IRS Form 944 allows the smallest employers to file their taxes. This Form must be submitted to the IRS by the tax filing deadline each year. Those who file using Form 944 may also be eligible for the Employee Retention Credit. Small employers who paid qualified wages to employees during the COVID-19 pandemic must amend their Form 944 in order to apply for their ERC refundable tax credit. If eligible, this could earn your business up to $21,000 per employee that you kept on payroll during the pandemic in the 2020 and 2021 tax years.
What Is IRS Form 944?
IRS Form 944 is the Employer’s Annual Federal Tax Return form. Small employers with $1,000 or less in annual tax liability can use this form to file a single tax return for the year, as opposed to quarterly. This allows them to file for social security, Medicare, and withhold federal tax income all on a single, yearly form. Form 944 is always due by the tax filing deadline each year on April 15.
IRS Form 944 vs 941
As opposed to Form 941, IRS Form 944 only needs to be filed on an annual basis, meaning once per year. Larger employers will need to complete Form 941 instead, which is required to be submitted on a quarterly basis. Generally, businesses file Form 941 unless specified by the IRS to use 944. With both forms, you will need to report:
EIN, name, address
Number of paid employees
Employee compensation including wages and tips
Federal tax income, social security, and Medicare taxes paid
Total tax liability
Paid sick or family leave wages
Adjustments
Total tax liability will determine whether you should use Form 941 or Form 944. If you need to use Form 941 instead, you must file for each fiscal quarter of the tax year. The fiscal quarter dates are January through March, April through June, July through September, and October through December.
Who Is Eligible to File Form 944?
Only small businesses are eligible to file Form 944, as opposed to Form 941. To file Form 944, your business’ tax liability must not exceed $1,000 for social security, Medicare, and withheld federal tax income.
In terms of the ERC tax credit, there are startup businesses that are eligible to file Form 944, as they are oftentimes smaller employers at the start of their business endeavors. If your startup business was opened for the first time on or after February 15, 2020, you may be eligible for additional ERC tax credit benefits as a recovery startup business.
Filing Form 944 for the ERC Tax Credit
Only the smallest employers are eligible to use Form 944. In terms of the ERC tax credit, they will need to amend Form 944 for the 2020 or 2021 tax years. Although the deadline for filing taxes for both those tax years has passed, there is still time to apply for the ERC tax credit. Employers will need to amend their Form 944 using Form 944-X to apply for the ERC tax credit.
The deadline for amending your Form 944 tax return using Form 944-X to apply for the ERC tax credit is April 15, 2024, for the 2020 tax year and April 15, 2025, for the 2021 tax year. Form 944-X shows an employer’s consent to support the ERC claim for a refundable tax credit.
Avoid an IRS Audit By Filing the Right Form for ERC
Always make sure that you are properly filing anything sent to the IRS. Incorrect information on an application to the IRS could put you at risk of an IRS audit. To ensure that your ERC tax credit application is properly filed and includes all important information, it is best to contact an ERC consultant to help with your application. An experienced ERC consultant can ensure that you are fully eligible for the ERC tax credit before applying.
Aside from helping determine your eligibility, an ERC consultant can help get you in line with the IRS faster. The wait times for IRS approval for your ERC application can be long. Through Five Star ERC Experts, you are guaranteed to be in the hands of experienced tax consultants and certified tax attorneys who understand how to navigate applications to the IRS.