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Optima Tax Relief Reviews Which Forms Small Businesses Should Use When Filing Employment Tax Returns

A handful of small businesses pay employment tax quarterly to the IRS while others choose to pay it just once a year. The IRS strongly recommends that small business owners review all the rules for filing two commonly used employment tax returns. The two forms small businesses should be aware of are:

  • Form 941, Employer’s Quarterly Federal Tax Return
  • Form 944, Employer’s Annual Federal Tax Return

Both these two forms are not interchangeable with each other and a small business must choose to file one or the other. An employer should never go back and forth between the two forms on their own and should always file according to their designated filing requirement.

Optima Tax Relief reviews additional details between the two forms.

Form 941, Employer’s Quarterly Federal Tax Return

Employer’s that choose to use Form 941 should:

  • 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.
  • Report the amount of employment taxes owed or claim an overpayment of employment taxes.

If the IRS advises an employer to file Form 941, they must do so in order to avoid any complications down the road.

Form 944, Employer’s Annual Federal Tax Return

  • This form should be used for employers who owe $1,000 or less. This form allows small business owners to report employment tax liabilities only once a year instead of quarterly.
  • Taxpayers should be aware that this form can’t be used unless an employer receives official IRS notification that they are eligible to use this form.
  • Once an employer has received notice that they can now file Form 944, they must file this form every year.
  • Employers must continue to file Form 944, regardless of the taxes that they may owe, unless the IRS notifies them differently.

If taxpayers have questions regarding either of the forms above, they should contact the IRS to receive additional information.


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