Form 945-X - Feb 2014

Form 945-X: How to correct withheld federal income tax

Form 945-X, Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund, is used to correct certain errors on a previously filed Form 945. It is filed separately and is not attached to the original Form 945.

What does Form 945-X correct?

Form 945-X is used to correct administrative errors on a previously filed Form 945, including errors involving federal income tax withheld from nonpayroll payments. These errors can result from incorrect calculations, transposed numbers or other mistakes in the amounts originally reported.

The form allows the filer to increase or decrease the reported withholding and, depending on the correction, either pay additional tax, apply an overpayment as a credit or request a refund or abatement.Form 945-X generally does not replace an original Form 945 that was never filed. If a Form 945 should have been filed but was not, the original Form 945 should be filed instead.

Who needs to file Form 945-X?

Form 945-X may be required when a filer discovers an error on a previously submitted Form 945. Form 945 is used to report federal income tax withheld from certain nonpayroll payments, including backup withholding and withholding from pensions, annuities, IRAs and certain other payments.

Common filers may include:

• Pension and retirement plan administrators that reported an incorrect amount of withholding
• Businesses that paid gambling winnings and incorrectly reported federal income tax withheld
• Payers that made payments subject to backup withholding and reported the wrong withholding amount

If the original Form 945 was not filed, Form 945-X generally should not be used as a substitute for the original return.

Adjustment process vs. claim process

Form 945-X provides two correction processes. The appropriate process depends on whether the original return understated or overstated the amount of tax.

• Adjustment process: Use this process to report additional tax that is owed or to apply an overreported amount as a credit against the tax reported on Form 945.
• Claim process: Use this process when the reported tax was overstated and the filer wants a refund or abatement.

Only one process should generally be used for a particular Form 945-X. Special rules apply to corrections made during the final 90 days of the period of limitations, so the current IRS instructions should be reviewed before filing.

How to file Form 945-X

Form 945-X can be filed electronically through the IRS Modernized e-File system when the filer and software meet the applicable requirements. Paper filing may also be available for eligible filers. When filing a paper return, use the current IRS mailing address that applies to the filing. Check the latest IRS instructions before mailing because addresses and filing procedures can change. A separate Form 945-X is generally required for each calendar year being corrected.

Is there a deadline for filing Form 945-X?

The deadline depends on the type of correction and the applicable period of limitations. For underreported tax, the correction should generally be reported when the error is discovered. Any additional tax due should be paid as required to limit potential interest and penalties. For overreported tax, a refund or abatement claim is generally subject to a period of limitations. In many cases, the claim must be filed within three years from the date the original Form 945 was filed or two years from the date the tax was paid, whichever is later.

Correcting an error does not automatically result in a penalty. However, additional tax that was underreported may be subject to interest and penalties if it was not paid when required.

What information is needed for Form 945-X?

Gather the original return and supporting records before completing Form 945-X. The form requires information about the amounts originally reported, the corrected amounts and the reason for the correction.Have the following information ready:

• The calendar year being corrected
• A copy of the original Form 945
• The originally reported withholding amounts
• The corrected withholding amounts
• The date the error was discovered
• A detailed explanation of the correction
• Records supporting the corrected amounts
• Payment information if additional tax is due

Review the corrected figures against payroll, payment and withholding records before submitting the form.

Complete Form 945-X with Lumin

Need to correct a previously filed Form 945? Use Lumin's fillable Form 945-X template to enter the required information, explain the correction and prepare the adjusted return for filing. Review the completed form, make any necessary changes and download it when it's ready to submit.