May 05, 2021

IRS Form 944

When you become a corporation, you’ll need to start paying employer income tax. Even if you’re the only employee, you will need to pay taxes as both an employer and a worker. This can make the tax process much more complicated—especially if you’re used to filing with a simple W-2 each year. 

Get to know a few of the most common employer IRS tax forms like Form 944. 

What Is Form 944 Used for, and When Must It Be Filed?

Form 944 is part of an employer’s annual tax return. Within this form, you’ll report the wages you paid to your employees and calculate how much you owe the federal government. In particular, Form 944 covers payment to Social Security and Medicare, which is typically split down the middle between employers and employees. 

Social Security and Medicare are both financed through payroll taxes. Employers will withhold a certain amount from each paycheck and then match the other half for their employees. For Social Security, employers and employees each pay 6.2% of wages for a total payment amount of 12.4%. 

Medicare is paid the same way, except both the employee and employer pay 1.45%. Both Social Security and Medicare benefits help workers after they retire: the taxes you pay today will cover your expenses when you leave the workforce. 

Form 944 is an annual report. You’ll report on the wages you paid out over the course of the year and use that base amount to determine what you owe in taxes for Social Security and Medicare (FICA)

What Is the Difference Between Form 941 and 944?

Form 941 and Form 944 are both related to employer federal tax returns. However, Form 941 is used for quarterly income tax payments, while Form 944 is used for annual income tax payments. 

You’ll file IRS Form 944 based on your company’s size and income. If your federal payroll tax liability is less than $1,000, then you can file Form 944 annually instead of paying the IRS each quarter.

The 944 tax form is most often used by self-employed individuals and small business owners with only a few employees. You need written permission from the IRS to use Form 944 instead of Form 941. 

Once your company grows to the point where you need to pay more than $1,000 per year in payroll tax, you’ll need to switch to Form 941. 

What Is the Difference Between Form 940 and 944?

Alongside Form 944 (or Form 941 for larger businesses), you will also need to complete Form 940 in your annual tax report. Form 940 is the federal unemployment tax payment (FUTA). Each company pays into the federal unemployment fund, which helps workers who are out of work. 

At the beginning of the COVID-19 pandemic, the federal government paid unemployment benefits to workers who had been furloughed or let go from their organizations. This money came from employers. 

Businesses must file Form 940 if they paid wages of $1,500 or more to employees during the past calendar year. FUTA is based on annual salary: employers will pay 6% of an employee’s salary for the first $7,000 they make. As a result, most employers will pay around $420 per employee in federal unemployment tax contributions.  

How Do I File and Pay Form 944?

You can find Form 944 instructions on the IRS website. There are multiple ways to pay the taxes you owe on Form 944: the IRS accepts same-day wires, electronic bank account withdrawals, credit or debit card payments, and prepaid orders. You have the flexibility to choose your preferred payment method.

To complete this form, you’ll need to have your Employer Identification Number (EIN) and your total employee wages for the past year. You’ll also need to report any changes to your business, like if you moved or closed it during the year.

You can complete Form 944 online, or you can download it and mail your completed form to the IRS. The IRS has a list of addresses to send the form to based on your current location.  

Know Your Tax Deadlines

If you want to avoid getting overwhelmed by your various employer tax forms, make sure to give yourself plenty of time to determine what you need to submit and when. The deadline to submit Form 944 is February 1 or the closest business day thereafter. You can gather your payroll rates for Q1–3 in December and then confirm the final amounts for Q4 in January. This gives you plenty of time to submit Form 944 before the February deadline. 

If you’re worried about making these payments, let our team at Sunrise help. We have a Tax Assist service that can pull information from your books to send to a CPA. You can get the accounting help that you need to pay the right amount on time.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.

About the author

Derek Miller
Derek Miller
Derek Miller is a writer specializing in entrepreneurship, small business, and digital marketing. His work has featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp. He’s currently the CMO of Smack Apparel, the content guru at Great.com, and a marketing consultant for small businesses.

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