Form 944 Preparation
Overview
Use ProPay to prepare Form 944 (Employer's Annual Federal Tax Return). Form 944 is designed for the smallest employers — those with an annual employment tax liability of $1,000 or less. These employers file once per year instead of quarterly, reducing their filing burden. ProPay calculates the annual totals and generates the form for printing or e-filing.
Who Must File Form 944
Form 944 is for employers whose annual employment tax liability is $1,000 or less. This includes Social Security, Medicare, and withheld federal income taxes. The IRS notifies eligible employers that they must file Form 944 instead of Form 941.
> Important: You cannot choose to file Form 944 on your own. The IRS must notify the employer that they qualify. If the employer has not received IRS notification, they must continue filing Form 941 quarterly.
Setting Up a Client for Form 944
Before you can prepare Form 944, the client must be designated as a 944 filer:
- Go to Client Functions > Setup > Edit/Change Client.
- Locate the 944 filing designation setting. [NEEDS-REVIEW — verify exact field name and screen location for the DEP_944 flag]
- Enable the 944 filer flag for this client.
- Click Save.
> Note: Only enable this flag after the employer has received IRS notification to file Form 944. Setting this flag changes the client's tax calculation from quarterly to annual.
Printing Form 944
- From the ProPay Main Menu, click Client Functions > Tax Returns.
- Select Form 944 from the list of available returns.
- Select the client(s) to include.
- ProPay calculates annual totals for wages, tips, Social Security and Medicare taxes, adjustments, and tax deposits.
- Review the calculated amounts on screen.
- Click Print Return to generate the completed Form 944.
E-Filing Form 944
- From the ProPay Main Menu, click Client Functions > Electronic Functions > Magnetic Media.
- Select the client(s) with the 944 filer flag enabled.
- Click Create Magnetic Return. ProPay generates a file formatted for IRS electronic submission.
- Verify that all client data passes validation.
- Transmit the file to the IRS.
> Tip: See E-filing 941 and 940 Returns for detailed instructions on IRS e-filing setup. The setup process is the same for Forms 941, 943, and 944.
Form 944 vs. Form 941
| Feature | Form 944 | Form 941 |
|---|---|---|
| Filing frequency | Annual | Quarterly |
| Who files | Employers with annual tax liability of $1,000 or less | Most employers |
| IRS notification required | Yes — IRS must notify employer | No — default form |
| Calculation period | Full calendar year | Each quarter |
| Due date | January 31 (for prior year) | Last day of month following quarter end |
Tips and Warnings
> Important: If an employer's tax liability exceeds $1,000 during the year, they may need to switch to quarterly filing (Form 941) for the following year. The IRS will send notification if a change is required.
> Warning: If a client is incorrectly flagged as a 944 filer, their tax calculations will use annual totals instead of quarterly. This can cause incorrect tax deposit schedules and potential penalties. Verify the 944 flag before preparing returns.
> Tip: Form 944 uses the same calculation engine and line items as Form 941. The only difference is the reporting period (annual vs. quarterly).
Related Topics
- Federal Taxes / 941 Processing — Quarterly federal return for most employers
- Form 943 Preparation — Annual return for agricultural employers
- E-filing 941 and 940 Returns — IRS electronic filing setup and process
- Tax Deposits — Tracking federal tax deposit obligations
- Year-End Tax Filing Reminders — Checklist for year-end compliance