Form 944 (2020) Employer Tax Filing Checklist
Form 944 is the annual federal employment tax return for employers notified by the IRS to file annually instead of quarterly. For 2020, this form incorporates COVID-era adjustments, including deferred employer social security tax payments, qualified sick and family leave wage credits under the Families First Coronavirus Response Act, and employee retention credit reporting with separate refundable and nonrefundable portions tracked through Worksheet 1.
Filing Steps
1. Confirm IRS Written Notification
Confirm you received IRS written notification requiring annual filing under Form 944 rather than quarterly Form 941 before proceeding. Filers not notified by the IRS must use quarterly filings instead. Only employers specifically informed by the IRS in writing are eligible to file Form 944.
2. Gather Wage Information
Gather the 2020 total wages, tips, and compensation paid to all employees. Separately identify qualified sick leave wages and qualified family leave wages. These special wages are exempt from the employer's share of social security tax. They are subject only to the employee's share at 6.2%, rather than the combined 12.4% rate applicable to regular wages.
3. Enter Federal Income Tax Withheld
Enter federal income tax withheld from wages on line 2. Verify this amount matches the total withholding from all payroll records for the entire 2020 calendar year.
4. Calculate Social Security Taxes
Calculate social security tax on line 4a. Report wage amounts in Column 1 and tax calculations in Column 2. For regular wages, multiply by 12.4% to account for both the employer's and employee's shares. For qualified sick leave wages reported on line 4a(i) and qualified family leave wages reported on line 4a(ii), multiply the wage amounts by only 6.2% in Column 2 because these wages are exempt from the employer share of social security tax and subject only to the employee share.
5. Calculate Medicare Taxes
Calculate Medicare tax at 2.9% on line 4c. Calculate Additional Medicare Tax at 0.9% on line 4d for wages exceeding the applicable thresholds: $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately. Report cumulative wages subject to this threshold.
6. Complete Worksheet 1 for COVID Credits
Complete Worksheet 1 provided in the 2020 instructions to determine refundable versus nonrefundable portions of qualified sick and family leave credits and employee retention credit. Enter nonrefundable credits on lines 8b and 8c. Enter refundable amounts on lines 10d and 10e. This worksheet is required for any employer claiming these COVID-related credits.
7. Complete Part 2 Tax Liability Reporting
If line 9 total taxes after nonrefundable credits is $2,500 or more, complete Part 2 with a monthly liability breakdown on lines 13a through 13l. If you are a semiweekly schedule depositor or became one because you accumulated $100,000 or more in tax liability on any day, you must complete Form 945-A and file it with Form 944. When filing Form 945-A, do not complete lines 13a through 13m on Form 944. If line 9 is less than $2,500, check the first box on line 13 and proceed directly to Part 3.
8. Report Qualified Health Plan Expenses
Report in Part 3 qualified health plan expenses allocable to sick leave wages on line 15, family leave wages on line 16, and employee retention credit qualified wages on line 17. Include corresponding health plan expense amounts on lines 18 and 19. Form 5884-C credit amounts, if applicable, should also be reported.
9. Account for Deferred Social Security Taxes
Account for deferred social security tax amounts on lines 10b for the employer share and 10c for the employee share. Under CARES Act Section 2302, employers could defer 100% of the employer share of social security tax for wages paid from March 27, 2020, through December 31, 2020. The deferred amount must be repaid in two installments: 50% by December 31, 2021, and 50% by December 31, 2022. Employee share deferrals on line 10c apply only to wages less than $4,000 per biweekly pay period paid from September 1 through December 31, 2020. These deferrals reduce current-year deposits but do not eliminate the tax liability.
10. Calculate Net Overpayment or Balance Due
Calculate net overpayment or balance due on lines 11 and 12. If overpayment exists, elect to apply it to the next return or request a refund. These are the only two options available for 2020.
11. Complete Third-Party Designee Authorization
Complete Part 4 third-party designee authorization if authorizing a tax preparer or employee to discuss the return with the IRS. Select a unique 5-digit PIN for all communications with the IRS regarding this return.
12. Sign and File the Return
Sign Part 5 under penalties of perjury as an employer or authorized officer. Include printed name, title, and daytime phone number. Attach paid preparer declaration if applicable. File all three pages together. If making a payment with the return, include the Form 944-V payment voucher. Ensure all three pages are complete before filing.
Year-Specific Updates for 2020
Qualified Sick and Family Leave Wage Credits
Qualified sick leave and family leave wage credits introduced by the Families First Coronavirus Response Act require separate wage identification and special tax rate calculations. These wages are exempt from the employer's share of social security tax and are subject only to the 6.2% employee share, rather than the standard combined 12.4% rate. The refundable credit portion is tracked separately on line 10d, and the nonrefundable portion is tracked on line 8b, as per Worksheet 1.
Employee Retention Credit
Employee retention credit expanded for 2020 under the CARES Act with both refundable and nonrefundable components. Report the refundable portion on line 10e and the nonrefundable portion on line 8c. Employers must complete Worksheet 1 to allocate portions correctly and reconcile them against Form 941-X if claiming retroactive credits for prior quarters.
Employer Share Social Security Tax Deferral
The employer share of social security tax deferral under Section 2302 of the CARES Act allows employers to defer 100% of the employer share of social security tax for wages paid from March 27 through December 31, 2020. Deferred amounts are reported on line 10b. Repayment is required in two equal installments: 50% of the deferred amount by December 31, 2021, and the remaining 50% by December 31, 2022. This is a deferral, not forgiveness, of tax liability.
Part 2 Monthly Liability Reporting
Part 2 monthly liability reporting on lines 13a through 13l applies only to employers with a line 9 tax liability of $2,500 or more. Employers with liability less than $2,500 skip Part 2 entirely and proceed to Part 3. This threshold simplifies reporting for the smallest employers.
Form 945-A Requirement
Form 945-A is required for semiweekly schedule depositors and must be filed with Form 944, not separately. No monthly breakout on lines 13a through 13m is permitted for these filers. Instead, all liability detail is provided on the attached Form 945-A.
Worksheet 1 Requirement
Worksheet 1, specific to 2020 reporting, is required for any employer claiming qualified sick leave, family leave, or employee retention credits. Calculations determine the correct allocation of refundable and nonrefundable credit portions, preventing double reduction of tax liability. This worksheet is essential for accurate credit reporting.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
