IRS advises small businesses to use correct form when filing returns
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Tuesday, January 5, 2021

IRS advises small businesses to use correct form when filing returns

By Payroll and Entitlements Editorial Staff

The IRS has advised small business owners to review the rules for filing Form 941, Employer's Quarterly Federal Tax Return and Form 944, Employer's Annual Federal Tax Return. These two forms are not interchangeable and a small business is required to file only one of them.

Form 941, Employer's Quarterly Federal Tax Return.. Employers use Form 941 to:

  • report income taxes, Social Security tax, Medicare tax and additional Medicare tax withheld from employee's wages, tips and other compensation;
  • claim employment tax credits and adjustments; and
  • report the amount of employment taxes owed or claim an overpayment of employment taxes.

If an employer has been advised by the IRS to file Form 941 quarterly, they must do so.

Form 944, Employer's Annual Federal Tax Return. Employers who owe $1,000 or less file this form. It allows them to report employment tax liabilities only once a year, instead of quarterly. However, this form can’t be used unless an employer receives official IRS notification that they are eligible to use this form. Moreover, employers must continue to file Form 944, regardless of the tax they owe, unless the Service notifies them differently. Finally, the IRS has informed taxpayers that if they’re not sure which form they should file, they can call 800-829-4933 or 267-941-1000 for more information.

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