Part 4: Explain Your Corrections for the Calendar Year You’re Correcting

41. Corrections of Both Underreported and Overreported Amounts Check the box on line 41 if any corrections you entered on lines 6–19, 20b–20d, 24, 25b, 25c, 27–30, or 33–38 in column 3 reflect both underreported and overreported amounts.

Example. If you had an increase to Tier 1 Employer compensation of $15,000 for Nathan Smith and a decrease to Tier 1 Employer compensation of $5,000 for Leah Green, you would enter $10,000 on line 6, column 3. That $10,000 represents the net change resulting from corrections.

On line 43, you must explain the reasons for both the $15,000 increase and the $5,000 decrease.

42. Did You Reclassify Any Workers? Check the box on line 42 if you reclassified any workers to be independent contractors or nonemployees. Also check this box if the IRS (or you) determined that workers you treated as independent contractors or nonemployees should be classified as employees. On line 43, provide a detailed reason why any worker was reclassified.

Return not filed because you didn’t treat any workers as employees. If you didn’t previously file Form CT-1 because you mistakenly treated all workers as independent contractors or nonemployees, file a Form CT-1 for each delinquent year.

Write “Misclassified Employees” in bold letters across the top margin of page 1 of each Form CT-1. Complete Form CT-1 using the Instructions for Form CT-1. Attach a Form CT-1 X to each Form CT-1. Complete the

Alternative signature method. Corporate officers or duly authorized agents may sign Form CT-1 X by rubber stamp, mechanical device, or computer software program.

top of Form CT-1 X, including the date you discovered the error, and provide a detailed explanation on line 43.

43. Explain Your Corrections Treasury regulations require you to explain in detail the grounds and facts relied upon to support each correction. On line 43, describe in detail each correction you entered in column 4 on lines 6–19, 20b–20d, 24, 25b, and 25c. Also use line 43 to describe corrections made on lines 27– 30 and 33–38. If you need more space, attach additional sheets, but be sure to write your name, EIN, “Form CT-1 X,” and the calendar year you’re correcting on the top of each sheet.

You must describe the events that caused the underreported or overreported amounts. Explanations such as “RRTA compensation was overstated,” “administrative/payroll errors were discovered,” or “taxes were not withheld” are insufficient and may delay the processing of your Form CT-1 X because the IRS may need to ask for a more complete explanation.

Provide the following information in your explanation of each correction.

• Form CT-1 X line number(s) affected.

• Date you discovered the error.

• Difference (amount of the error).

• Cause of the error. You may report the information in paragraph form. The following paragraph is an example.

“The $1,000 difference shown in column 3 of lines 6 and 7 was discovered on May 15, 2025, during an internal payroll audit. We discovered that we included $1,000 of compensation for one of our employees twice. This correction removes the reported compensation that was never paid.”