Publication 51 |
2000 Tax Year |
9. Adjustments on Form 943
There are two types of adjustments: current year adjustments and
prior year adjustments. See the instructions for Form 943 for more
information on how to report these adjustments.
Current Year Adjustments
In certain cases, amounts reported as social security and Medicare
taxes on lines 3 and 5 of Form 943 must be adjusted to arrive at your
correct tax liability. The most common situation involves differences
in cents totals due to rounding. Other situations when current year
adjustments may be necessary include third-party sick pay, group-term
life insurance for former employees, and the uncollected employee
share of tax on tips. See Circular E for more information on these
adjustments.
If you withhold an incorrect amount of income tax from an employee,
you may adjust the amount withheld in later pay periods during the
same year to compensate for the error.
Prior Year Adjustments
Generally, you can correct social security and Medicare errors on
prior year Forms 943 by making an adjustment on the Form 943 for the
year during which the error is discovered. The adjustment increases or
decreases your tax liability for the year in which it is reported (the
year the error is discovered) and is interest free. The net
adjustments reported on Form 943 may include any number of corrections
for one or more previous years, including both overpayments and
underpayments.
You are required to provide background information and
certifications supporting prior year adjustments. File with Form 943 a
Form 941c, Supporting Statement To Correct Information, or
attach a statement that shows all of the following:
- What the error was,
- The year in which each error was made and the amount of each
error,
- The date you found each error,
- That you repaid the employee tax or received from each
affected employee written consent to this refund or credit, if the
entry corrects an overcollection, and
- If the entry corrects social security and Medicare taxes
overcollected in an earlier year, that you received from the employee
a written statement that he or she will not claim a refund or credit
for the amount.
Do not file Form 941c or the written statement separately.
The IRS will not be able to process your adjustments without this
supporting information. See the instructions for Form 941c for more
information.
Income tax withholding adjustments.
You cannot adjust the amount reported as income tax withheld for a
prior year return, even if you withheld the wrong amount. However, you
may adjust prior year income tax withholding to correct an
administrative error. An administrative error occurs if
the amount you entered on Form 943 is not the amount you actually
withheld. Examples include mathematical or transposition errors. In
these cases, you should adjust the return to show the amount actually
withheld.
The administrative error adjustment corrects only the amount
reported on Form 943 to agree with the actual amount withheld from
wages in that year.
You may also need to correct Forms W-2 for the prior year if they
do not show the actual withholding by filing Form W-2c,
Corrected Wage and Tax Statement, and Form W-3c,
Transmittal of Corrected Wage and Tax Statements.
Social security and Medicare tax adjustments.
Correct prior year social security and Medicare tax errors by
making an adjustment on line 8 of Form 943 for the year during which
the error was discovered.
If you withheld no tax or less than the correct amount, you may
correct the mistake by withholding the tax from a later payment to the
same employee.
If you withheld employee tax when no tax is due or if you withheld
more than the correct amount, you should repay the employee.
Filing a claim for overreported prior year liabilities.
If you discover an error on a prior year return resulting in a tax
overpayment, you may file Form 843, Claim for Refund and
Request for Abatement, for a refund. This form also can be used to
request an abatement of an overassessment of employment taxes,
interest, and/or penalties. You must file Form 941c, or an equivalent
statement, with Form 843. See the separate Instructions for Form
843.
Note:
For purposes of filing Form 843, a timely filed Form 943 is
considered to be filed on April 15 of the year after the close of the
tax year. Generally, a claim may be filed within 3 years from that
date.
Refunding amounts incorrectly withheld from employees.
If you withheld more than the right amount of income, social
security, or Medicare taxes from wages paid, give the employee the
excess. Any excess income tax withholding must be reimbursed to the
employee prior to the end of the calendar year. Keep in your records
the employee's written receipt showing the date and amount of the
repayment. If you do not have a receipt, you must report and pay each
excess amount when you file Form 943 for the year in which you
withheld too much tax.
Filing corrections to Form W-2 and W-3 statements.
When adjustments are made to correct social security and Medicare
taxes because of a change in the wage totals reported for a previous
year, you also may need to file Forms W-2c and Form W-3c.
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