What is IRS Form 944?

If you're a small business owner, you may have received a notification from the Internal Revenue Service (IRS) stating that you must file Form 944¹.

This is standard practice for eligible employers that need to report their tax obligations, such as annual income and federal payroll taxes that you withhold from employee paychecks. But what is Form 944, and why is it necessary for your organization to file?

In this article, we'll explain what IRS Form 944 is, how it works, and who needs to file one.

What is IRS Form 944?

Small businesses use Tax Form 944 to report their organization's federal income tax, Social Security tax, and Medicare tax they’ve withheld from their employees. Eligible employers also use it to calculate business taxes.

This annual form replaces Form 941 for some small business employers, allowing you to file annually instead of submitting quarterly forms.

Form 944 allows you to report the following information:

• Employee wages
• Employee tips
• Federal income tax withheld
• Employer and employee share of Social Security and Medicare taxes
• Adjustments to Social Security and Medicare wages and tips, including sick leave wages and group-term life insurance
• Qualified small business payroll tax credit for research activities
• Credits for sick and family leave wages
• Employee retention credit
• COBRA premium credit
• Advances received from Form 7200

Who must file Form 944?

Employers eligible for Form 944 must have $1,000 or less in annual payroll tax liability.

If the IRS sends you a notice to use Form 944 to report your federal income taxes, you must file the form. If the IRS notifies you that you're eligible to file Form 944, but aren't required to, then you can elect to file it instead of Form 941.

However, if the IRS didn't notify you, you must complete Form 941. Most organizations will complete and file Form 941.

There are a few exceptions for small businesses to be aware of.

You aren't eligible for Form 944, even if you have $1,000 or less in annual income tax liability, if:

• You're a household employer
• You're an agricultural employer

If you believe you should be eligible for Form 944, you can contact the IRS to request the change. Additionally, if you've exceeded the $1,000 limit and were told to file the form by the IRS, you must continue to file Form 944 until told otherwise in writing.

Determining which form to file is essential for ensuring you're making tax deposits on time and aren't subject to late filing penalties.

Do I have to file Form 944 if I have no employees?

Yes, you must file Form 944 if the IRS has notified you in writing that you must submit one—even if you have no employees. In this case, you'll fill out the form to the best of your ability, skipping over the sections that apply to withheld wages.

How to file Form 944

Now that we've covered what Form 944 is, let's discuss the tax filing process. The IRS offers a complete how-to on its instructions¹ page. You can find the current version² of the form on the IRS website.

1. Gather payroll forms and fill in your primary business information

You want to have the information you need on hand before starting. You'll need access to payroll taxes and federal income tax withholding for your employees’ wages. You'll also need to know the total amount you've paid your employees for the year. If you're using payroll software or a payroll service, you should be able to access these numbers quickly.

Then, you can start filling in your basic information. You'll need to provide your EIN (if you don't have an EIN, you need to apply for one from the IRS), the official name of your business, and your trade name or doing-business-as name (DBA) if you have one. You'll also need to provide your business address.

Once you've completed the basic information, you can move on to the next section.

2. Complete Part 1

In box 1, you'll supply the total number of wages, tips, and compensation paid to your employees for the tax year.

In box two, write the amount of federal income tax withheld from employees' wages, tips, and other income. Remember, you'll need to count any taxable employee benefits you've provided to your workers, such as employee stipends.

Next, you need to calculate Social Security wages and Medicare wages to determine your employment tax liability. If you don't have any wages subject to withholding, check the box and skip to line 5. Otherwise, you'll input the amount for each type of income and multiply that amount by the listed numbers to get the total in column 2.

Total the amount in column 2 and add this value to box 4e.

Now you'll complete the other boxes in Part 1, using lines 2 and 4e to determine the total taxes before adjustments. You'll add boxes 5 and 6 to get your total taxes after adjustments in box 7.

Subtract any tax credits or tax deposits you've already made for the year in boxes 9 and 10. Enter the difference in box 11 if box 9 is larger than box 10 to determine your annual liability. This is the amount you must pay to the IRS. If box 10 is larger than box 9, you've paid more in taxes than you owe. This means you'll need to fill in box 12 to indicate you either need a tax refund or to have the amount withheld from your next return.

3. Complete Part 2

Part 2 of the form asks you to report your organization's deposit schedule and tax liability. First, check whether the amount on line 9 in Part 1 is less than $2,500 or not.

If this value is less than $2,500, skip this section and go to Part 3. If line 9 is greater than $2,500, enter your tax liability for each month.

4. Complete Part 3

Part 3 asks if your business is closed or if you stopped paying wages to your employees. If these situations apply, check the box and fill in the final date you paid employees. Otherwise, leave this section blank.

5. Complete Part 4

Part 4 asks if you'd like to grant the IRS permission to speak with a third-party designee. This could be an employee, tax-preparer, CPA, or someone else you would like to allow the IRS to speak to regarding your Form 944 return.

6. Complete Part 5

This is the final section of the form. You'll sign your name and review the form to ensure the information is accurate and complete.

When should I submit Form 944?

You need to file Form 944 by Jan. 31 of the current year for the previous year that you're reporting.

For example, if you're filing for the 2023 tax period, you must file by Jan. 31, 2024. If the annual filing deadline falls on a weekend or holiday, you can file it by the next business day.

Where do I send Form 944?

Where your organization is located determines where you'll send your completed Form 944. The amount of employment taxes you owe will also determine whether or not you need to send payment when you need to file.

You must make a payment to the Internal Revenue Service when submitting Form 944 if your net federal taxes are less than $2,500, if you've deposited taxes owed quarterly and owe less than $2,500 for Q4, or if you deposit taxes monthly and owe less than $100 or 2% of the total tax due, whichever is greater.

You have a few options to submit payment:

• Fill out Form 944-V, or Form 944 payment voucher, to pay by mail
• Pay online through a tax-preparation software program, tax professional, or e-file providers

To submit Form 944 with a payment, you'll either send the form to IRS offices in Cincinnati or Louisville, depending on your state. If you're submitting Form 944 without payment, you can send it to IRS offices in Kansas City or Ogden, Utah, depending on your state. You can also always use electronic filing methods through your tax-preparer or tax software program.