Managing payroll comes with more than simply paying employees on time. Employers must also calculate, report, and deposit various federal employment taxes correctly. Among the most important IRS payroll tax forms are Forms 940, 941, and 944.
Although these forms are related to employment taxes, each serves a different purpose. Understanding which form applies to your business can help you avoid filing mistakes, missed deadlines, and unnecessary penalties.
In this guide, QuickBooks Repair Pros explains the key differences between Forms 940, 941, and 944 and what employers should know when handling payroll tax reporting.
What Are Forms 940, 941, and 944?
Forms 940, 941, and 944 are federal employment tax returns used by employers to report specific payroll-related taxes to the IRS.
- Form 940: Reports federal unemployment tax, also known as FUTA tax.
- Form 941: Reports federal income tax withheld from employees, Social Security tax, and Medicare tax on a quarterly basis.
- Form 944: Reports many of the same employment taxes as Form 941, but annually for certain eligible small employers.
The IRS generally requires employers to file Form 941 quarterly. However, certain small employers who qualify and are instructed by the IRS may file Form 944 annually instead. Form 940 is generally filed annually to report FUTA tax.
Form 940: Employer’s Annual Federal Unemployment Tax Return
Form 940 is used to report an employer’s Federal Unemployment Tax Act (FUTA) liability.
FUTA taxes help fund the federal unemployment compensation system. Unlike Social Security and Medicare taxes, FUTA tax is an employer responsibility and generally isn’t deducted from employees’ wages.
A business may generally have a FUTA filing obligation when it meets IRS wage or employment tests, such as paying $1,500 or more in wages during a calendar quarter or having one or more employees during at least some part of a day in 20 different weeks during the year or preceding year.
What Does Form 940 Report?
Form 940 is used to calculate and report:
- Federal unemployment tax liability
- FUTA taxable wages
- Applicable state unemployment tax information
- Credit information that may affect FUTA liability
- FUTA tax payments and amounts due
Employers operating in multiple states may also need to complete Schedule A (Form 940) to account for multi-state employment and applicable credit-reduction information.
Form 941: Employer’s Quarterly Federal Tax Return
Form 941 is one of the most commonly used payroll tax forms. Employers generally use it to report employment taxes every quarter.
According to the IRS, Form 941 reports wages paid to employees, federal income tax withheld, employee and employer Social Security and Medicare taxes, Additional Medicare Tax withheld from employees, and certain payroll tax adjustments.
When Is Form 941 Due?
Form 941 is generally filed four times per year:
| Quarter | Months Covered | General Filing Deadline |
|---|---|---|
| Q1 | January–March | April 30 |
| Q2 | April–June | July 31 |
| Q3 | July–September | October 31 |
| Q4 | October–December | January 31 |
If a filing deadline falls on a weekend or legal holiday, the IRS generally allows filing on the next business day. Employers that have deposited their taxes on time may also receive additional time to file in certain circumstances.
What Information Is Included on Form 941?
Businesses typically use Form 941 to report:
- Employee wages
- Federal income tax withheld
- Social Security wages and taxes
- Medicare wages and taxes
- Additional Medicare Tax withheld
- Certain adjustments and credits
- Total employment tax liability
Importantly, Form 941 is not used to report FUTA taxes. Those taxes are reported on Form 940.
Form 944: Employer’s Annual Federal Tax Return
Form 944 was designed for certain smaller employers whose annual employment tax liability is $1,000 or less. Instead of filing Form 941 every quarter, an eligible employer files one annual employment tax return.
However, businesses shouldn’t simply choose Form 944 because they have a small payroll. The IRS determines who is eligible to use Form 944, and employers generally must have the appropriate filing requirement or notification before using it.
What Does Form 944 Report?
Like Form 941, Form 944 can report:
- Wages paid to employees
- Federal income tax withheld
- Social Security taxes
- Medicare taxes
- Employer and employee shares of applicable payroll taxes
- Certain adjustments and credits
The major difference is the filing frequency: Form 941 is generally quarterly, while Form 944 is annual for eligible employers.
Form 940 vs. Form 941 vs. Form 944
The easiest way to understand the three forms is to compare their primary purposes:
| Tax Form | Primary Purpose | Filing Frequency |
|---|---|---|
| Form 940 | Reports federal unemployment (FUTA) tax | Generally annually |
| Form 941 | Reports federal income tax withholding, Social Security, and Medicare taxes | Generally quarterly |
| Form 944 | Reports federal income tax withholding, Social Security, and Medicare taxes for certain eligible |
The key distinction is that Form 940 deals with federal unemployment tax, while Forms 941 and 944 deal primarily with federal income tax withholding and Social Security and Medicare taxes
How Payroll Deposits Fit Into the Process
Filing an employment tax return and depositing payroll taxes are not necessarily the same thing.
Employers generally must deposit employment taxes according to IRS deposit schedules rather than waiting until the related tax return is filed. Depending on the employer’s circumstances and tax liability, deposits for taxes reported on Forms 941 or 944 may be required monthly or semiweekly. FUTA deposits may also be required during the year when the applicable liability reaches the IRS threshold.
The IRS generally requires employment tax deposits to be made electronically through electronic funds transfer (EFT).
Common Payroll Tax Filing Mistakes
Payroll reporting errors can create unnecessary work and potentially lead to penalties. Some common issues include:
1. Filing the Wrong Form
Using Form 941 when the IRS has instructed an employer to file Form 944—or confusing FUTA reporting on Form 940 with payroll tax reporting on Form 941—can cause compliance problems.
2. Missing Filing Deadlines
Even if payroll tax deposits have already been made, employers generally still need to submit the required tax return by its filing deadline.
3. Incorrect Payroll Records
Errors in employee wages, tax withholdings, Social Security wages, or Medicare taxes can carry over from payroll records into tax returns.
4. Confusing Tax Deposits With Tax Returns
Making a payroll tax deposit does not eliminate the requirement to file the corresponding employment tax return.
5. Poor QuickBooks Payroll Setup
Incorrect payroll tax settings, employee information, tax tracking categories, or account mappings in QuickBooks can make reconciliation and tax reporting more difficult.
How QuickBooks Can Help With Payroll Tax Management
Accounting software such as QuickBooks can make payroll recordkeeping more organized by tracking employee wages, payroll taxes, liabilities, and payments.
However, software is only as reliable as the information and configuration behind it. Incorrect payroll setup or inaccurate historical data can result in discrepancies when payroll reports are compared with IRS filings.
Regularly reconciling payroll accounts and reviewing tax liability reports can help identify discrepancies before they become larger problems.
What Should You Do If Your QuickBooks Payroll Records Are Incorrect?
If your QuickBooks payroll records don’t match your payroll tax returns, don’t simply change numbers until the balances appear correct.
First, identify the source of the discrepancy. Check payroll transactions, tax payments, employee records, payroll liability accounts, and previously filed returns. Depending on the issue, correcting the accounting records may require a different approach than correcting an already-filed tax return.
For complicated payroll discrepancies, working with a qualified accounting or tax professional can help ensure corrections are handled properly.
Final Thoughts
Forms 940, 941, and 944 all play important roles in federal employment tax reporting, but they aren’t interchangeable.
Form 940 generally covers federal unemployment tax, while Form 941 is generally used to report payroll taxes quarterly. Form 944 provides an annual reporting option for certain small employers who meet the IRS requirements.
Keeping accurate payroll records, monitoring deposit requirements, and using the correct IRS form can make payroll compliance much easier. If your QuickBooks payroll records contain errors, unexplained balances, or reconciliation issues, getting the records reviewed early can help prevent problems from carrying into future tax filings.
QuickBooks Repair Pros helps businesses address QuickBooks and payroll-related accounting issues so their financial records are more accurate, organized, and easier to manage.
Tax rules and filing requirements can change. Always verify current requirements with the IRS or a qualified tax professional before filing.
The IRS confirms the core distinctions used above: Form 940 is for FUTA, Form 941 is generally quarterly, and Form 944 is for eligible small employers filing annually.