Quick answer
Form 941 is the default quarterly payroll return used by most employers; Form 944 is a simpler annual return reserved for small employers with very low annual payroll tax liability (generally $1,000 or less). The IRS usually notifies eligible employers about Form 944, but you can also request a change if your situation meets the rules (IRS, About Form 944).
Why the difference matters
Filing frequency affects cash flow, recordkeeping cadence, and deposit timing. Quarterly filing (941) spreads reporting and payments across the year and triggers the IRS’s deposit rules; annual filing (944) consolidates reporting into a single return and can reduce administrative burden for very small employers.
In my experience advising small businesses, the right filing choice can save several hours per year and reduce the number of deposit errors — but choosing incorrectly can lead to penalties and surprise notices from the IRS.
(Authoritative guidance: IRS, About Form 941 and About Form 944.)
Who is eligible for Form 944 and who must use Form 941?
- Form 944: Intended for employers whose annual federal employment tax liability is $1,000 or less for Social Security, Medicare, and withheld federal income tax. Employers typically file Form 944 once a year (IRS, About Form 944).
- Form 941: Used by most employers who do not meet Form 944 eligibility. If your annual employment taxes exceed the Form 944 threshold or the IRS requires quarterly reporting, you must file Form 941 each quarter (IRS, About Form 941).
The IRS often notifies small employers that they should file Form 944. If you believe you qualify but did not receive notification, you can contact the IRS to request the change.
Key practical differences (at a glance)
- Filing frequency: 941 = quarterly; 944 = annual.
- Typical eligibility: 941 = most employers; 944 = small employers with annual tax liability generally $1,000 or less.
- Deposit and payment timing: Filing frequency does not eliminate deposit rules — you must still follow IRS deposit rules unless IRS directs otherwise.
- Amended returns: Use Form 941-X to correct quarterly returns and Form 944-X to correct annual returns.
For more on correcting returns, see our guide to filing adjusted employer returns: Correcting Employer Payroll Returns: When to File Form 941-X and What to Include.
How to know which form you should file — step-by-step
- Estimate annual employment tax liability (Social Security + Medicare + withheld federal income tax). If the total is around or below $1,000, Form 944 may apply.
- Check annual IRS notices. The IRS typically tells eligible employers that they should file Form 944. If you receive this notice, follow it.
- If you believe you qualify but did not receive notification, contact the IRS Business & Specialty Tax Line or submit a written request per Form 944 instructions. Keep documentation (payroll reports and tax computations) to support your request.
- If your payroll increases mid-year and you exceed the eligibility threshold, you may need to switch back to Form 941. Notify your tax advisor and the IRS promptly.
(For official steps and contact points, consult the Form 944 and Form 941 pages on IRS.gov.)
Deposit rules and timing — the common pitfall
A frequent misconception is that annual filers never deposit payroll taxes during the year. That’s not universally true: while Form 944 consolidates reporting, deposit rules still apply unless the IRS specifies otherwise. The requirement to deposit payroll taxes (and the deposit frequency) depends on your tax liability and IRS lookback rules. In practice, most small employers who file Form 944 have minimal liability and either make a single annual payment or follow the deposit schedule the IRS assigns.
Always confirm deposit timing with IRS guidance or your payroll provider to avoid penalties for late deposits.
Deadlines and timing (practical overview)
- Form 941: Filed quarterly — due the last day of the month following the end of the quarter (typically April 30, July 31, October 31, and January 31). Check current-year calendars for weekend/holiday shifts (IRS, About Form 941).
- Form 944: Filed annually — due January 31 of the year following the calendar year reported. If you timely deposited all taxes when due, the due date can vary; consult current Form 944 instructions.
Note: The IRS may shift due dates if they fall on weekends or federal holidays. Always check the current year’s instructions.
Common employer scenarios (real-world examples)
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Example 1 — Micro retail shop: You pay two part-time employees limited hours year-round. Your total annual employment tax liability is about $700. Filing Form 944 simplifies your admin: one return, one payment, one annual reconciliation.
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Example 2 — Growing startup: You start the year as a microbusiness but hire full-time staff midyear. Your annual tax liability exceeds $1,000. You must switch to Form 941 and begin quarterly filings and possibly more frequent deposits.
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Example 3 — Seasonal employer: You have large payouts in summer but none the rest of the year. Estimate your annual liability at year start and re-check mid-year; if it’s > $1,000, file Form 941.
In my practice, I recommend running a simple spreadsheet to project annual liability at the start and midyear to decide whether to ask the IRS for Form 944 or remain on Form 941.
How to switch between forms
- From 941 to 944: If you think you qualify for Form 944, you can request the change; the IRS generally must approve it. The IRS may proactively change your filing requirement and will send written notice if they do.
- From 944 to 941: If your payroll grows above the threshold, notify the IRS and begin filing quarterly. The timing of the switch can affect deposit schedules, so act promptly.
Keep a written record of any communications with the IRS and your payroll provider when making a filing-frequency change.
Penalties and mistakes to avoid
- Filing the wrong form or late filing can lead to penalties and interest. Late deposits typically carry steep penalties, so calendar reminders and payroll automation are essential.
- Don’t assume annual filing means no deposits. Confirm deposit rules with the IRS or your payroll service.
- If you must correct an already-filed return, use Form 941-X or Form 944-X as appropriate.
See our related guides to prevent common Form 941 mistakes: Avoiding Common Mistakes on Form 941 and Other Payroll Returns and our internal overview of employer responsibilities for corrections and deposits: Employer Responsibilities for Form 941: Corrections and Deposits.
Practical checklist before filing
- Run an annual estimate of employment taxes (withheld income tax + employer and employee share of FICA).
- Confirm whether the IRS has notified you to file Form 944.
- If you plan to request Form 944, gather evidence of low annual liability and contact the IRS per the Form 944 instructions.
- Set up deposit schedules with your payroll provider and calendar reminders for filing deadlines.
- Keep payroll records for at least four years in case of audit.
When to call a professional
Contact a payroll specialist or tax advisor if any of these apply: you approach the $1,000 threshold and aren’t sure about deposit timing; you receive an IRS notice about filing frequency; you need to change your filing status mid-year; or you face penalties or proposed adjustments.
In my practice, small errors in deposit timing are the most common cause of penalties. Automating deposits and confirming filing status with the IRS early in the year prevents most problems.
Resources and authoritative references
- IRS, About Form 941: https://www.irs.gov/forms-pubs/about-form-941
- IRS, About Form 944: https://www.irs.gov/forms-pubs/about-form-944
Internal guides on related topics:
- IRS Form 941: Employer’s Quarterly Federal Tax Return (FinHelp): https://finhelp.io/glossary/irs-form-941-employers-quarterly-federal-tax-return/
- IRS Form 944: Employer’s Annual Federal Tax Return (FinHelp): https://finhelp.io/glossary/irs-form-944-employers-annual-federal-tax-return/
- Correcting returns (941-X / 944-X): https://finhelp.io/glossary/correcting-employer-payroll-returns-when-to-file-form-941-x-and-what-to-include/
Professional disclaimer
This article is for educational purposes and does not constitute tax advice. Rules and thresholds can change; consult the IRS instructions for Forms 941 and 944 or a qualified tax professional for guidance tailored to your situation.
If you’d like, our team can review your payroll numbers and recommend whether to request Form 944 or remain on Form 941.
