Topic Number: 758 - Form 941 – Employer's Quarterly Federal Tax Return and Form 944 – Employer's Annual Federal Tax Return
Generally, you must file Form 941 (PDF), Employer's QUARTERLY Federal Tax Return, or Form 944 (PDF), Employer's ANNUAL Federal Tax Return, to report wages you've paid and tips your employees have reported to you, as well as employment taxes (federal income tax withheld, social security and Medicare taxes withheld, and your share of social security and Medicare taxes). Only small business employers who've been notified by the IRS to file Form 944 may file it. To report wages and taxes for farm employees, you must file Form 943 (PDF), Employer's Annual Tax Return for Agricultural Employees. See Topic No. 760 for reporting and deposit requirements for agricultural employers.
You're required to file a separate Form 941 for each quarter. The first quarter is January through March. The second quarter is April through June. The third quarter is July through September. The fourth quarter is October through December. Form 941 is generally due by the last day of the month following the end of the quarter. For example, you're required to file Form 941 by April 30 for wages you pay during the first quarter, January through March.
If the due date for filing a return falls on a Saturday, Sunday, or legal holiday, you may file the return on the next business day. The term legal holiday means any legal holiday in the District of Columbia. For a list of legal holidays, see Chapter 11 of Publication 15, (Circular E), Employer's Tax Guide.
Some employers with small payrolls, including government employers, may file an annual return, Form 944 (PDF) instead of Form 941 (PDF) each quarter, if indicated on your Form SS-4 (PDF), Application for an Employer Identification Number. Form 944 is designed for employers with an annual employment tax liability of $1,000 or less. Form 944 generally is due on January 31 of the following year. The purpose of Form 944 is to reduce burden on small employers by allowing them to file one return per year, and in most cases pay the employment tax with the return.
Employers who may be eligible to file Form 944 because their estimated annual employment tax liability is $1,000 or less and who want to file this form and didn't indicate this on the Form SS-4, have to contact the IRS to request to file Form 944. Employers aren't permitted to file Form 944 unless they're notified by the IRS to do so. Employers required to file Form 944, who want to file Forms 941 instead, must notify the IRS to request to file quarterly Forms 941. Employers can call the IRS at 800-829-4933 between January 1, 2017, and April 3, 2017, or send a written request postmarked between January 1, 2017, and March 15, 2017. For further information, see the Form 944 (PDF) and Revenue Procedure 2009-51.
Employers notified to file Form 944, whose businesses grow during the year and whose employment tax liability exceeds the $1,000 threshold, must still file Form 944 for the year. Employers who exceed the eligibility threshold must not file Form 941 until the IRS notifies them that their filing requirement has been changed to Form 941. For information on requesting to file Forms 941 quarterly or Form 944 annually to report your social security, Medicare, and withheld federal income taxes, refer to the Form 944 (PDF) and the Form 941 (PDF).
Generally, employers are required to deposit their employment taxes rather than pay the taxes when the Form 941 or Form 944 is filed. For the rules for making deposits, refer to Publication 15 or Topic No. 757. If you've deposited all your taxes on time, you have ten additional days after the due date of the return to file.
Adjustments and Corrections - In certain cases, you must adjust amounts reported as social security and Medicare taxes to arrive at your correct tax liability. For example, the total social security and Medicare taxes on Form 941 or Form 944 may differ by a small amount from the total on your payroll records due to fractions of cents that you gained or lost by rounding each time you computed payroll for each individual employee. You may add or subtract this difference on the line for fractions-of-cents adjustments. You may also use an adjustment line to report the social security and Medicare taxes you were unable to collect on employees' tips, or for sick pay wages for which social security and Medicare taxes were withheld by a third party, such as an insurance company. If you wish to correct an error on a previously filed Form 941 or Form 944, use Form 941X (PDF), Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or Form 944X (PDF), Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund, respectively.
Calculating the Taxes - The federal income tax withheld and social security and Medicare taxes are added together on Form 941 and Form 944. The resulting net tax is the amount of employment taxes you owe for the quarter (Form 941) or the year (Form 944). If this amount is $2,500 or more, complete the tax liability for each month in Part 2 of Form 941 (PDF) and Form 944 (PDF), if you're a monthly schedule depositor. If you file Form 941 and are a semiweekly depositor, then report your tax liability on Form 941, Schedule B (PDF), Report of Tax Liability for Semiweekly Schedule Depositors. If you file Form 944 and are a semiweekly depositor, then report your tax liability on Form 945-A (PDF), Annual Record of Federal Tax Liability. The purpose of Part 2 of Form 941, Part 2 of Form 944, Schedule B (Form 941), and Form 945-A is to show the tax liability for that payday. The IRS uses this information to determine if you deposited your employment taxes on time.
Deposit Schedules - For monthly depositors, you must show the combined amount of social security, Medicare and withheld federal income taxes owed for each month in Part 2 of Form 941 or Part 2 of Form 944. For semiweekly depositors, you must show the combined amount of social security, Medicare and withheld federal income taxes owed for each day on Schedule B (Form 941) or Form 945-A. You become liable for employment taxes when you actually pay the employees their wages, not when the pay period ends. For example, if your pay period ends September 24 but you don't pay the employees until October 1, their wages would be reported in the fourth quarter when you actually paid the employees their wages and became liable for the tax, not the third quarter when the pay period ended.
Penalties - It's very important that you complete Part 2 of Form 941 and Form 944, Schedule B of Form 941, or Form 945-A correctly, or it may appear that you didn't deposit your taxes when due. There's a late deposit penalty ranging from 2% to 15% depending on the length of time the deposit is late.
Generally, unless you're eligible to pay taxes with your return, you should have deposited your taxes and shouldn't have a balance due with Form 941 and Form 944. If you pay taxes with your tax return that should have been deposited, you may be subject to a penalty. See Topic No. 757 and Publication 15 for rules on deposits and payment of tax with your return. Be sure to sign and date Form 941 or Form 944 before mailing.
See Publication 15, (Circular E), Employer's Tax Guide, for more information on filing requirements for Form 941 and Form 944.