IRS Tax Tip 2019-178, December 17, 2019
Small business owners should review the rules for filing two commonly-used employment tax returns. The two forms are:
Small business owners should remember these two forms are not interchangeable. A small business files one or the other. The employer should never flip-flop between the two forms on their own, and should always file in accordance with their designated filing requirement.
Here are some more details about these two forms. This will help business owners understand the differences between them:
- This form is for our smallest employers to file and pay the abovementioned taxes only once a year, instead of quarterly.
- While this form is intended for employers who owe $1,000 or less, employers can't file Form 944 unless they receive official IRS notification that they are eligible to do so.
- Once the employer receives notice they can file Form 944, they must file this form every year. They must continue to file Form 944, regardless of the tax they owe, unless the IRS notifies them differently.
- Employers use Form 941 to:
- Report income taxes withheld from employee's paychecks.
- Pay the employer's portion of Social Security or Medicare tax.
- If the IRS advises the employer to file Form 941 quarterly return, they must do so.
- Form 944 Instructions (PDF)
- Publication 15, (Circular E), Employer's Tax Guide
- Revenue Procedure 2009-51