941-X: 20. Special Additions to Wages for Federal Income Tax, Social Security Taxes, Medicare Taxes, and Additional Medicare Tax, Form Instructions

The “Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax” section is listed as question #20 under Part 3 of Form 941-X, which is needed to claim the employee retention tax credit. Instructions are below for the  Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax section.

Form 941-X:

20. Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax

Part 3: Enter the corrections for this quarter. If any line doesn’t apply, leave it blank.

20. Special addition to wages for social security taxes

Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund

Part 3, “20. Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax“ 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:

20. Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax

Section 3509 provides special rates for the employee share of federal income tax, social security tax, Medicare tax, and Additional Medicare Tax withholding when workers are reclassified as employees in certain circumstances. The applicable rate depends on whether you filed required information returns. An employer can’t recover any tax paid under this provision from the employees. The full employer share of social security tax and Medicare tax is due for all reclassifications. 

Note. Section 3509 rates aren’t available if you intentionally disregarded the requirements to withhold taxes from the employee, or if you withheld federal income tax but didn’t withhold social security and Medicare taxes. Section 3509 rates are also not available for certain statutory employees. 

On lines 19–22, enter only corrections to wages resulting from reclassifying certain workers as employees when section 3509 rates are used to calculate the taxes. 

If the employer issued the required information returns, use the section 3509 rates as follows.

  • For social security taxes, use the employer rate of 6.2% plus 20% of the employee rate of 6.2%, for a total rate of 7.44% of wages. 
  • For Medicare taxes, use the employer rate of 1.45% plus 20% of the employee rate of 1.45%, for a total rate of 1.74% of wages. 
  • For Additional Medicare Tax, 0.18% (20% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax. 
  • For federal income tax withholding, the rate is 1.5% of wages. If the employer didn’t issue the required information returns, use the section 3509 rates as follows. 
  • For social security taxes, use the employer rate of 6.2% plus 40% of the employee rate of 6.2%, for a total rate of 8.68% of wages. 
  • For Medicare taxes, use the employer rate of 1.45% plus 40% of the employee rate of 1.45%, for a total rate of 2.03% of wages. 
  • For Additional Medicare Tax, 0.36% (40% of the employee rate of 0.9%) of wages subject to Additional Medicare Tax. 
  • For federal income tax withholding, the rate is 3.0% of wages. 

Unlike some other lines on Form 941-X, enter in column 1 only the corrected wages for workers being reclassified, not the amount paid to all employees. Enter in column 2 previously reported wages (if any) to reclassified employees. To get the amount for column 4, use the applicable section 3509 rates. If you filed the required information returns for some employees but didn’t file them for other employees, be sure to use the applicable rates for each employee when calculating the amounts in column 4 and show your calculations on line 43. The tax correction in column 4 will be a positive number if you increased the amount of wages you previously reported. See the instructions for line 42, later, for more information. 

Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund

Instructions for Part 3, “20. Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax“ 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: 20. Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax, Form Instructions

The “Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax” section is just one of forty three detailed questions and calculations you must complete correctly on the 941X IRS Form. Listed as question #20 under Part 3 of the 941X, be sure to answer the Special Additions to Wages for Federal  Income Tax, Social Security Taxes, Medicare  Taxes, and Additional Medicare Tax question #20 correctly.

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 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.
– Done-With-You (DWY) and let’s collaborate together.
– Done-For-You (DFY) and we handle it all for you, from start to finish.
– Or, Consult-With-You to customize to your exact needs. 

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! 

There is nothing wrong with charging %’s. Some company ERC calculations and filings are highly complicated and require a lot of work, however, there is no need for you to potentially pay excessive fees for the same quality work.

If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical 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 calculating the largest amount of employee retention tax credit your company may claim.

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 what amount of employee retention tax credit your company qualifies for.

Cover Image Credit: Irs.gov / Form 941-X / Disaster Loan Advisors.

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