Form 944: The Annual Payroll Tax Return for Small Employers
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Key Takeaways
- Form 944 is a simplified option for small employers with a relatively low payroll tax liability. If your business owes $1,000 or less in payroll taxes annually, you can use this form to report your taxes just once a year, rather than filing quarterly with Form 941.
- While Form 944 may seem like an appealing option, it’s not something you can opt into without approval. The IRS determines whether you qualify based on your payroll tax liability. If you believe that you meet the criteria, you can request to switch from Form 941 to Form 944, but you must first receive confirmation from the IRS. Until you get their approval, you must continue using Form 941 for quarterly filings.
- Filing Form 944 annually doesn’t automatically mean you can wait until the end of the year to pay your payroll taxes.
- As your business expands and your payroll tax liability increases, the IRS may move you from annual Form 944 filings to quarterly Form 941 filings. This usually happens when your tax liability exceeds $1,000. If that occurs, you’ll need to switch to a quarterly filing schedule, which involves more frequent reporting and deposits, as your business will be required to file and pay taxes four times a year instead of just once.
- The annual deadline for submitting Form 944 is January 31, which gives employers a set date to report their payroll taxes for the previous year.
If you’re a small business owner or a new employer in the U.S., the IRS has a form specifically designed to help you simplify your tax reporting: Form 944. You might not have heard much about it, especially if you’ve been used to filing quarterly returns. But if your payroll is on the smaller side, this form could save you time and energy.
Let’s break down what Form 944 is, who it’s for, how it works, and what you need to know heading into the 2025 tax season.
What is Form 944?
Form 944 is the IRS’s way of giving certain small employers a break from filing federal payroll tax returns every quarter. Instead of sending in Form 941 four times a year, you get to file just once annually. The idea is to reduce the paperwork burden on very small businesses with low payroll tax obligations.
Formally known as the “Employer’s Annual Federal Tax Return,” Form 944 is used to report federal income tax withheld from employee wages, along with both the employer and employee shares of Social Security and Medicare taxes.
But here’s the thing: not everyone gets to decide whether they file Form 944. The IRS will let you know if you’re eligible or required to use it.
Who Should File Form 944?
The IRS generally invites businesses to file Form 944 if they expect their total annual liability for employment taxes—this includes Social Security, Medicare, and withheld income tax—to be $1,000 or less. That threshold means you’re likely running a very small payroll, maybe even just paying yourself or a handful of part-time employees.
Typically, this form is for:
- New businesses with very few employees
- Sole proprietors or single-member LLCs with minimal payroll
- Employers paying infrequent or seasonal wages
If the IRS hasn’t notified you to file Form 944, you shouldn’t switch to it on your own. You’ll still need to file Form 941 quarterly unless the IRS says otherwise. If you think you qualify and want to switch, you can request permission by contacting the IRS, but you must do so before the end of the year preceding the tax year in question.
What Does Form 944 Report?
Form 944 basically collects the same info as Form 941—it just bundles it all into one annual filing. Instead of having to do quarterly reports, Form 944 lets you wrap up everything at the end of the year. Here’s a bit more on what you’ll report:
- Wages paid to employees during the year: You’ll need to report the total amount of wages you paid to your employees, which forms the basis of the taxes you owe. This includes regular wages, salary, bonuses, and any other forms of compensation.
- Federal income tax withheld: Just like with Form 941, you’ll need to report the amount of federal income tax you withheld from your employees’ paychecks throughout the year. This is the money you’ve already taken out of their wages and sent to the IRS on their behalf.
- Social Security and Medicare taxes owed: You’ll report the amount of Social Security and Medicare taxes you owe, both the employer’s and employee’s portion. This includes the match that you, as the employer, are responsible for paying.
- Any adjustments (like sick pay, tips, group-term life insurance, etc.): This section includes adjustments for things like taxable sick pay, tips your employees reported, or group-term life insurance benefits. Basically, any fringe benefits or adjustments that affect your taxable income.
- Credit for COBRA premium assistance, if applicable: If you qualify for any COBRA premium assistance (for example, under COVID relief programs), you’ll report it here. This credit helps offset some of the health insurance premiums for employees who were laid off.
- Total tax liability for the year: This is the sum of all the taxes you owe for the year, including income tax, Social Security, Medicare, and any other applicable taxes.
- Any deposits made throughout the year: Even though you’re filing once a year, you’re still required to make periodic tax deposits. This section will show what you’ve already paid throughout the year, ensuring that you’ve met your deposit obligations.
If you’re a small business—say, a one-person operation or just a few employees—and your payroll taxes are low, Form 944 really helps simplify things. You won’t have to juggle multiple quarterly filings, and you can just focus on the annual reporting, which saves you time and hassle.
Deadlines and Due Dates for 2025
For the 2024 tax year, Form 944 is due by January 31, 2025. That date doesn’t change from year to year since it’s always January 31 of the following year.
However, if you deposited all your employment taxes on time and in full throughout the year, you get a little more breathing room. You’ll have until February 10, 2025, to file.
It’s important to remember that even though you file only once, you may still be required to make tax deposits throughout the year, especially if you’re withholding taxes from employee paychecks.
How to File Form 944
You can file Form 944 either by paper mail or electronically. If you’re mailing it, the address depends on your state and whether you’re sending a payment with the form. If you prefer to file online, you can use the IRS’s e-file system or approved third-party software.
One thing to keep in mind: Form 944 is not a replacement for your W-2 and W-3 reporting at the end of the year. You still have to send those in to report wages and taxes paid for each employee.
If you file Form 944 without being authorized by the IRS to do so, your return could be rejected or processed incorrectly. The same goes if you’re supposed to file 944 but you send in 941s instead. Always check with the IRS if you’re unsure about which form applies to you.
Also, if your payroll grows and your tax responsibility exceeds $1,000 in a year, you might be required to switch back to filing quarterly. The IRS will usually notify you about that change.
Common Mistakes to Avoid
A few things trip up filers every year: Double-check that you’re reporting the correct year. Make sure you don’t forget to include all taxes owed, not just what you withheld. If you made deposits during the year, you’ll want those to match what you report on the form. And finally, always sign the return—unsigned forms are considered incomplete.
Why Form 944 Matters for Small Employers
Form 944 might not seem like a big deal at first glance, but for small businesses, it’s a small victory in the paperwork game. Filing once instead of four times a year cuts down on hassle and helps you focus on running your business. If you qualify, this one annual filing could save you several hours and reduce the chance of making quarterly filing mistakes.
The Final Word on Form 944…
If you’re a small employer with limited payroll, Form 944 is designed to make your life a little easier. It’s not for everyone, and it does come with specific IRS rules, but for those who qualify, it can simplify your payroll reporting process significantly. As always, staying informed and double-checking your eligibility each year will help you avoid missteps and keep things running smoothly.
Form 944: FAQ
1. Who exactly is supposed to file Form 944 instead of Form 941?
Form 944 is meant for really small employers—usually businesses with very few employees or seasonal help—whose total liability for Social Security, Medicare, and federal income tax withholding adds up to no more than $1,000 per year. The IRS typically reaches out to eligible businesses to let them know they qualify. If you haven’t received that notification but think you might be a candidate, you can ask to switch, but you’ll need to do it ahead of time and wait for the IRS to approve. Otherwise, you’re expected to keep filing Form 941 quarterly like everyone else.
2. If I use Form 944, do I still need to send in payments throughout the year?
Yes, possibly. Filing Form 944 once a year doesn’t necessarily mean you get to hold onto those withheld taxes all year long. The IRS expects you to follow its deposit schedule, which depends on how much tax you’re responsible for. If your tax liability hits a certain threshold—usually over $2,500 during the year—you might need to deposit those taxes either monthly or semiweekly, even if you’re filing Form 944 annually. The key is to separate how often you file from how often you pay.
3. What kind of info goes on Form 944?
Form 944 asks for the same kinds of information as Form 941, just in an annual format. You’ll report things like how much you paid your employees in wages, how much federal income tax you withheld, and what you owe in Social Security and Medicare taxes. You’ll also note any adjustments or credits and list any tax deposits you made during the year. The IRS uses all this to reconcile what you paid versus what you owe, just like with quarterly filings, only now it’s all bundled into one big form.
4. Can I switch between Form 941 and Form 944 from year to year?
Not on your own. The IRS determines which form you’re supposed to file based on your tax history and the size of your payroll. If you want to switch from one to the other, you have to make a formal request, usually before January of the year you want the change to take effect. And even then, it’s up to the IRS to approve the change. If your payroll grows beyond the $1,000 threshold, the IRS will usually switch you back to quarterly filing automatically.
5. What happens if I file Form 944 when I was supposed to file Form 941?
Filing the wrong form can cause confusion or processing delays. The IRS might reject the form, misapply your payments, or send you notices for missing forms. If you’re unsure which one to file, it’s best to check with the IRS or look at any correspondence they’ve sent you. The safest route is always following their official direction. Filing the wrong return isn’t the end of the world, but it can lead to some headaches down the line.
6. Is there an advantage to filing Form 944 if I qualify?
Absolutely. For small businesses, especially solo operations or those with minimal payroll, filing once a year instead of four times can really simplify things. You only need to pull together all your wage and tax info once, which means less paperwork, fewer deadlines, and a lower chance of making filing errors throughout the year. It’s a nice little break from the usual tax grind, as long as you stay on top of any deposits you still need to make. Just don’t assume you qualify—make sure the IRS is on board with the switch first.
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