Some smaller companies are starting the new year off with a great timesaver: once-a-year filing of employer’s federal tax returns. For TY ‘09, IRS is allowing certain companies to file Form 944, Employer’s Annual Federal Tax Return, for their withheld federal income taxes, social security and Medicare. That’s instead of the usual quarterly returns you’d file.

Your company qualifies if its estimated employment tax liability is $1,000 or less. You’ll receive written notice from IRS if you qualify. (But don’t expect a new notification every year. IRS will contact you again only if you cease to qualify.)

Note: Once you receive notice you qualify for Form 944, you must file it rather than continuing to file Forms 941 quarterly. Ultimately, the new form should be a time-saver for smaller companies. But if you want to opt-out, you can, as long as your company meets at least one of the following:

• It anticipates an employment tax liability of more than $1,000 for the year, or
• It wants to file Forms 941 electronically.

Tags: Best practices, E-filing, Employment tax, Payroll, Tax filing, Tax returns