Form 944: What do startups need to know?

IRS Form 944, also known as the Employer’s Annual Federal Tax Return, is a tax form designed for certain small employers that have been notified by the IRS to file this form annually instead of filing Form 941 quarterly. This form is specifically intended for small businesses and startups that have relatively low annual payroll tax liabilities. Typically, their annual liability for federal income taxes, Social Security, and Medicare is less than $1,000. Larger companies with greater tax liability use Form 941.

What does Form 944 include?

For startups that meet the eligibility criteria for filing Form 944, it serves as an annual summary of the company’s payroll tax activities. If you want to learn more, visit our article on typical startup payroll costs. This form allows the company to report the total wages paid to employees, the federal income tax withheld from employees’ paychecks, and the employer and employee portions of Social Security and Medicare taxes.

Form 944 also facilitates the calculation of the employer’s share of Social Security and Medicare taxes for the entire year, along with any adjustments or corrections that need to be made. It serves as a reconciliation tool to ensure that the total tax liability matches the total taxes deposited throughout the year.

When is Form 944 due?

Startups must file Form 944 by January 31st of the following year (see our tax calendars). Filing Form 944 annually simplifies the tax reporting process for eligible small businesses, since they don’t need to file Form 941 quarterly.

To accurately complete Form 944, startups should maintain accurate payroll records, ensure proper tax calculations, and stay informed about any updates or changes to employment tax requirements. Specialized payroll software can help streamline the process and ensure compliance with IRS regulations, or startups can contact us for professional assistance.

Step-by-step instructions: Form 944

IRS Form 944, Employer’s Annual Federal Tax Return, is used by small employers (typically those with an annual tax liability of $1,000 or less for Social Security, Medicare, and federal income taxes withheld) to report and pay federal employment taxes annually, rather than quarterly (as is done with Form 941).

Here’s are step-by-step IRS Form 944 instructions.

Step 1: Confirm Eligibility to File Form 944

Only employers authorized by the IRS can file Form 944. The IRS will notify you if you are eligible, and your startup must receive written notice from the IRS to file this form, even if you estimate your tax liability as less than $1,000. You can also request to file Form 944 instead of Form 941 by contacting the IRS.

Step 2: Download the Form

Visit the IRS website and download Form 944 for the correct tax year, and download the Form 944 instructions.
Make sure you’re using the correct version for the tax year you’re filing.

Step 3: Complete the Header Section

Complete the Header Section

Employer Identification Number (EIN): Enter your startup’s EIN, which you received from the IRS when registering your business.
Name: Enter the legal name of your startup.
Trade Name: If your startup operates under a trade name (DBA), enter that name; otherwise, leave this blank.
Address: Enter your company’s address, including city, state, and ZIP code.
Calendar Year: Verify that you are filing for the correct year (e.g., 2023, 2024).

Step 4: Fill Out Part 1 - Federal Employment Tax Liability

This section covers the total wages and tips your startup paid to employees and the corresponding taxes.

Fill Out Part 1 - Federal Employment Tax Liability

Line 1 - Wages, Tips, and Other Compensation: Enter the total wages and tips paid to employees during the year (before taxes).
Line 2 - Federal Income Tax Withheld: Enter the total amount of federal income tax withheld from employees’ wages and tips.
Line 3 - If no wages, tips, or other compensation are subject to Social Security or Medicare tax, check this box and skip to line 5.
Social Security and Medicare Taxes:
- Line 4a through 4e: Report taxable Social Security and Medicare wages and tips.
Line 5 - Total Taxes Before Adjustments: Add lines 2 and 4e. This is the total tax before any adjustments.
Line 6 - Current Year’s Adjustments: Make any corrections to tax amounts for the year (e.g., for sick pay, fractions of cents, or other minor corrections).
Line 7 - Total Taxes After Adjustments: Add or subtract the adjustments from Line 5 to get your total annual tax liability.
Line 8a through 8g - Qualified Small Business Payroll Tax Credit: If you claimed an R&D payroll tax credit using Form 8974, enter the credit amount here. Otherwise, leave this blank.
Line 9 - Total Taxes After Credit: Subtract any credits (if applicable) from Line 7.
Lines 10a through 10j - Total Deposits and Refundable Credits. Enter all tax deposits for the year and any refundable credits.
Line 11 - Balance Due. If line 9 is more than line 10, enter the amount due on this line.
Line 12 - Overpayment. If you paid too much in tax for the year, enter the amount that you overpaid.

Step 5: Fill Out Part 2 - Deposits and tax liability for the year

Fill Out Part 2 - Deposits and tax liability for the year

Line 13: Determine if you’re a monthly or semiweekly schedule depositor.

If monthly, enter your tax liability for each month of the year.
If semiweekly, check the appropriate box and complete Schedule B (Form 941).

Step 6: Fill Out Part 3 - Tell us about your business (only if applicable)

Determine if you're a monthly or semiweekly schedule depositor. If monthly, enter your tax liability for each month of the year. If semiweekly, check the appropriate box and complete Schedule B (Form 941). Step 6: Fill Out Part 3 - Tell us about your business (only if applicable)

Part 3 only needs to be completed if your business has closed or you no longer pay wages.

Step 7: Fill Out Part 4 - Third-party designee

Fill Out Part 4 - Third-party designee

If you want to allow someone else (like an accountant or tax preparer) to speak to the IRS on your behalf, check “Yes” and provide their name, phone number, and personal identification number (PIN). If not, check “No.”

Step 8: Fill Out Part 5 - Signature

Signature

The business owner or an authorized representative must sign and date the form.
Provide the title (e.g., CEO, CFO) and the best phone number to reach you.

Step 9: Review and Submit Form 944

Review: Double-check all entries for accuracy.
Submit:
- If you’re filing electronically, use IRS-approved e-file software.
- If you’re filing by mail, send the completed Form 944 to the appropriate IRS address based on your business’s location. Refer to the IRS Form 944 instructions for where to mail the form.

Step 10: Pay Any Taxes Due

If you have a balance due (Line 11), ensure you pay by the filing deadline (usually January 31 of the following year).
Payment can be made via the Electronic Federal Tax Payment System (EFTPS), or by check/money order if filing by mail.

Tips for Filing Form 944:

Deposit schedule. Make sure all tax deposits are made on time, even if you only file once a year.
Keep records. Maintain records of payroll, deposits, and communications with the IRS for at least four years.
Consult a tax professional. If you’re unsure about your liability or eligible credits, seek advice from a qualified tax expert.

Employer ANNUAL Federal Tax Return

Warning: This information is for informational purposes only and should not be used for official tax matters. Use the official Form 944 and instructions, generally found at: https://www.irs.gov/forms-instructions. Rely on this information at your own risk. Visit https://www.irs.gov/forms-instructions for official IRS information. Consult with a tax professional.

Answer these questions for this year.

Answer these questions for this year. Part 3

Form 944-V, Payment Voucher

Purpose of Form

Complete Form 944-V if you’re making a payment with Form 944. We will use the completed voucher to credit your payment more promptly and accurately, and to improve our service to you.

Making Payments With Form 944

To avoid a penalty, make your payment with your 2022 Form 944 only if one of the following applies.

• Your net taxes for the year (Form 944, line 9) are less than $2,500 and you’re paying in full with a timely filed return.

• Your net taxes for the year (Form 944, line 9) are $2,500 or more and you already deposited the taxes you owed for the first, second, and third quarters of 2022; your net taxes for the fourth quarter are less than $2,500; and you’re paying, in full, the tax you owe for the fourth quarter of 2022 with a timely filed return.

• You’re a monthly schedule depositor making a payment in accordance with the Accuracy of Deposits Rule. See section 11 of Pub. 15, section 8 of Pub. 80, or section 11 of Pub. 179 for details. In this case, the amount of your payment may be $2,500 or more.

Otherwise, you must make deposits by electronic funds transfer. See section 11 of Pub. 15, section 8 of Pub. 80, or section 11 of Pub. 179 for deposit instructions. Don’t use Form 944-V to make federal tax deposits.

CAUTION

Use Form 944-V when making any payment with Form 944. However, if you pay an amount with Form 944 that should’ve been deposited, you may be subject to a penalty. See section 11 of Pub. 15, section 8 of Pub. 80, or section 11 of Pub. 179 for details.

Specific Instructions

Box 1—Employer identification number (EIN). If you don’t have an EIN, you may apply for one online by visiting the IRS website at www.irs.gov/EIN. You may also apply for an EIN by faxing or mailing Form SS-4 to the IRS. If you haven’t received your EIN by the due date of Form 944, write “Applied For” and the date you applied in this entry space.

Box 2—Amount paid. Enter the amount paid with Form 944. Box 3—Name and address. Enter your name and address as shown on Form 944.

• Enclose your check or money order made payable to “United States Treasury.” Be sure to enter your EIN, “Form 944,” and “2022” on your check or money order. Don’t send cash. Don’t staple Form 944-V or your payment to Form 944 (or to each other).

• Detach Form 944-V and send it with your payment and Form 944 to the address provided in the Instructions for Form 944.

Note: You must also complete the entity information above Part 1 on Form 944.

Payment Voucher

Privacy Act and Paperwork Reduction Act Notice.

We ask for the information on this form to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Subtitle C, Employment Taxes, of the Internal Revenue Code imposes employment taxes on wages and provides for income tax withholding. This form is used to determine the amount of the taxes that you owe. Section 6011 requires you to provide the requested information if the tax is applicable to you. Section 6109 requires you to provide your identification number. If you fail to provide this information in a timely manner, or provide false or fraudulent information, you may be subject to penalties. You’re not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books and records relating to a form or instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or requires the IRS to disclose or give the information shown on your tax return to others as described in the Code. For example, we may disclose your tax information to the Department of Justice for civil

and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.

The time needed to complete and file Form 944 will vary depending on individual circumstances. The estimated average time is:

Recordkeeping . . . . . . . . . . 18 hr., 39 min.

Learning about the law or the form . . . 1 hr., 2 min.

Preparing, copying, assembling, and sending the form to the IRS . . . . . 3 hr., 46 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making Form 944 simpler, we would be happy to hear from you. You can send us comments from www.irs.gov/FormComments. Or you can send your comments to Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don’t send Form 944 to this address. Instead, see Where Should You File? in the Instructions for Form 944.