Finances and Taxes

What is Form 944?

Nayo Carter-Gray  

Form 944 allows smaller employers whose annual liability for Social Security, Medicare, and withheld federal income taxes is $1,000 or less, to file and pay employment taxes once a year instead of every quarter. This information would generally be reported on Form 941, but Form 944 was created to help reduce the burden of these quarterly filings for those businesses that are eligible.

Who must file Form 944?

The IRS will notify you in writing if you must file Form 944 to report your Social Security, Medicare and withheld federal income taxes instead of Form 941, 941-SS or 941-PR. 

However, new employers are eligible to file Form 944 if they meet (or will meet) the eligibility requirements. When completing Form SS-4 or Form SS4-PR to apply for an Employer Identification Number (EIN), you must indicate the highest number of employees anticipated in the next 12 months. Check the box on line 14 to indicate if you expect to have $1,000 or less in employment tax liability for the calendar year and would like to file Form 944.

Once notified, you must file Form 944 to report any of the following that apply to  your business:

  • Wages you have paid
  • Tips your employees reported to you
  • Federal income tax you withheld
  • Both the employer and the employee share of Social Security and Medicare taxes
  • Additional Medicare Tax withheld from employees
  • Current year’s adjustments to Social Security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance
  • Deferred amount of the employer share of Social Security tax
  • Deferred amount of the employee share of Social Security tax
  • Qualified small business payroll tax credit for increasing research activities
  • Credit for qualified sick and family leave wages
  • Employee Retention Credit

Please note: Household employers, agriculture employers and employers who are not notified may not file Form 944.

What is the difference between Form 944 and Form 941?

While both forms are used to report FICA (which consists of Social Security + Medicare tax) and income tax withholding to the IRS, there are only two major differences between Form 944 and Form 941. Form 944 is filed annually while Form 941 is filed quarterly, and the total annual tax liability reported on Form 944 is less than $1,000 vs. no annual limit reporting requirement for Form 941. 

When do you pay?

If your tax liability is less than $2,500 for the year, you can pay the amount due with Form 944.  However, in order to avoid a penalty, you should pay the taxes in full and file Form 944 on time. 

Please note: The $2,500 threshold at which federal tax deposits must be made differs from the amount of annual tax liability that makes an employer eligible to file Form 944. If your business grows during the year, you may be required to change your federal tax deposit schedule.

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Federal Tax Deposit Requirements for Form 944 Filers

If your tax liability is:Your deposit requirement is:
Less than $2,500 for the yearNo deposit required. You may pay the tax with your return. If you’re unsure that your tax liability for the year will be less than $2,500, deposit under the rules below.
$2,500 or more for the year, but less than $2,500 for the quarterYou can deposit by the last day of the month after the end of a quarter. However, if your fourth quarter tax liability is less than $2,500, you may pay the fourth quarter’s tax liability with Form 944.
$2,500 or more for the quarterYou must deposit monthly or semiweekly depending on your deposit schedule. But, if you accumulate $100,000 or more of taxes on any day, you must deposit the tax by the next business day. See section 11 of Pub. 15, section 8 of Pub. 80, or section 11 of Pub. 179.

How to fill out Form 944

You begin this form by entering your Employer Identification Number (EIN), business name, trade name (if applicable), and address.

Part 1: Answer these questions for this year

Line 1: Wages, Tips, and Other Compensation: Enter amounts on line 1 that will be included in box 1 of your employees’ Forms W-2. This includes sick pay paid by your agent and sick pay paid by a third party that isn’t your agent (for example, an insurance company) if you received timely notice of the payments and the third party transferred liability for the employer’s taxes to you.

Line 2: Federal Income Tax Withheld: Enter the amount of federal income tax that you withheld or were required to withhold from wages, including qualified sick leave wages, qualified family leave wages, and qualified wages (excluding qualified health plan expenses) for the Employee Retention Credit; tips; taxable fringe benefits; and supplemental unemployment compensation benefits.

Line 3: If no wages, tips, and other compensation are subject to Social Security or Medicare tax, check the box and go to Line 5.

Lines 4a–4e: Taxable Social Security and Medicare Wages and Tips:

Line 4a: Taxable Social Security wages: Enter the total wages, including qualified wages (other than qualified health plan expenses) for the Employee Retention Credit; sick pay; and taxable fringe benefits subject to Social Security taxes that you paid to your employees during the year. Do not include the wages reported on line 4a(i) or on line 4a(ii).

Line 4a(i): Qualified sick leave wages: Enter the qualified taxable sick leave wages you paid to your employees during the year. 

Line 4a(ii): Qualified family leave wages: Enter the qualified taxable family leave wages you paid to your employees during the year.

Line 4b: Taxable Social Security tips: Enter all tips your employees reported to you during the year until the total of the tips and taxable wages (including qualified sick leave wages and qualified family leave wages) for an employee reach $137,700 for the year.

Line 4c: Taxable Medicare wages and tips: Enter all wages, including qualified sick leave wages, qualified family leave wages, and qualified wages (excluding qualified health plan expenses) for the Employee Retention Credit; tips; sick pay; and taxable fringe benefits that are subject to Medicare tax.

Line 4d: Taxable wages & tips subject to Additional Medicare Tax withholding: Enter all wages, including qualified sick leave wages, qualified family leave wages, and qualified wages (excluding qualified health plan expenses) for the Employee Retention Credit; tips; sick pay; and taxable fringe benefits that are subject to Additional Medicare Tax withholding. You’re required to withhold Additional Medicare Tax in the pay period in which you pay wages over $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year.

Line 4e: Total Social Security and Medicare taxes: Add the column 2 amounts on lines 4a–4d. Enter the result on line 4e.

Line 5: Total Taxes Before Adjustments: Add the total federal income tax withheld from wages, tips, and other compensation from line 2 and the total Social Security and Medicare taxes before adjustments from line 4e. Enter the result on line 5.

Line 6: Current Year’s Adjustments: Enter amounts that result from current period tax adjustments. Use a minus sign (preferred) or parentheses to show an adjustment that decreases the total taxes on line 5. These amounts can include adjustments for fractions of cents, sick pay, tips and group-term life insurance.

Please note: If you need to adjust any amount reported on line 6 from a previously filed Form 944, complete and file Form 944-X.

Line 7: Total Taxes After Adjustments: Combine the amounts shown on lines 5 and 6 and enter the result on line 7.

Line 8a: Qualified Small Business Payroll Tax Credit for Increasing Research Activities: Enter the total credit from Form 8974, line 12.

Line 8b: Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages From Worksheet 1: Enter the nonrefundable portion of the credit for qualified sick and family leave wages from Worksheet 1, Step 2, line 2j found in the instructions for Form 944. 

Line 8c: Nonrefundable Portion of Employee Retention Credit from Worksheet 1: Enter the nonrefundable portion of the Employee Retention Credit from Worksheet 1, Step 3, line 3h.

Line 8d: Total Nonrefundable Credits: Add lines 8a, 8b, and 8c. Enter the total on line 8d.

Line 9: Total Taxes After Adjustments and Nonrefundable Credits: Subtract line 8d from line 7 and enter the result on line 9.

Please note: If line 9 is less than $2,500, you have the option to pay the amount with Form 944 or you may deposit the amount.

If line 9 is $2,500 or more, you generally must deposit the tax liability by Electronic Federal Tax Payment System (EFTPS). However, if you deposited all taxes accumulated in the first 3 quarters of the year and your fourth quarter liability is less than $2,500, you may pay the accumulated fourth quarter taxes with Form 944.

Line 10a: Total Deposits for This Year: Enter your deposits for this year, including any overpayment that you applied from filing Form 944-X, 944-X (SP), 941-X, or 941-X (PR) in the current year. Also include any overpayment from a previous period that you applied to this return.

Line 10b: Deferred Amount of the Employer Share of Social Security Tax: Enter the amount of the employer share of Social Security tax that you’re deferring.*

Line 10c: Deferred Amount of the Employee Share of Social Security Tax: Enter the amount of the employee share of Social Security tax that you’re deferring.**

Line 10d: Refundable Portion of Credit for Qualified Sick and Family Leave Wages From Worksheet 1: Enter the refundable portion of the credit for qualified sick and family leave wages from Worksheet 1, Step 2, line 2k.

Line 10e: Refundable Portion of Employee Retention Credit From Worksheet 1: Enter the refundable portion of the Employee Retention Credit from Worksheet 1, Step 3, line 3i.

Line 10f: Total Deposits, Deferrals, and Refundable Credits: Add lines 10a, 10b, 10c, 10d, and 10e. Enter the total on line 10f.

Line 10g: Total Advances Received From Filing Form(s) 7200 (Advance Payment of Employer Credits Due to COVID-19) for the Year: Enter the total advances received from filing Form(s) 7200 for the year.

Line 10h: Total Deposits, Deferrals, and Refundable Credits Less Advances: Subtract line 10g from line 10f. Enter the result on line 10h.

Line 11: Balance Due: If line 9 is more than line 10h, enter the difference on line 11.

Line 12: Overpayment: If line 10h is more than line 9, enter the amount on line 12.

Please note: There should never be an entry on both lines 11 and 12.

Part 2: Your deposit schedule and tax liability for this year

Line 13: If the amount on line 9 is less than $2,500, check the first box on line 13 and go to line 14. If the amount is $2,500 or more, check the second box instead.

Part 3: Tell Us About Your Business

Line 14: Check the box if your business has closed and enter the last date you paid wages.

Lines 15 through 19 is where you will enter the amounts you use on Worksheet 1 to figure the credit for qualified sick and family leave wages and the Employee Retention Credit. If you’re claiming these credits, you must enter the applicable amounts.

Line 15: Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages: Enter the qualified health plan expenses allocable to qualified sick leave wages. This amount is also entered on Worksheet 1, Step 2, line 2b.

Line 16: Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages: Enter the qualified health plan expenses allocable to qualified family leave wages. This amount is also entered on Worksheet 1, Step 2, line 2f.

Line 17: Qualified Wages for the Employee Retention Credit: Enter the qualified wages for the Employee Retention Credit (excluding the amount of any qualified health plan expenses allocable to these wages). This amount is also entered on Worksheet 1, Step 3, line 3a.

Line 18: Qualified Health Plan Expenses Allocable to Wages Reported on Line 17: Enter the qualified health plan expenses for the Employee Retention Credit. These expenses are generally allocable to the wages reported on Form 944, Part 3, line 17.

Line 19: Credit From Form 5884‐C, Line 11, for the Year: Enter the credit to be claimed on line 11 of Form 5884‐C for the Work Opportunity Credit for qualified tax‐exempt organizations that hired qualified veterans in 2020.

Third-Party Designee: If you want to allow an employee, paid tax preparer, or another person to discuss your Form 944 with the IRS, you can check the Yes box here and enter their name, phone number, and a five-digit personal identification number (PIN) here.  

A third-party designee can also provide the IRS with any missing information, call regarding the processing of the return, and respond to IRS notices you have shared with them. They can not bind you to anything (including additional tax liability) or represent you before the IRS.

This authorization automatically expires after one year from the due date of this return. 

Who can sign Form 944?

The following persons may sign the return for each type of business entity:

  • Sole proprietorship: the individual who owns the business
  • Corporation (including a limited liability company (LLC) treated as a corporation): the president, vice president, or other principal officer duly authorized to sign
  • Partnership (including an LLC treated as a partnership) or unincorporated organization: a responsible and duly authorized partner, member, or officer having knowledge of its affairs
  • Single-member LLC treated as a disregarded entity for federal tax purposes: the  owner of the LLC or a principal officer duly authorized to sign
  • Trust or estate—The fiduciary

Form 944 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.

When is Form 944 due?

Form 944 is due by January 31st unless that day falls on a holiday or weekend; in those cases, it is due on the following normal business day. However, if you made your deposits on time and in full, you may file the return by February 10th

If you file by mail, make sure your filing is properly addressed, contains sufficient postage and is postmarked by the US Postal Service by the due date in order to be considered timely filed. If not, the return will be considered filed when it is actually received. 

Penalties for late filing

Failing to file Form 944 by the deadline results in a 5% penalty on the tax owed for each month the return is late (this penalty caps at 25%). Paying late or not paying the full amount due, the IRS will charge you 2-15% of the unpaid tax determined by the number of days the amount remains unpaid.

Important tip: If you fail to withhold and pay taxes to the US Treasury that are required, a trust fund recovery penalty may apply. The penalty is 100% of the unpaid trust fund tax. If the unpaid tax can’t be collected from the business immediately, the penalty could be imposed on all persons the IRS determines is responsible for collecting and paying these amounts and willfully didn’t do so.  

Where do you file Form 944?

Form 944 can be filed electronically by visiting the IRS E-file webpage.

However, if you are required to file by mail, where you file depends on if you are including a payment with the form. You can mail the return to the address listed for your location below.

Mailing Addresses for Form 944

If you’re in . . .Without a payment . . .With a payment . . .
Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, WisconsinDepartment of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0044
Internal Revenue Service
P.O. Box 806532
Cincinnati, OH 45280-6532
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, WyomingDepartment of the Treasury
Internal Revenue Service
Ogden, UT 84201-0044
Internal Revenue Service
P.O. Box 932100
Louisville, KY 40293-2100
No legal residence or principal place of business in any stateInternal Revenue Service
P.O. Box 409101
Ogden, UT 84409
Internal Revenue Service
P.O. Box 932100
Louisville, KY 40293-2100
Special filing address for exempt organizations; federal, state, and local governmental entities; and Indian tribal governmental entities, regardless of locationDepartment of the Treasury
Internal Revenue Service
Ogden, UT 84201-0044
Internal Revenue Service
P.O. Box 932100
Louisville, KY 40293-2100

*Section 2302 of the CARES Act provides that employers, including government employers, can defer the deposit of the employer share of Social Security tax due on or after March 27, 2020, and before January 1, 2021, as well as payment due for the employer share of social security tax for wages paid on or after March 27, 2020, and before January 1, 2021. 

**On August 8, 2020, the President issued a Presidential Memorandum directing the Secretary of the Treasury to use his authority pursuant to section 7508A of the Internal Revenue Code to defer the withholding, deposit, and payment of certain payroll tax obligations. In Notice 2020-65, the Secretary made relief available under section 7508A to employers required to withhold social security taxes from wages paid to employees. Specifically, under the notice, the due date for withholding and payment of the employee share of social security tax on applicable wages is postponed until the period beginning on January 1, 2021, and ending on April 30, 2021. See IRS Bulletin 2020-38 for details.

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Nayo Carter-Gray
Nayo Carter-Gray Making Accounting a Little Less Taxing® for small business owners is Nayo Carter-Gray’s goal as owner and founder of 1st Step Accounting LLC. A self-proclaimed techie, Mrs. Carter-Gray decided a virtual accounting practice was the best way to experience her love of travel and still help small business owners across the US to reduce the stress of managing their disorganized financial systems. Mrs. Carter-Gray is an Enrolled Agent and a QuickBooks Online Advanced Certified Pro-Advisor. She was named one of Hubdoc’s 2017 and 2018 Top 50 Cloud Accountants in North America and handpicked to sit on the 2018-2019 Intuit Accountant Council. Mrs. Carter-Gray was also recently named one of Forbes Top 100 Tax Twitter accounts to follow and one of the Top 50 Women in Accounting by Practice Ignition.
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