The IRS issued a September 17, 2024, draft version of the Form 944, Employer’s Annual Federal Tax Return instructions used by small employers with limited annual employment tax liability. The updated instructions contain substantive changes related to COVID-era credits, the elimination of certain forms and publications, and the 2024 Social Security wage base limit.
Form 944.
The Employer’s Annual Federal Tax Return is used by employers whose annual estimated tax liability is $1,000 or less, and have been notified by the IRS to file Form 944 instead of the quarterly Form 941. If an employer believes he or she is eligible to file the annual return instead, a written request must be submitted to the IRS. Agricultural employers, household employers, and employers who have been explicitly requested to file Form 941 may not use Form 944. See Payroll Guide ¶4237 for more information on Form 944.
Changes to this year’s instructions.
In addition to noting the 2024 Social Security wage base limit of $168,600 for the 2024 tax year, the draft instructions note the COVID-era qualified sick and family leave wage credits have expired and may no longer be claimed on Form 944. Instead, if a taxpayer is eligible to claim the credit for qualified sick and family leave wages in 2024 for an earlier applicable leave period, the taxpayer must file Form 944-X, Adjusted Employer’s ANNUAL Federal Tax Return or Claim for Refund, after filing Form 944, to claim the credit for qualified sick and family leave wages paid in 2024. Filing a Form 944-X before filing a Form 944 for the year may result in errors or delays in processing your Form 944-X. As a result, lines 8a through 8g have been removed and replaced with just line 8, “Qualified small business payroll tax credit for increasing research activities” with a reminder to attach Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.
Reminders.
The instructions note a number of reminders including: (1) the discontinuation of Forms 941-SS and 941-PR and Publication 51, 80, and 179; and (2) instructions for claiming the Qualified Small Business Payroll Tax Credit for Increasing Research Activities and claiming the Employee Retention Credit for Certain Tax-Exempt Organizations Affected by Qualified Disasters.
Draft 2024 Form 944.
The IRS released a draft of the 2024 Form 944 in June (see IRS Issues 2024 Draft Form 944, 06/10/2024). The form has not yet been finalized.
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.
