Whether you employ one worker or hundreds, you’re legally required to withhold payroll taxes from your W-2 employees’ paychecks and remit them to the federal government. Along with filing the taxes themselves, employers file tax return paperwork with the IRS to report on their payroll tax liabilities.
Depending on your business’s payroll tax liability, you’ll either file IRS Form 941 quarterly or Form 944 annually.
Below, we explain more about the differences between the two tax forms, including how you know which one to file and when each form is due.
Want help keeping track of tax form deadlines?
Software like QuickBooks Payroll can prepare tax forms 941 and 944 along with calculating, withholding and filing taxes on your behalf.
What is tax form 941?
Tax Form 941, aka the Employer’s Quarterly Federal Tax Return, is a form filed quarterly by non-farming, non-agricultural businesses that have a quarterly payroll tax liability greater than $1,000. The form reports how much money was withheld from employee paychecks for federal income, Medicare and Social Security taxes over the course of an entire quarter.
Other information on Form 941 includes the following:
- Your business’s employer identification number, address and name.
- The number of employees you paid throughout the quarter and how much they earned (both wages and reported tips).
- Adjustments for sick leave, family leave, tips and group-term life insurance.
- Tax credits for qualified family and sick leave and for research and development.
Form 941 filing schedule and deadlines
Form 941 must be filed by the last day of the month following the end of each quarter:
- Quarter 1 (January 1 to March 31): Due April 30.
- Quarter 2 (April 1 through June 30): Due July 31.
- Quarter 3 (July 1 through September 30): Due October 31.
- Quarter 4 (October 1 through December 31): Due January 31 of the new year.
If the last day of the month following the quarter’s end falls on a weekend or legal holiday, the deadline moves to the next business day. (In this case, legal holidays refer to any holidays celebrated in Washington, D.C.)
While form 941 is due quarterly, payroll taxes themselves are due on a more frequent schedule that differs depending on your total tax liability. Learn more by reading our comprehensive guide to payroll tax deadlines for employers.
What is tax form 944?
Tax Form 944, aka the Employer’s Annual Federal Tax Return, serves the same purpose as form 941: Reporting a non-agricultural employer’s payroll tax liability.
However, the form is filed annually, not quarterly, and only by businesses with an annual payroll tax liability of under $1,000 — an extremely low amount easily exceeded by most one-employee businesses and sole proprietorships.
You will only file Form 944 if the IRS informs you in writing (via the U.S. Postal Service) that you should do so. Otherwise, you should file form 944 on a quarterly basis instead.
Form 944 filing schedule and deadlines
Employers file Form 944 just once per year, usually on the last day of the first month after the end of the financial year (January 31).
How to file forms 941 and 944
The fastest, easiest way to file forms 941 and 944 is electronically through the IRS’s e-file system.
However, filing electronically is only possible through an IRS-approved tax-filing service. You can find an authorized service on the IRS’s list of modernized e-file (MeF) service providers, which is updated annually.
While you can’t use payroll software to file tax forms, the best payroll software will generate a pre-filled Form 944 or 941. You can then export the form for easy e-filing through an IRS-approved software tool.
Filing by mail
You can print and mail your tax return forms, but make sure to follow the IRS’s filing instructions to ensure your tax return is accepted on time.
Filing with a tax professional
Instead of filing quarterly tax returns on your own, you can work with a tax professional authorized by the IRS to e-file forms on behalf of business owners. Use the IRS’s online search tool to find the nearest authorized accountant, bookkeeper or tax professional who can e-file for you.
Filing with a professional employer organization (PEO)
If you outsource your payroll and HR services to a certified PEO, the PEO will prepare and file tax returns on your behalf using their own employer identification number. The PEO’s tax-filing service should include Form 941, but double-check with the company before signing a co-employment agreement to ensure the PEO is responsible for filing the form, not you.
Penalties for non-compliance and how to avoid them
Failure to File penalties
If you fail to file Form 941 or 944 on time, you’ll receive a Failure to File penalty from the IRS. The fine you’ll pay depends on how late your tax return is and how much you owe in unpaid payroll taxes. For instance, for each month past the tax return due date, the penalty costs 5% of your unpaid taxes with an additional 5% fee per month (for up to five months).
Failure to Pay penalties
Failing to deposit your payroll taxes on time will result in an additional fee separate from the Failure to File penalty.
Your exact penalty depends on how late the payment is and how much you owe. For instance, if your payment is between one and five days late, your penalty is equivalent to 2% of the total unpaid tax amount. The rate increases the longer you wait to deposit taxes.
To avoid IRS-imposed penalties, it’s essential to stay on top of all tax-filing deadlines.
IRS Publication 509 lists every tax payment deadline and tax return due date for the 2023 fiscal year. It also includes a downloadable tax calendar to help you keep track of the year’s tax deadlines.
If you don’t want to stay on top of tax-filing deadlines on your own, payroll software and tax-filing services will typically send you notifications and reminders as tax deadlines approach.
Full-service payroll software can also minimize your risk of accruing a Failure to Pay penalty by automatically calculating and remitting payroll taxes on your behalf. Payroll software companies further reduce your penalty risk by issuing a tax-filing guarantee where the company promises to assume any IRS-imposed penalties if it makes a mistake on your taxes.
Frequently asked questions
Do household employers file form 941?
Yes. If the tax liability for your household employee exceeds $1,000 for the year, you should file Form 941 on a quarterly basis.
What are the key differences between tax forms 941 and 944?
Tax forms 941 and 944 are used by non-agricultural businesses to report payroll tax withholding to the federal government. However, the form you should use depends on your business’s overall tax liability.
Form 944 is much less commonly used and applies only to businesses with an annual tax liability of less than $1,000. All other non-agricultural businesses file Form 941 instead. Unless you receive an official letter from the IRS instructing you to use Form 944, you should use Form 941 by default.
Additionally, Form 944 is submitted annually (usually on January 31). Form 941 is submitted quarterly.
Can you get an extension for Form 941?
No, you cannot request an extension from the IRS for Form 941. If you file late, you’ll receive a Failure to File penalty that costs 5% of your total tax liability for every month you fail to file.
What is Form 943?
Agricultural businesses like farms file Form 943, aka the Employer’s Annual Tax Return for Agricultural Employees, instead of forms 941 or 944. Agricultural businesses submit these forms annually to report on the federal income, Medicare and Social Security taxes withheld from employee paychecks during the year.
Read next: What Is a 1099 Form? When to Use It and How It Works (TechRepublic)
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