Understanding the Difference Between
Form 941 and 944

If you are an employer, filing employment tax forms on time is essential to stay compliant with the IRS. Two commonly used forms are Form 941 and Form 944, but they are not the same. Knowing which one applies to your business can save you time, effort, and penalties.

What is Form 941?

Form 941 (Employer’s Quarterly Federal Tax Return) is used by U.S. employers to report and pay federal payroll taxes on a quarterly basis. It includes information on federal income tax withheld from employees wages, Employer’s and Employee’s share of Social Security and Medicare taxes.

What is Form 944?

Form 944 (Employer’s Annual Federal Tax Return) is used by small businesses with an annual payroll tax liability of $1,000 or less. It allows eligible employers to report federal income tax, Social Security, and Medicare taxes annually instead of quarterly.

Key differences of Form 941 Vs Form 944

Let's see the differences between Form 941 Vs Form 944

Which form is right for your business: 941 or 944?

• Choose Form 941 if:
• Your business withholds more than $1,000 in employment taxes annually.
• You have a moderate or large payroll.
• You are required to file quarterly (every three months).
• Choose Form 944 if:
• Your total annual liability for federal income, Social Security, and Medicare taxes is $1,000 or less.
• You have a very small payroll.
• The IRS has notified you that you are eligible to file Form 944.

Common scenarios

1.Can I switch from Form 941 to Form 944?

Employers cannot switch from Form 941 to Form 944 on their own. The IRS must authorize the use of Form 944 based on the employer's annual tax liability.

2. I received a letter from the IRS saying I can file Form 944. Can I choose to file Form 941 instead?

If the IRS has directed you to file Form 944, you cannot file Form 941 unless you request and receive approval from the IRS to switch.

3. My business only operates during the summer months. Do I still need to file all four quarters of Form 941?

To avoid filing for inactive quarters, check the "Seasonal Employer" box on Line 18 of the form. If your business operates only during the summer months, you are not required to file all four quarters of Form 941. However, you must file for the quarters in which you paid wages to employees.

4. I have closed my business mid-year. Do I still need to file Form 941 for the remaining quarters?

You need to file a final Form 941 for the last quarter you paid wages and check the box on Line 17 to indicate it is your final return. Attach a payroll statement including your name, and the address where the data is stored.

5. Can I request to switch from filing Form 941 to Form 944 if my business has slowed down?

Yes, but you must request the change with the IRS before April 1 of the current tax year, and the IRS must approve it before you begin filing Form 944.