The Internal Revenue Service (IRS) has released the 2011 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 2011 Form 944
The 2011 Form 944 has several new items. The new items include the following:
Employee Tax for Social Security Cut To 4.2%
The employee tax rate for social security has been cut to 4.2%, although the employer rate remains at 6.2%. The Medicare tax rate remains at 1.45% for both employees and employers.
COBRA Premium Assistance Credit Continues
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. The credit is claimed on line 9a.
Social Security Wage Base for 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 expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return.
Electronic Deposit Requirement
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). 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.