Form 944, the Employer’s Annual Federal Tax Return, is one of the lesser-known IRS payroll tax forms for small businesses. Like Form 941, it’s used to report your employer and employee Social Security and Medicare taxes, plus employee federal income tax payments. The difference between the two forms is that Form 944 should be filed by businesses that withhold less than $1,000 in a year in federal payroll taxes.
Few businesses meet this threshold, but it does reduce your filings obligations from quarterly to annually if you do. So, if you’re an employer that pays less than roughly $4,000 in wages in a calendar year, you’ll likely need to file Form 944.
Read on for a description of Form 944, a printable PDF, and simple instructions on how to fill it out.
Form 944 lets small business owners who have a few (or no) full-time employees file and pay their employment taxes yearly, instead of every quarter. Even if you have no employees, you will need to file a return for your business.
Filing Form 944 is the alternative to filing a 941 (Employer’s Quarterly Federal Tax Return used for employers with higher estimated tax liability), but it’s important to be certain you are filing the correct form on time to avoid fines and penalties.
If you are a new business owner, the IRS will determine whether you will need to file a 944 or 941 return when you receive your Employer Identification Number (EIN). Need help with this? We also offer additional information and instructions for completing a 941.
The deadline to file your 2020 Form 944 return is January 31, 2021. Unlike those filing a 941, small business owners have the option to pay taxes when filing, rather than making tax deposits throughout the year. However, if you do make deposits monthly, the IRS extends the deadline to file until February 10 (or the first business day after the 10th).
As a small business owner, you must file a 944, even if you have no taxes to report. If your business closes, you will have to file a final return for the year which the business closed.
To complete Form 944, you’ll need the following:
There are currently four parts that need to be completed on a 944. Read on for line-by-line instructions and calculations:
Part 2 is where you will enter information on your current tax deposit schedule and corresponding tax liability for the year.
This is filled out only if your business has closed or you no longer pay wages.
Part 4 is used if you wish to designate an employee or paid preparer or service to talk with the IRS about Form 944.
That’s basically it!
If you’ve done a good job of payroll accounting throughout the year, filling out Form 944 should be fairly simple. Be sure to check that form is completed accurately and that the taxes are deposited on or before the due date. If you are using payroll software or a payroll service provider, your 944 will usually be completed for you.
If you have any questions, visit the IRS website for more detailed background information and Form 944 instructions.