What are the FICA reporting requirements (Forms 941 and 944)?

Both the employer and employee portions of the Social Security and Medicare (FICA) taxes are deposited at the same time and generally in the same manner as the federal income tax withheld from employees. For most employers, FICA taxes are reported along with the federal income tax withheld on Form 941. All of the mechanical rules that apply to the reporting of federal income tax withheld-such as due dates, places to file, methods of paying the tax, and execution of the return-apply equally to the reporting of FICA taxes. See ¶36,610 regarding tax deposit rules.

Reconciliation. Reconciliation of Forms 941, W-3 and W-2 is required. This means that you must certify that the amount of wages reported to the SSA on Form W-3, Transmittal of Income and Tax Statements, equals the total amount of wages you reported to the IRS on the four Forms 941.

Agricultural workers. Generally, deposits of income and FICA taxes reported for agricultural employees on Form 943 are made in accordance with the same rules that apply to taxes reported on Form 941. Although deposits are made separately from those representing taxes reported on Form 941, the tax amounts reportable on Form 943 are combined (except at year-end) with those reportable on Form 941 to determine whether and how frequently deposits are required.

Domestic employees. Deposits of the taxes due on wages paid to domestic employees are not required, provided the wages and taxes are reported on Schedule H (Form 1040). Even if withholding is not requested by a domestic employee, the wages are still subject to FICA taxes if they exceed a prescribed cash pay test, currently $1,700 for calendar year 2009 (up from $1,600 in 2008).

Small employers. In early 2006, the Internal Revenue Service introduced Form 944, Employer’s Annual Federal Tax Return, which replaces the quarterly Form 941 filing requirement for certain small employers. The purpose of Form 944, which is targeted for taxpayers who owe $1,000 or less in total employment tax per year, is to reduce the burden on the smallest of small business taxpayers by establishing new rules and processes that will allow them to file their employment tax returns annually and, in most cases, pay the employment tax due with their return.