The Internal Revenue Service (IRS) has released the 2010 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2010 Form 944

The 2010 Form 944 has several new items. The new items include the following:

Qualified Employer’s Social Security Tax Exemption

Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010, and before January 1, 2011.

Qualified Employer’s Social Security Tax Credit

Qualified employers are allowed a credit for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 18, 2010, and before April 1, 2010.

COBRA Premium Assistance Credit Extended

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.

Social Security Wage Base for 2010 and 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expires on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who receive advance payments of EIC in 2010 must file a 2010 federal income tax return.

Electronic Deposit Requirement

The IRS has issued proposed regulations under §6302 of the Internal Revenue Code of 1986 which provide that beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Under these proposed regulations, which are expected to be finalized by December 31, 2010, Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.