Don’t get into an IRS payroll tax problem – Payroll Taxes forms 940, 941, and 944

Payroll Taxes forms 940, 941, and 944 update

Don’t get into an IRS payroll tax problem…

IRS has revised its instructions for Forms 940, 941, and 944 and will be sending out notices in February to employers that are eligible to file Form 944 for the 2008 tax year.

Form 940. The 2007 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and its instructions, are now on the IRS web site. The due date for filing the return is Jan. 31, 2008. However, employers that deposited all of their FUTA tax in accordance with IRS deadlines have until Feb. 11, 2008 to file the return.

There are no credit reduction states for tax year 2007, so lines 2 and 11 of the form, and part 2 of Schedule A, Multi-State Employer and Credit Reduction Information, do not need to be completed.

The Form 940 instructions note that, for tax year 2008 (generally due in January 2009), the FUTA tax rate is scheduled to decrease from 6.2% to 6.0%, but caution that there is pending legislation that would eliminate the reduction in the tax rate.

Note: The Senate-passed version of H.R. 6, the Energy Independence and Security Act, would extend the temporary surtax rate through Dec. 31, 2008. Thus, the FUTA rate would remain at 6.2% through the end of 2008.

Form 941. The instructions for Form 941, Employer’s Quarterly Federal Tax Return, have been recently revised to include the Department of the Treasury (DOT) in some of the filing addresses. The first quarter 2008 return will reflect the increase in the Social Security wage base to $102,000.

IRS also reminds employers to use a minus sign when reporting a negative amount as a tax adjustment on line 7 of Form 941, and not a parenthesis. It requests this to enhance the accuracy of its scanning software.

Form 944. Certain employers whose estimated annual employment tax liability is $1,000 or less are eligible to file Form 944, Employer’s Annual Federal Tax Return, rather than filing Form 941 on a quarterly basis. As with Form 941, IRS has changed some of the Form 944 filing addresses to add the DOT. The 2007 Form 944 is on the IRS Web site.

In February 2008, IRS will be sending out notices to employers who should file Form 944 for tax year 2008, rather than quarterly Form 941. Employers who receive this notice should immediately discontinue filing Form 941. Employers expecting to exceed the $1,000 Form 944 threshold (approximately $4,000 or more in wages) must contact IRS before Apr. 1, 2008 to request to remain a quarterly Form 941 filer. Employers already filing Form 944 will not receive the above notice from IRS.

Employers who prefer to e-file Form 941 quarterly (rather than file Form 944) must contact IRS by Apr. 1, 2008 to change their filing status. They should wait to receive confirmation from IRS before they start filing Form 941. The first quarter Form 941 is due at the end of April.

The due date for the 2008 annual Form 944 is Feb. 2, 2009.

Source: Federal Taxes Weekly Alert (preview) 12/20/2007, Volume 53, No. 51

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Mike Habib, EA

As an IRS licensed Enrolled Agent (EA) specializing in IRS Tax Problem Resolution, I can represent individuals and businesses in all of the following states, counties, and metro cities, Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington D.C.. West Virginia Wisconsin Wyoming. AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY New York, Los Angeles, Orange County, Riverside, San Bernardino, San Francisco, Ventura, Lancaster, Palmdale, Santa Barbara, Chicago, Washington D. C., Silicon Valley, Philadelphia, Boston, Detroit, Dallas, Houston, Atlanta, Miami, Seattle, Phoenix, Minneapolis, Cleveland, San Diego, St Louis, Denver, San Juan, Tampa, Pittsburgh, Portland, Cincinnati, Sacramento, Kansas City, Milwaukee, Orlando, Indianapolis, San Antonio, Norfolk & VB, Las Vegas, Columbus, Charlotte, New Orleans, Salt Lake City, Greensboro, Austin, Nashville, Providence, Raleigh, Hartford, Buffalo, Memphis, West Palm Beach, Jacksonville, Rochester, Grand Rapids, Reno, Oklahoma City, Louisville, Richmond, Greenville, Dayton, Fresno, Birmingham, Honolulu, Albany, Tucson, Tulsa, Tempe, Syracuse, Omaha, Albuquerque, Knoxville, El Paso, Bakersfield, Allentown, Harrisburg, Scranton, Toledo, Baton Rouge, Youngstown, Springfield, Sarasota, Little Rock, Orlando, McAllen, Stockton, Charleston, Wichita, Mobile, Columbia, Colorado Springs, Fort Wayne, Daytona Beach, Lakeland, Johnson City, Lexington, Augusta, Melbourne, Lancaster, Chattanooga, Des Moines, Kalamazoo, Lansing, Modesto, Fort Myers, Jackson, Boise, Billings, Madison, Spokane, Montgomery, and Pensacola

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