What’s the Difference Between Form 944 And Form 941?

You’re well aware of Form 941 and the need for filing quarterly payroll taxes, but did you know that an alternative exists? Although it’s only open to a handful of small businesses, Form 944 provides a valuable second path for select entrepreneurs.

Form 944: Annual Taxes Primarily Intended For Small Employers

Form 944 is primarily intended for small businesses. Other than business size, the main difference is that those with Form 944 can file on an annual basis. Conversely, Form 941 requires quarterly filing.

Eligibility for Forms 941 and 944

To qualify for Form 944, employers’ liability for Medicare, Social Security, and federally withheld income taxes cannot exceed an annual total of $1,000. Very few businesses actually reach this threshold, so not very many qualify for this alternate document.

Often, new employers are able to use Form 944 during their first year or two of owning a business, only moving to Form 941 when withheld taxes move beyond $1,000 per year.

Reaching Out to the IRS

If you believe that you’re eligible for Form 944, you or a representative should contact the IRS or send a written request. In some cases, the IRS will actively reach out to eligible businesses to instruct owners to replace Form 941 with Form 944.

Can I Use Form 941 Instead of Form 944?

If you have been instructed to use Form 944 but prefer to file quarterly, call the IRS or send a written request. Don’t complete the other form and hope for the best.

Still not sure if Form 941 or 944 is the better option for your business? The Highland Tax Group can help. Call 720-398-6088 today to learn more about payroll tax services.