Form 941 vs. 944- Which One Should You File, an Annual or Quarterly Form?

When comparing Form 941 vs. 944, businesses with higher tax liabilities file Form 941 quarterly, while those with lower annual liabilities file Form 944 annually.

Usually, employers fill out Form 941 every quarter. However, if a small employer’s total tax responsibility for the year is less than $2,500, they get to file Form 944 just once a year, instead of the usual quarterly hustle with Form 941. 

Employers, when it comes to managing payroll taxes—the ones taken from your employees’ pay and contributions—the IRS wants you to deposit and report them using either Form 944 or Form 941. However, understanding the distinction between Forms 944 and 941 is crucial. 

As an employer, your payroll responsibilities encompass federal tax obligations, including: 

• Withholding federal income tax 
• Withholding and contributing to Social Security tax 
• Withholding and contributing to Medicare tax 
• Contributing to federal unemployment tax 

It’s important to note that depending on your location, you may be responsible for additional state and local taxes (e.g., state and local income taxes). 

After withholding and contributing federal taxes, the crucial next step is to report them to the IRS. Utilize Form 940, known as the ‘Employer’s Annual Federal Unemployment (FUTA) Tax Return,’ to report federal unemployment tax. For federal income, Social Security, and Medicare taxes, the appropriate forms for reporting are either Form 944 or Form 941. 

 

What is Form 944, Employer’s Annual Federal Tax Return? 

Form 944 simplifies tax tasks for the smaller employers. If your combined yearly tax for Social Security, Medicare, and withheld federal income taxes is $2,500 or less, you can file and manage these taxes annually instead of quarterly. It’s like a streamlined approach for the less complex tax scenario. 

What is Form 941, Employer’s Quarterly Federal Tax Return 

The IRS Form 941 is a quarterly tax return for employers. Employers use Tax Form 941 to record the federal income tax, social security tax, and Medicare tax deducted from each employee’s wage (FICA taxes). This form is also used to determine the employer’s Social Security, Medicare, and other withholding taxes. 

Employers or business owners responsible for employee wages must submit IRS Tax Form 941 on a quarterly basis. However, there are a few exemptions, including seasonal business employers, household employers, and employers of farm workers.

 

Choosing the Right Form for Your Business 

When evaluating Form 941 vs. 944, employers with substantial payroll tax obligations must file Form 941 every quarter, whereas those with minimal annual tax liabilities can opt for Form 944 once a year. Let’s consider the following factors-

Factors to Consider:

• Annual Employment Tax Liability: 

If your estimated annual employment tax liability is $2,500 or less, you may be eligible to file Form 944 annually. 

• Notification from the IRS: 

The IRS will notify eligible employers to file Form 944 annually if they meet the criteria. 

• Obligatory Quarterly Filing: 

If you do not meet the eligibility criteria for Form 944, you are required to file Form 941 quarterly. 

E-file Form 941 and Form 944 with Tax1099 

Effortlessly e-file Form 941 and Form 944 using Tax1099 within just a few minutes. Our platform ensures automatic tax calculations, and error checks based on IRS Business Rules, built-in worksheets, and 941 Schedule B for precise filing.