I mistakenly paid an employee with two business checks in January and I did not withhold taxes. He no longer is an employee. How can I fix this situation?

ANSWER

The BIDaWIZ Team's Answer:

An employer who has under-reported and/or underpaid FICA tax, RRTA tax or income tax withholding can correct the error on the form that corresponds to the return being corrected. For instance, if the original return filed was a Form 941 - Employer's QUARTERLY Federal Tax Return, the correction can be reported on Form 941-X - Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund. The adjusted return on which the correction is shown must provide the following: 1) a detailed explanation of the correction, 2) the date the error was ascertained, 3) the return period being corrected, 4) other information as prescribed in the regulations or instructions relating to the adjusted return. If all of the above information is provided and the adjustment is reported by the due date of the return for the return period in which the error is ascertained, then there shouldn't be any problem. Also, don't forget about fixing any state withholdings that weren't accounted for previously.