Topic no. 758, Form 941 – Employer's Quarterly Federal Tax Return and Form 944 – Employer's Annual Federal Tax Return

Generally, you must file Form 941, Employer's QUARTERLY Federal Tax Return or Form 944, 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, Employer's Annual Tax Return for Agricultural Employees. See Topic no. 760 for reporting and deposit requirements for agricultural employers. For information about e-filing, please see E-file Employment Tax Forms.

Form 941

You're required to file a separate Form 941 for each quarter (first quarter - January through March, second quarter - April through June, third quarter - July through September, fourth quarter - 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 you've deposited all of your taxes on time, you have ten additional days after the due date of the return to file.

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 Publication 15 (Circular E), Employer's Tax Guide (Section 11, Depositing Taxes – Deposits Due on Business Days Only).

Form 944

Some employers with small payrolls, including government employers, may file an annual return, Form 944 instead of Form 941 each quarter, if you are eligible and properly so indicated on your Form SS-4, Application for Employer Identification NumberForm 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. However, if you made timely deposits in full payment of your taxes for the year, you may file by February 10. As with Form 941, 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 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 may be eligible to file Form 944 if their estimated annual employment tax liability is $1,000 or less. If an employer's employment tax liability is expected to be $1,000 or less and the employer wants to file Form 944 and did not indicate this on the Form SS-4, the employer must contact the IRS to request to file Form 944. Employers aren't permitted to file Form 944 unless they are 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 and receive approval to do so. See the Instructions for Form 944 for more information.

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 Instructions for Form 944 PDF and the Instructions for Form 941 PDF.

Depositing and reporting taxes

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 (Section 11, Depositing Taxes) and Topic no. 757.

Adjustments and corrections - In certain cases, you must adjust amounts reported as Social Security and Medicare taxes to arrive at your correct tax liability. Forms 941 and 944 contain lines which allow you to enter adjustments to tax due to:

  • Fractions of cents that you gained or lost by rounding when you computed payroll for each individual employee.
  • Sick pay for which Social Security and Medicare taxes were withheld by a third party that is not your agent, such as an insurance company.
  • Uncollected employee share of Social Security and Medicare taxes on tips and/or group-term life insurance premiums paid for former employees.

If you wish to correct an error on a previously filed Form 941 or Form 944, use Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund, respectively.

Calculating and reporting the taxes - You become liable for employment taxes when you pay the employees their wages, not when the pay period ends. For example, if you file Form 941 and 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.

The federal income tax withheld and Social Security and Medicare taxes are added together on either Form 941 or Form 944. The resulting net tax after credits and adjustments 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, and you're a monthly schedule depositor, for either Form 941 or Form 944  complete the tax liability for each month in Part 2. If you file Form 941 and are a semiweekly depositor, then report your tax liability by date on Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors PDF. If you file Form 944 and are a semiweekly depositor, then report your tax liability by date on Form 945-A, Annual Record of Federal Tax Liability. The IRS uses this information to determine if you deposited your employment taxes for each deposit period on time.

Penalties - It's very important that monthly schedule depositors complete Part 2 (Form 941 or Form 944) and semiweekly schedule depositors complete Schedule B (Form 941) or Form 945-A (Form 944) 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 or 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 (Section 11, Depositing Taxes) for rules on depositing taxes and making a payment of tax with your return. Be sure to sign and date Form 941 or Form 944 before mailing.

Requests to change the quarterly or annual filing requirement

The Instructions for Form 941 contain instructions for both employers who request to file Forms 941 instead of Form 944 and employers who request to file Form 944 instead of Forms 941. See also the Instructions for Form 944 and Publication 15 (Section 12, Filing Form 941 or Form 944).