Form 944 (2023) Annual Employer Tax Return Checklist
Form 944 is the annual federal employment tax return filed only by employers receiving IRS written authorization to file annually instead of quarterly Forms 941. The 2023 version introduces new line structures for qualified sick and family leave wages taken after March 31, 2021, and before October 1, 2021, with corresponding credit provisions and health plan expense allocations specific to this retroactive leave period. This Employer’s Annual Federal Tax Return provides a streamlined alternative to Form 941 for eligible small businesses with minimal annual liability.
1. Verify IRS Written Authorization
Confirm you received written IRS notification to file IRS Form 944 annually. Only employers with explicit authorization may use this form. All other employers must file quarterly Form 941 returns instead. You cannot simply choose to file Form 944 without receiving written notification from the IRS, even if your annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less. This filing requirement differs from Form 940 (Employer’s Annual Federal Unemployment Tax Return) and Form 941-SS, which serve different purposes.
2. Complete Entity Information Section
Enter your legal name (not trade name), Employer Identification Number (EIN), complete address, and foreign address information if applicable. Your EIN must exactly match the number assigned by the IRS to avoid processing delays and penalties.
Employers in American Samoa, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, and Puerto Rico may skip lines 1 through 2 if their employees are not subject to U.S. income tax withholding. If you use payroll software or a full-service payroll provider, ensure they use your correct EIN on all submissions.
3. Report Wages and Federal Income Tax Withheld
Part 1, Lines 1–2
Enter total wages, tips, and other compensation on line 1. Report federal income tax withheld from all employee wages on line 2. These amounts establish the baseline for tax calculations unique to annual filing. Line 1 should include all compensation subject to federal income tax withholding, including qualified sick and family leave wages paid during 2023. This information must reconcile with your Forms W-2 at year-end to avoid discrepancies.
4. Calculate Social Security and Medicare Taxes
Part 1, Lines 4a–4e
Multiply taxable social security wages by 0.124 on line 4a. Include qualified sick leave wages paid in 2023 for leave taken after March 31, 2021, and before October 1, 2021, on line 4a using the 0.062 rate on new line 4a(i). Include qualified family leave wages on new line 4a(ii) using the 0.062 rate.
The 0.124 rate represents the combined employer and employee social security tax (12.4% total). The 0.062 rate on lines 4a(i) and 4a(ii) applies only to qualified sick and family leave wages because these wages are not subject to the employer share of social security tax, as clarified in Revenue Procedure 2021-33 and Notice 2021-49.
Multiply taxable social security tips by 0.124 on line 4b. Multiply taxable Medicare wages and tips by 0.029 on line 4c. The 0.029 rate represents the combined employer and employee Medicare tax (2.9% total). Multiply Additional Medicare Tax wages by 0.009 on line 4d. Sum all Column 2 amounts on line 4e to calculate total social security and Medicare taxes. Most payroll software automatically calculates these amounts based on the wages entered for employees throughout the year.
5. Apply Current-Year Adjustments
Part 1, Lines 5–7
Add lines two and 4e to calculate total taxes before adjustments on line 5. Enter current-year adjustments on line 6. Eligible adjustments include fractions of cents, sick pay adjustments, tips, and group-term life insurance adjustments, and other corrections detailed in the Form 944 instructions.
Combine lines 5 and 6 to determine total taxes after adjustments on line 7. Use negative amounts (shown with a minus sign or parentheses) if the adjustment reduces your tax liability. These adjustments ensure accurate reporting similar to that made on quarterly Form 941 returns.
6. Claim Nonrefundable Credits
Part 1, Lines 8a–8g
Attach Form 8974 for the qualified small business payroll tax credit for research activities on line 8a. This credit can be up to $500,000 for tax years beginning after 2022 under the Inflation Reduction Act.
Enter the nonrefundable portion of credit for qualified sick and family leave wages for leave taken before April 1, 2021, on line 8b. Enter the nonrefundable portion of credit for qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021, on new line 8d. Note that the Employee Retention Credit is not reported on Form 944 for the 2023 tax year, as it applies to different time periods and forms.
Lines 8c, 8e, and 8f are reserved for future use and should remain blank. Sum lines 8a, 8b, and 8d on new line 8g to calculate total nonrefundable credits. These credits reduce your annual liability before calculating the net tax owed.
7. Calculate Net Tax Liability and Deposits
Part 1, Lines 9–12
Subtract line 8g from line 7 on line 9 to determine net taxes after nonrefundable credits. This is your total annual liability for the year. Enter total deposits for the year on line 10a, including any overpayment applied from a prior year.
Lines 10b, 10c, 10e, 10g, 10i, and 10j are reserved for future use. Add refundable credit for qualified sick and family leave wages for leave taken before April 1, 2021, on line 10d. Add a refundable credit for leave taken between March 31, 2021, and October 1, 2021, on new line 10f.
Sum lines 10a, 10d, and 10f on new line 10h to calculate total deposits and refundable credits. Calculate balance due (line 9 minus line 10h) on line 11 or overpayment (line 10h minus line 9) on line 12. When you e-file Form 944, you will receive a submission receipt confirming successful transmission.
8. Report Monthly Tax Liability or Complete Form 945-A
Part 2, Line 13
If line 9 is less than $2,500, check the appropriate box and skip to Part 3. If line 9 is $2,500 or more and you are not a semiweekly schedule depositor, enter the monthly tax liability for each month on lines 13a through 13l. Verify total liability on line 13m equals line 9.
Semiweekly schedule depositors must complete Form 945-A, Annual Record of Federal Tax Liability, instead of entering monthly amounts. Do not complete lines 13a through 13m if you file Form 945-A. Form 945-A must be filed with Form 944, and the total tax liability shown on line M of Form 945-A must equal line 9 of Form 944. This reporting structure differs from the Schedule B used with Form 941, which is filed quarterly.
9. Report Qualified Leave Wages and Health Plan Expenses
Part 3, Lines 15–24
Enter qualified health plan expenses allocable to qualified sick leave wages for leave taken before April 1, 2021, on line 15. Enter qualified health plan expenses allocable to qualified family leave wages for leave taken before April 1, 2021, on line 16. These reporting requirements follow guidance established in Revenue Procedure 2021-33.
Lines 17 and 18 are reserved for future use. Enter qualified sick leave wages for leave taken after March 31, 2021, and before October 1, 2021, on new line 19. Enter corresponding qualified health plan expenses on new line 20. Enter amounts under certain collectively bargained agreements on new line 21.
Enter qualified family leave wages for leave taken after March 31, 2021, and before October 1, 2021, on line 22. Enter qualified health plan expenses allocable to these wages on line 23. Enter amounts under certain collectively bargained agreements allocable to qualified family leave wages on line 24. Full-service payroll providers typically track these amounts separately to ensure accurate reporting.
Lines 25 and 26 are reserved for future use.
10. Designate Third-Party Representative
Part 4
Indicate whether the IRS may contact an employee, paid preparer, or other third-party designee to discuss Form 944. If yes, provide the designee's name, phone number, and a 5-digit personal identification number (PIN). This authorization allows the third-party designee to answer questions about the preparation and calculation of your return. Many employers designate their payroll software provider or full-service payroll company as their authorized representative.
11. Sign and Date the Return
Part 5
The taxpayer must sign under penalties of perjury, print their name, enter the title, and provide their daytime phone number and date. A paid preparer (if applicable) must sign, enter PTIN, and provide firm name, EIN, address, and phone number. You must complete all three pages of IRS Form 944 and provide a signature. Failure to sign or complete all pages may result in delayed processing. When you e-file Form 940 or other annual returns, you use a similar signature process with electronic PIN verification.
12. Prepare Form 944-V Payment Voucher if Making Payment
Complete Form 944-V only if paying with Form 944 and one of three conditions applies: (a) line 9 is less than $2,500 and paying in full with timely return; (b) line 9 is $2,500 or more but you deposited taxes for first three quarters of 2023 with fourth-quarter tax less than $2,500 and paying that amount in full; or © you are a monthly schedule depositor making a payment under the Accuracy of Deposits Rule.
Do not staple Form 944-V or payment to Form 944. Make check payable to “United States Treasury” with EIN, “Form 944,” and “2023” noted on check. Mail the payment voucher, check, and Federal Tax Return together to the appropriate IRS address based on your location.
Key 2023-Specific Updates
New lines 4a(i) and 4a(ii) allow separate reporting of qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021. These wages are subject to the employee's share of social security tax only (6.2%), not the employer's share, as per guidance in Notice 2021-49. New lines 8d and 10f accommodate nonrefundable and refundable credits for this specific leave period. The social security wage base limit for 2023 is $160,200. The Medicare tax rate remains 1.45% each for employer and employee (2.9% combined) with no wage base limit. This Annual Federal Tax Return must be reconciled with Forms W-2 filed for all employees to ensure accurate reporting of employee wages and withholding amounts.
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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.
