Whether you’re self-employed or your business employs individuals who make a modest income, you’ll still need to withhold a percentage of that income and pay it to the IRS each quarter. Going through your taxes every quarter might not make much sense, though, if you’re only withholding a minimal amount.
In these cases, you might wonder if it’s possible to consolidate your tax payments into one annual payment. For some employers, it is indeed possible—and you’ll do it with IRS Form 944.
What is IRS form 944, you ask? Below, we’ll go over everything you need to know about this form, who needs to file it, and how to get tax help if you’re not sure how to proceed with your business taxes this year.
What Is Form 944?
Form 944 is an IRS tax document designed for small employers or self-employed individuals who want to file their tax withholding annually instead of every quarter. If you’re interested in doing so, you must get in touch with the IRS to request Form 944. If you don’t take this step, you won’t be eligible to use the form—instead, you’ll need to use Form 941.
Who Needs to File a 944 Tax Form?
Most taxpayers that use this form do so for convenience. However, the IRS sometimes will notify an employer to file this form instead of Form 941, 941-SS, or 941-PR.
If the IRS instructs you to fill out Form 944, go ahead and do so. You’ll also only need to pay your tax withholding once a year.
Aside from those who get notified, who should file form 944? You should file this form if your tax withholdings amount to less than $1,000 and you want to pay once a year instead of quarterly. You’ll use this form to report:
- Employee-reported tips.
- All wages you’ve paid.
- All income taxes you’ve withheld.
- Your share and the employee’s share of Medicare and Social Security taxes.
- Payroll tax credits.
- Employee retention credits.
- Family leave or qualified sick leave wages.
Employers Who Aren’t Eligible to Use Form 944
Not all employers who want to pay their tax withholdings annually rather than quarterly will be eligible.
Here are a few types of employers who aren’t able to use Form 944:
- Business owners who employ agricultural workers.
- Employers that weren’t notified by the IRS to use Form 944.
- Businesses that utilize household employees.
If you have more questions about your eligibility, consider reaching out to a tax expert that can help.
How to Fill Out Your Federal 944 Form
Did you request Form 944 from the IRS? If so, your next step will be learning how to complete form 944.
You can fill it out online or by printing the form and mailing it to the IRS.
Here are a few basic instructions to help you process the form:
- Enter your personal details (EIN, name, address).
- Be sure to place your EIN at the top of page 2 and 3 as well.
- Report dollars without dollar signs or decimal points.
- Leave sections blank when the value is zero.
- Negative amounts should get reported using a minus sign.
Remember to complete all three pages of Form 944 and sign the last page. From there, you’ll submit the return either digitally or via mail.
What’s the Purpose of Form 944?
The main purpose of Form 944 is to help reduce the burden on small employers and the IRS. Small employers benefit from a simplified process and only having to pay their tax withholdings once a year. The IRS benefits by only having to process one return once a year instead of quarterly taxes.
What’s Better for Your Business: Annual or Quarterly Taxes?
At this point, you should have a better understanding of IRS form 944 and what it’s used for. You might not, however, have a firm understanding of what’s better for your business—filing your tax withholdings annually or quarterly.
To determine the answer, it’s crucial for you to estimate the overall amount of tax withholdings you’ll accumulate over the year (and each quarter). If there’s a chance you’ll go over the $1,000 threshold, it makes more sense to stick with Form 941 instead.
If you need more help determining the answer for your specific situation, consider consulting with business tax preparation services that can help you make an informed decision.
Your Business Taxes in 2022 and Beyond
Determining whether you should file Form 944 or 941 is only one aspect of your business tax situation that you’ll need to figure out. There are plenty of other important business taxes to know about and plenty of other tax laws you’ll need to comply with. If you have questions about your tax situation, consider reaching out to an agent here at Tax Group Center for answers.
Do You Have More Questions About IRS Form 944 or Your Taxes?
In a nutshell, IRS Form 944 can help self-employed individuals or certain types of employers. When the total annual liability for withheld taxes won’t exceed $1,000, form 944 can help you file your taxes once a year rather than every quarter. This simplified process saves your business time and money.
Form 944 can be helpful, but it’s not the only IRS tax form you’ll need to fill out to ensure all your business dealings are squared up with the tax agency. If you have more questions about your business taxes, it might make sense to get in touch with a tax expert who can help you meet your needs.
Consider filling out our tax debt form to get connected with the best tax representative we have here at Tax Group Center. We look forward to hearing from you.