As an employer, you are required to withhold taxes from employee wages. You must then file and deposit the federal payroll taxes. In most cases, companies are required to file quarterly federal payroll and income taxes. But, sometimes, very small businesses can file Form 944 once a year instead. What is IRS Form 944?
What is Form 944 used for?
Most employers need to file Form 941, Employer’s QUARTERLY Federal Tax Return. If your business qualifies, the IRS will notify you that you must file Form 944 instead. Filing Form 944 means you are only responsible for reporting taxes once annually instead of four times a year.
Who files Form 944?
The IRS will tell you to file Form 944 if you have an annual liability for Social Security, Medicare, and federal income taxes of $1,000 or less. According to the IRS, this means you will pay $4,000 or less in wages subject to these taxes during the calendar year.
You will receive a written notice if the IRS wants you to file Form 944.
If the IRS has not notified you to file Form 944, you can request to file it. To do so, you must contact the IRS via phone (1-800-829-4933 or 267-941-1000) or send a written request. You must make this request within the first few months of the year. The IRS will notify you if you can file Form 944 following this request.
New employers might also be allowed to file Form 944. Before you hire employees, you must apply for an EIN (Employer Identification Number). The EIN will be used to identify your business when you report taxes. To apply, file Form SS-4, Application for Employer Identification Number.
When you file Form SS-4, complete Box 13 and check Box 14, indicating you predict your employment tax liability will be $1,000 or less.
Who can’t file Form 944?
You cannot file Form 944 if the IRS did not tell you to. If you request to file Form 944 and the IRS does not reply, you must file Form 941.
If you employ only household or agricultural employees, you also cannot file Form 944.
Requesting to file Form 941
If you would rather file Form 941, you can elect to change your filing method. You must call the IRS (1-800-829-4933 or 267-941-1000) or send a written request at the beginning of the year.
IRS Form 944 instructions
On IRS Form 944, you need to enter information about employee wages to make sure the amount you withheld is correct.
In order to complete Form 944, you must enter your EIN, business name, trade name (if applicable), and address. Then, you must answer questions about wages and other compensation, withheld federal income tax, and taxable Social Security and Medicare wages.
Here is a list of the information you need to provide on Form 944:
- Employer Identification Number
- Employer contact information
- Employee wages, tips, and other compensation
- Federal income tax withheld
- Taxable Social Security and Medicare wages
- Deposit information
For more instructions on how to complete and file Form 944, consult the IRS.
Filing Form 944
You must file Form 944 once each year by January 31.
File Form 944 either electronically or by mail. If you decide to e-file, you must use a third-party and pay a fee. Your form will be received faster with e-file than by mail.
If you choose to file by mail, pay attention to the IRS’s requirements. The IRS will treat Form 944 as filed on time even if it is received after the due date if it is properly addressed, has enough postage, and is postmarked by the U.S. Postal Service or IRS-designated private delivery service on or before the due date.
File Form 944-X, Adjusted Employer’s ANNUAL Federal Tax Return or Claim for Refund, if you made a mistake on Form 944.
You must pay federal taxes via an electronic funds transfer (EFT). Most business owners use the Electronic Federal Tax Payment System (EFTPS), a free service that lets you pay federal taxes online or over the phone.
If you do not use EFTPS, a third party can make electronic deposits on your behalf.
Even if you file Form 944, your total employment tax liability could exceed $1,000. The amount of tax liability you actually have determines your deposit requirements.
If the IRS told you to file Form 944, you might need to deposit monthly or semiweekly. If this is the case, you will file Form 941 quarterly for the following year.
Employers whose tax liability is less than $2,500 for the year do not need to deposit. You can pay the tax amount with your return.
Employers whose tax liability is $2,500 or more for the year, but less than $2,500 for the quarter, can deposit after the end of the quarter. You can pay the fourth quarter’s tax liability when you file Form 944 if it is less than $2,500.
If your tax liability ends up being $2,500 or more for the quarter, you must deposit monthly or semiweekly. This depends on your deposit schedule. Your deposit schedule is based on the IRS lookback period. Deposit monthly if you reported $50,000 or less in taxes during the lookback period. Deposit semiweekly if you reported more than $50,000 during the lookback period.
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This article has been updated from its original publish date of Dec. 1, 2014.
This is not intended as legal advice; for more information, please click here.