Both of IRS Forms 944 and 941 are used by employers to report employment taxes to the IRS. These taxes include social security tax, medicare tax, additional medicare tax and federal income tax withheld from employee paychecks when payroll is run. Form 944 is an annual report of employment taxes, while the Form 941 is a quarterly report of payroll taxes. However, employers should only ever use one form or the other, depending on their circumstances. In a given year, an employer should never be filing both forms for the same reporting period. The majority of employers will file their employment taxes quarterly, and will therefore use Form 941 unless they specifically qualify to use Form 944 to report their employment taxes once a year.

When to Use Form 944

Form 944 is intended only for use by the “smallest” employers – which is defined as employers whose employment tax payments don’t exceed $1,000 in a given year, but the rules for when to use Form 944 are a little more complciated than that. Employers will file their employment taxes annually if one of the following situations apply:1

  • Notification from the IRS – In certain situations, the IRS may notify employers that they are to file their employment taxes using Form 944. In such cases, the employer must use Form 944 to file their employment taxes annually, even if they’re interested in filing their employment taxes quarterly using Form 941.
  • New Employers Expecting to Pay Less than $1,000 in Employment Taxes – New employers who expect to have less than $1,000 in employment taxes for their first year in existence can file Form 944 if they indicate this is so by completing Line 13 and checking the box on Line 14 of the Form SS-4 (or Form SS-4PR) when they applied for their Employer Identification Number (EIN). Presumably, if the employer did not provide this information when they applied for their EIN, they should default to using Form 941 to report their employment taxes quarterly.
Screenshot of Form SS-4, Lines 13 and 14

New businesses that are applying for their EIN using Form SS-4 and who expect to have less than $1,000 of employment taxes per year must enter an expected number of employees in the boxes of Line 13 and check the box on Line 14 in order to qualify to report their employment taxes annually on Form 944.

Note as well that employers who only employ household or agricultural employees are never allowed to file using Form 944.2

  1. See Form 944 Instructions, pg. 3, https://www.irs.gov/pub/irs-pdf/i944.pdf.
  2. See Form 944 Instructions, pg. 3, https://www.irs.gov/pub/irs-pdf/i944.pdf.

Blake is a CPA and a law school graduate specializing in taxology, tax and finance process automation and optimization, and cloud accounting systems.