IRS Form 944: Line by Line Instruction - Explained

Updated on December 03, 2021 - 10:30 AM by Admin, TaxBandits

Form 944 is to report the payroll taxes annually rather than quarterly (for which Form 941 is used). This 944 Form is designed for small businesses with a tax liability of $1,000 or less. For filing the Employer's ANNUAL Federal Tax Return, employers must know the following detailed information on how to fill out Form 944.

Keep reading this article to learn more about Form 944 instructions and the changes for the 2021 tax year.

Table of Content :

If you have received a notice from the IRS to file Form 944, the information such as social security, medicare, and federal income taxes withheld should be reported.

1. What’s New to Form 944 for 2021?

For the 2021 tax year, the following lines have been changed in the 944 tax form.

Lines Changed for 2021 Form 944

Line No Changed Lines in 2021 Tax Year
8d Enter the Non Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021
8e Enter the Non Refundable portion of COBRA premium assistance credit
8f Enter the number of individuals provided COBRA premium assistance
10f Refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021
10g Refundable portion of COBRA premium assistance credit
15 Enter the qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021
16 Qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021
18 Qualified health plan expenses for the employee retention credit
19 Report the qualified sick leave wages for leave taken after March 31, 2021
21 This should be filled with the amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 19.
22 Report the qualified family leave wages for leave taken after March 31, 2021
23 Qualified health plan expenses allocable to qualified family leave wages reported on line 22
24 Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 22
25 Enter the total of any amounts included on lines 8c and 10e for the third quarter, if you're eligible for the employee retention credit in the third quarter solely because the business is a recovery startup business .
26 If you're eligible for the employee retention credit in the fourth quarter solely because the business is a recovery startup business, enter the total of any amounts included on lines 8c and 10e for the fourth quarter

In addition to this, Line 10b, which had Deferred amount of the employer share of social security tax and Line 10c, which had Deferred amount of the employer share of social security tax for the 2020 tax year, is now reserved for future use.

Form 940

Ready to file Form 944 for 2021?

Create a Free Account Now with TaxBandits and E-file your Form 944 in minutes. Get instant approval from the IRS.

2. How to fill out Form 944 for 2021?

IRS Form 944 contains 5 parts in which certain information should be reported. Before you begin to file, gather the payroll data and basic information such as EIN (Employer identification number), name, trade name & address.

The following is a detailed breakdown of the different parts of the 944.

Completing Part 1 of Form 944: Answering the questions about the taxable wages

944 form part I
  • Line 1 & 2:

    Report the total wages paid to the employees and the federal income taxes withheld.

  • Line 3:

    If no wages are subject to social security or medicare taxes, check the box and skip to line 5.

  • Line 4 (4a to 4e):

    Calculate the taxable social security and medicare wages and tips by multiplying each of the boxes in column 1 with the tax rates specified and enter in column 2. Enter the total social security and medicare taxes in Line 4e.

  • Line 5:

    Add lines 2 and 4e and enter the total taxes before adjustment.

  • Line 6:

    Enter tax amounts that result from current period adjustments. You can use a minus sign (if possible) to show a negative adjustment that decreases orelse parentheses.

  • Line 7:

    Add lines 5 and 6 and enter the total taxes after adjustment. Line 8a: If your business can claim any tax credit for performing or participating in research, enter the amount and attach Form 8974.

  • Line 8b:

    Enter the non refundable portion of the credit for qualified sick and family leave wages taken before April 1, 2021 from Worksheet 1, Step 2, line 2j.

  • Line 8c:

    Enter the non refundable portion of employee retention credit.

    Note: Use Worksheet 2 for calculating Employee Retention Credit for Qualified Wages paid after December 31, 2020, and before July 1, 2021. Use Worksheet 4 for Employee Retention Credit for Qualified Wages paid after June 30, 2021, and before January 1, 2022.

  • Line 8d:

    Enter the non refundable portion of the credit for qualified sick and family leave wages taken after March 31, 2021 from Worksheet 3, Step 2, line 2r.

  • Line 8e:

    Enter the non refundable portion of the COBRA premium assistance credit from Worksheet 5, Step 2, line 2g.

  • Line 8f:

    Enter the number of individuals provided with the COBRA premium assistance

  • Line 8g:

    Add lines 8a, 8b, 8c & 8d and enter the total non refundable credits.

  • Line 9:

    Subtract line 8g from line 7 and enter the total taxes after adjustment and non refundable credits.

  • Line 10a:

    Enter the deposits including any overpayment applied from filing Form 944-X, 944-X (SP), 941-X, or 941-X (PR) in the current year.

  • Line 10b & 10c:

    Reserved for future use.

  • Line 10d:

    Enter the refundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021. Use Worksheet 1 to calculate

  • Line 10e:

    Refundable portion of employee retention credit

  • Line 10f:

    Calculate the refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 using Worksheet 3 and enter here.

  • Line 10f:

    Calculate the refundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021 using Worksheet 3 and enter here.

  • Line 10g:

    Refundable portion of COBRA premium assistance credit

  • Line 10h:

    Refundable portion of COBRA premium assistance credit

  • Line 10i:

    Enter the total advances received from filing Form(s) 7200 for the year.

  • Line 10j:

    Subtract line 10i from line 10h and enter the result on line 10j.

  • Line 11 & 12:

    Enter the balance due in line 11 and the overpayment in line 12. Check the box if the overpayment balance should be applied to the next return or refunded.

Completing Part 2 of Form 944: About the deposit schedule and tax liability

944 form part II
  • Line 13:

    In this part, report the business’s deposit schedule and tax liability for the year. If line 9 is less than $2,500, check the box and go to part 3. If it is more, enter the tax liability for each month.

    If you are a semiweekly schedule depositor or accumulated $100,000 or more of liability on any day during a deposit period, complete Form 945-A.
    Add lines 13a through 13l and enter the amount in line 13m.

Completing Part 3 of Form 944: Informations about the business

944 form part III

Part 3 is about business information. Following are the line by line instructions:

  • Line 14:

    Check the box if the business is closed or stopped giving wages and enter the final date of pay.

  • Line 15 & 16:

    Enter the qualified health plan expenses allocable to qualified sick and family leave wages for leave taken before April 1, 2021.

  • Line 17:

    Enter the qualified wages for the employee retention credit.

  • Line 18:

    Qualified Health Plan Expenses for the Employee Retention Credit.

  • Line 19:

    Enter the qualified sick leave wages paid to employees for leave taken after March 31, 2021.

  • Line 20:

    Enter the qualified health plan expenses allocable to qualified sick leave wages for leave taken after March 31, 2021.

  • Line 21:

    Enter the amounts under certain collectively bargained agreements allocable to qualified sick leave wages reported on line 19.

  • Line 22:

    Qualified Family Leave Wages for Leave Taken After March 31, 2021

  • Line 23:

    Enter the qualified health plan expenses allocable to qualified family leave wages reported on line 22.

  • Line 24:

    Amounts under certain collectively bargained agreements allocable to qualified family leave wages reported on line 22.

  • Line 25:

    If you are eligible for the employee retention credit in the third quarter solely because the business is a recovery startup business, enter the total of any amounts included on lines 8c and 10e for the third quarter.

  • Line 26:

    If you are eligible for the employee retention credit in the fourth quarter solely because the business is a recovery startup business, enter the total of any amounts included on lines 8c and 10e for the fourth quarter.

Completing Part 4 of Form 944: About the third-party designee

944 form part IV

This should be filled if you allow a third-party designee to discuss this return with the IRS. A third-party designee refers to an employee, tax preparer, or another person, who would be allowed to speak to the IRS regarding this return on behalf of your business.

Completing Part 5 of Form 944: Signature

944 form part V

Part 5 of Form 944 is used to sign confirming that the information provided in the return is true and correct. All of the paid preparer information such as name, signature & address should be entered.

Form 940

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Create a Free Account Now with TaxBandits and E-file your Form 944 in minutes. Get instant approval from the IRS.

3. When is Form 944 due for 2021?

Form 944 is filed once a tax year. The employers are responsible for filing the 944 with the IRS on-time.

For 2021, the due date for filing Form 944 is January 31, 2022. If the deposits are made on time in full payment of the taxes, the return can be filed by February 10, 2022.

Failing to file Form 944 before the due date may result in a penalty of about 5%. This gets accumulated based on the date of filing.

Avoid being penalized by the IRS

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4. How to file Form 944 Electronically?

IRS recommends e-filing of Form 944 rather than paper filing to avoid errors and for faster processing. TaxBandits, an IRS authorized e-file provider supports e-filing for all 1099, W2, 94x, and ACA Forms.

Follow the below steps to file 944 electronically with TaxBandits.

  • Step 1: Choose Form 944
  • Step 2: Enter Form Information
  • Step 3: Review and Transmit to the IRS

Visit https://www.taxbandits.com/payroll-forms/e-file-form-944-online/ to learn more about Form 944 e-filing.

Form 940

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