB#NOT-2021-49; and Rev. Proc. 2021-33.
Be sure to explain the reasons for this correction on line 43.
TIP: Adjustments to the nonrefundable portion of the employee retention credit for qualified wages paid after March 12, 2020, and before July 1, 2021, are reported on Form 941-X, line 18a, and adjustments to the refundable portion of the credit are reported on Form 941-X, line 26a. Adjustments to qualified wages for the employee retention credit are reported on Form 941-X, line 30. Adjustments to qualified health plan expenses allocable to the employee retention credit are reported on Form 941-X, line 31a. Adjustments to qualified wages paid March 13, 2020, through March 31, 2020, for the employee retention credit are reported on Form 941-X, line 33a, and adjustments to qualified health plan expenses allocable to these wages are reported on Form 941-X, line 34. The employee retention credit may only be claimed on Form 941 filed for quarters beginning after March 31, 2020. The employee retention credit for wages paid March 13, 2020, through March 31, 2020, is claimed on Form 941 for the second quarter of 2020; therefore, any corrections to the employee retention credit for the period from March 13, 2020, through March 31, 2020, should be reported on Form 941‐X filed for the second quarter of 2020. Don’t file Form 941‐X for the first quarter of 2020 to report these amounts. If you claimed the employee retention credit on your original Form 941 for the quarter, and you make any corrections on Form 941‐X for the quarter to amounts used to figure this credit, you’ll need to refigure the amount of the credit using Worksheet 2. You’ll also use this worksheet to figure this credit if you’re claiming the credit for the first time on Form 941-X.
Instructions for Qualified Wages Paid After June 30, 2021, and Before January 1, 2022
CAUTION: The Infrastructure Investment and Jobs Act amends section 3134 of the Internal Revenue Code, as enacted under the ARP, to limit the availability of the employee retention credit in the fourth quarter of 2021 to employers that are recovery startup businesses, as defined in section 3134(c)(5). Thus, for wages paid after September 30, 2021, and before January 1, 2022, only the wages paid by recovery startup businesses can be qualified wages. See the December 2021 revision of the Instructions for Form 941 for more information about a recovery startup business.
If you’re correcting the nonrefundable portion of the employee retention credit for qualified wages paid after June 30, 2021, and before January 1, 2022, that you reported on Form 941, line 11c, enter the total corrected amount from Worksheet 4, Step 2, line 2h, in column 1. In column 2, enter the amount you originally reported or as previously corrected. In column 3, enter the difference between columns 1 and column 2.
Copy the amount in column 3 to column 4. However, to properly show the amount as a credit or balance due item, enter a positive number in column 3 as a negative number in column 4 or a negative number in column 3 as a positive number in column 4. For an example of how to report amounts in columns 1–4 for an employment tax credit, see the instructions for line 17, earlier.
For more information about the employee retention credit for qualified wages paid after June 30, 2021, and before January 1, 2022, see Notice 2021-49 and Rev. Proc. 2021-33. See Notice 2021-65, 2021-51 I.R.B. 880, available at IRS.gov/irb/2021-51_IRB#NOT-2021-65, for modifications to Notice 2021-49.
Be sure to explain the reasons for this correction on line 43.
TIP: Adjustments to the nonrefundable portion of the employee retention credit for qualified wages paid after June 30, 2021, and before January 1, 2022, are reported on Form 941-X, line 18a, and adjustments to the refundable portion of the credit are reported on Form 941-X, line 26a. Adjustments to qualified wages for the employee retention credit are reported on Form 941-X, line 30. Adjustments to qualified health plan expenses allocable to the employee retention credit are reported on Form 941-X, line 31a. If you claimed the employee retention credit on your original Form 941 for the quarter, and you make any corrections on Form 941-X for the quarter to amounts used to figure this credit, you’ll need to refigure the amount of the credit using Worksheet 4. You’ll also use this worksheet to figure this credit if you’re claiming the credit for the first time on Form 941-X.
Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Instructions for Part 3, “18a. Nonrefundable Portion of Employee Retention Credit“ came from the IRS Instructions for Form 941-X published by the Internal Revenue Service (IRS) Department of the Treasury, revised in April 2022.
Conclusion and Summary on 941-X: 18a. Nonrefundable Portion of Employee Retention Credit, Form Instructions
The “Nonrefundable Portion of Employee Retention Credit” section is just one of forty three detailed questions and calculations you must complete correctly on the 941X IRS Form. Listed as question #18a under Part 3 of the 941X, be sure to answer the Nonrefundable Portion of Employee Retention Credit question #18a correctly.
How To Fill Out Form 941-X For the Employee Retention Tax Credit?
Need Help Completing / Filing IRS Form 941-X?
Disaster Loan Advisors can assist your business in filing an amended Form 941 Employer’s Quarterly Federal Tax Return (for 2020 and 2021), which is IRS Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.
This tax form is required to be filled out correctly and filed for each qualifying quarter in 2020 and 2021 to ensure your business claims the maximum Employee Retention Credit (ERC) / Employee Retention Tax Credit (ERTC).
– Did you calculate your company’s maximum ERC Tax Credit correctly?
– Are you claiming all the ERC Credit for each qualifying quarter?
– Are you maximizing the total amount of ERC Credit your company qualifies for?
– Need a professional set of eyes to ensure you filled out your form 941X correctly?
Flexible and Professional ERC Consulting Tax Services
There are several flexible options for you. We can review, prepare, and / or file your 941-X Forms for you, or with you.
– Do-It-Yourself (DIY) and have us review your work.
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Our professional ERC fee and pricing structure is very reasonable in comparison.
We DO NOT charge a percentage (%) of your ERC Refund like some companies are charging. Some ERC firms out there are charging upwards of 25% to 35% of your ERC refund!
If you are looking for an ERC Company that believes in providing professional ERC Tax Services and value for small business owners, in exchange for a fair, reasonable, and ethical flat-fee for the amount of work required, Disaster Loan Advisors is a good fit for you.
Form 941-X and the ERC program can be very confusing as it relates to your specific business situation. Our fee structure is fair and reasonable for the same or better level of ERC service.
Schedule Your Form 941-X Consultation to have peace of mind you are making sure your company actually qualifies, AND you are calculating the employee retention tax credit properly.
Deadlines to File IRS Form 941-X in 2024 and 2025
The 2020 ERC Credit Tax Year deadline of 4/15/24 has already passed. Good news? The opportunity to retroactively claim your business Employee Retention Credit for the prior 2021 Tax Year is still available, with a next year April 15, 2025 deadline.
This really is your FINAL chance at any potential ERC tax credit refund!
How to Claim the Employee Retention Tax Credit (ERC / ERTC) and Receive Up to a $26,000 Refund Per Employee
Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, business owners and companies can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Program is a valuable tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
Schedule Your Free Employee Retention Credit Consultation to see if your company qualifies for the employee retention tax credit.
Cover Image Credit: Irs.gov / Form 941-X / Disaster Loan Advisors.
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