The IRS has updated Form 941 (Employer’s Quarterly Federal Tax Return) and Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund), along with their respective Instructions, for 2026. These forms are used by employers to report quarterly wages, taxes withheld, and social security and Medicare obligations, and to correct errors on previously filed returns.
A notable change appearing on both forms is the addition of a new “Aggregate Return Filers Only” section, requiring aggregate filers to identify themselves as a Section 3504 Agent, Certified Professional Employer Organization (CPEO), or Other Third Party. Section 3504 Agents and CPEOs must additionally attach Schedule R to their aggregate returns.
Both sets of instructions also reflect new guidance enacted under P.L. 119-21, commonly known as the One Big Beautiful Bill Act. New deductions for qualified tips and qualified overtime compensation are introduced for tax years 2025 through 2028. Employees and self-employed individuals may deduct up to $25,000 of qualified tips received in occupations that customarily and regularly received tips on or before December 31, 2024, and individuals (including employees and other workers not treated as employees) may deduct up to $12,500 ($25,000 if married filing jointly) of qualified overtime compensation.
The Form 941-X Instructions additionally tighten the rules around COVID-19 related employee retention credit corrections for the third and fourth quarters of 2021. Claims for those quarters are disallowed unless filed on or before January 31, 2024. The assessment period for those quarters has been extended to 6 years after the credit was claimed or from when the original return was filed, whichever is later. Records related to qualified wages paid after June 30, 2021, and before January 1, 2022 should be kept for at least 7 years.
Form 941 also introduces several other notable changes for 2026. Line 15 has been restructured into five lines to accommodate a new direct deposit option for refunds. The social security wage base limit has been updated from $176,100 to $184,500, the household worker wage threshold from $2,800 to $3,000, and the election worker wage threshold from $2,400 to $2,500.
For more detail, see the updated Form 941 and its Instructions, as well as Form 941-X and its Instructions.
