Every small business that withholds income and payroll taxes from their employees‘ paychecks is obligated to report that withholding to the government.
Typically, you would use IRS Form 941 or the Employer’s Quarterly Federal Tax Return to file this information. But if your business is smaller and has a limited tax liability, you may be eligible to file a different IRS tax form: Form 944, also known as the Employer’s Annual Federal Tax Return.
Eligible employers can use Form 944 to file and pay federal income tax withheld from employees, along with Social Security and Medicare payments owed by employers and employees, only once a year instead of every quarter.
What is Form 944?
Form 944 is an IRS form that reports taxes, including state income tax (where applicable) and FICA taxes for Social Security and Medicare, that you withdraw from your employees’ paychecks.
The primary purpose of creating this form was for smaller businesses that have fewer employees and hence, less tax liability. Think of this form as an annual tax return. You can be eligible to file IRS Form 944 if your employment tax liability is $1000 or less–in other words, if you expect to pay $4000 or less in total employee wages for the year.
Moreover, Form 944 also requires information concerning the Additional Medicare Tax. While an employer isn’t required to pay this additional tax, it’s withheld from high-income employees and must be paid, along with t… Read More