If you run a small business with just a few employees, you may not need to file form 941 every quarter. For employers whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less, the IRS offers a simpler path: Form 944.
Officially called the Employer's Annual Federal Tax Return, this tax form lets qualifying small businesses handle their federal payroll taxes once a year instead of quarterly. It covers Social Security tax, Medicare tax, additional Medicare tax withholding, and federal income tax withheld from wages, all in a single annual filing.
This guide covers who is eligible to file form 944, how the filing process works, what to report, and how to avoid penalties.
Not every employer can use form 944. The IRS limits it to the smallest employers, and you generally need a notice from the IRS confirming your filing requirement.
You may qualify if your total annual payroll tax liability is $1,000 or less for the year. This threshold includes Social Security, Medicare, and withheld federal income taxes. In practice, it means you are either paying very low wages or have one or two part-time employees.
If you are a new employer and expect your annual employment tax liability to stay below $1,000, you can request approval to file form 944 when you apply for your EIN. The IRS will review and send confirmation.
Already filing the quarterly version and want to switch? You need to contact the IRS and request the change. You cannot just start using the annual return. They must approve it and send written confirmation that you are required to file form 944 going forward.
If your business grows and your total tax exceeds $1,000, you must continue to file form 941 for that year. The IRS may also notify you to switch back to quarterly filing.
For detail on deposit schedules and how deposit timing works alongside these forms, that guide breaks it down.
Both forms report the same federal payroll taxes. The difference is frequency.
Form 941 is the Employer's Quarterly Federal Tax Return. Most employers file it four times per year, reporting Social Security, Medicare, and withheld federal income taxes for each quarter.
Form 944 is the annual version. Instead of filing quarterly, eligible small employers file form 944 once per year. It covers the same tax obligations and uses a similar structure, but everything goes into one return for the full year.
You cannot file form 944 instead of form 941 unless the IRS has authorized it. Even if your annual employment tax amount is clearly under $1,000, you must complete the quarterly return until you receive approval. And if the IRS has told you to use form 944, do not submit the quarterly version instead.
For context on how Form W-2 reporting ties into these filings, that guide covers the employee wage side.
The form is not long, but you do need your payroll data for the entire year before you fill out the form.
Here is what you report:
Line 1: Total wages, tips, and other compensation paid to employees during the year.
Lines 2 and 4: The amount of federal income tax you withheld, plus the employer and employee shares of Social Security and Medicare.
Line 6: Total tax before adjustments. This is where you enter your tax liability for the year.
Lines 7 through 9: Adjustments for fractions of cents, sick pay, and tips.
Line 10: Total tax after adjustments. This number represents your annual employment tax liability for the year.
Line 11: Total deposits already made, plus any overpayment from a prior period.
Line 12: The balance. If Line 10 is more than Line 11, you have tax due. If less, you can get a refund or apply it forward.
Part 3: Deposit schedule and tax liability. If your total annual payroll tax liability is under $2,500, you can pay when you submit the form. If $2,500 or more, you need to enter your tax liability for each month and follow the regular tax deposit rules.
Tax credits. If you qualify for the qualified small business payroll tax credit for increasing research activities, report it here. This payroll tax credit for increasing research lets eligible businesses apply a portion of their R&D tax credit against employment taxes. Use Form 8974 to calculate the amount.
The deadline to file form 944 for the 2025 tax year is January 31, 2026. Since that date falls on a Saturday, you would actually file form 944 by February 2, 2026.
If you made all your tax deposits on time, the IRS gives you an extra 10 days to submit the form.
You can submit form 944 by mail or electronically. E-filing is faster and gives you confirmation. If you use a tax preparation service or payroll software, they can handle the electronic filing.
If you are closing your business during the year, you must file a final return through your last payroll date. Check the box indicating it is a final return, and settle any unpaid tax.
Missing the deadline on this business tax filing can lead to penalties.
Late filing. If you do not submit form 944 on time, the penalty is typically 5% of the unpaid tax per month, up to 25%.
Late deposits. If you were supposed to make a tax deposit during the year and missed it, separate penalties apply based on how late the deposit was.
Errors. If the IRS finds mistakes in the taxes and federal income tax amounts you reported, additional penalties and interest can follow.
Staying on top of your tax filing and making sure the numbers match your records is the simplest fix. If anything is unclear, working with a tax professional who handles business tax and tax reporting is worth the investment.
For employers correcting a previously filed quarterly return, our guide on Form 941-X covers how that process works.
Once the IRS assigns you this form, you must continue to file it each year unless they tell you otherwise. If your annual liability for Social Security, Medicare, and withheld income taxes grows past $1,000, contact the IRS. They will move you to the quarterly federal tax return and send a notice.
You can also voluntarily request the switch. Any change takes effect for the following year.
Being eligible to file this form does not lock you in permanently. Your filing requirement depends on where your annual tax liability lands relative to the $1,000 line. The IRS monitors this and may proactively reassign you, so you must file form 944 (or the quarterly return) on whichever form they designate and must report their tax obligations accordingly.
1. What is Form 944? It is the annual return small employers use to report Social Security, Medicare, and withheld income taxes once per year.
2. Who needs to file Form 944? Employers whose yearly total for these taxes is $1,000 or less and who have received IRS authorization. You need to file form 944 only after the IRS confirms your eligibility.
3. What is the difference between Form 944 and the quarterly return? The quarterly return (Form 941) is filed four times per year. Form 944 covers the same taxes but annually. The IRS determines which one you file based on your total tax amount.
4. When is Form 944 due? January 31 of the year after the reporting period. For the 2025 tax year, the due date is January 31, 2026 (adjusted for weekends).
5. Can I switch from Form 941 to Form 944? Yes, but you must contact the IRS and get approval. You cannot simply stop filing the quarterly return and start using the annual one.
6. What taxes does Form 944 cover? Social Security tax, Medicare tax, additional Medicare tax withholding, and federal income tax withheld from employee wages.
7. What happens if my liability goes above $1,000? The IRS may require you to switch back to the quarterly federal tax return. Contact them to update your status and make sure you are filing the correct form going forward.
8. Are there penalties for filing Form 944 late? Yes. Penalties for filing form 944 late start at 5% of the unpaid tax per month, up to 25%. Late deposits carry separate penalties.
Need help with Form 944 filing, tax preparation, or payroll tax reporting? Madras Accountancy works with CPA firms across the U.S. on payroll compliance and business tax support. Reach out to talk through your needs.
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