CPA Practice Advisor - 23
A YEAR IN THE LIFE: PAYROLL ACCOUNTANT
WHAT IS LOOKBACK
PERIOD FOR FORM 944
FILERS?
Again, Form 944 filers report
Social Security, Medicare, and
federal income tax liabilities on
an annual basis.
If you will file Form 944 for
the current year, or if you filed
it in either of the previous two
years, your lookback period is the
second preceding calendar year.
For example, the IRS lookback
period for 2020 is calendar year
2018.
Depending on how you filed in
the past, you might have to look
at your Form 944 for that year,
or all four quarters of Form 941
for that year.
FORM 944 LOOKBACK
PERIOD EXAMPLE
Let's say Daniel of Daniel's
Hauling Services wants to find
out whether he's a monthly or
semiweekly depositor for 2020.
He reported the following tax
liabilities on Form 944 during
calendar year 2018:
■■Calendar Year 2018: $1,000
Because Daniel's tax liability
was less than $50,000 in 2018, his deposit
schedule for 2020 is monthly.
HOW ADJUSTMENTS AFFECT THE
IRS LOOKBACK PERIOD
Mistakes happen. If you make an error on
Form 941 or Form 944, you will need to make
a correction using Form 941-X or Form 944-X.
If you make a correction, the adjustments
don't affect the amount of tax liability for
previous periods. You must use the amount
you originally reported.
EXAMPLE OF AN ADJUSTMENT
Let's look at the 2020 lookback period for
Karen's Pet Supply again:
■■3rd Quarter 2018: $10,000
■■4th Quarter 2018: $10,000
■■1st Quarter 2019: $13,000
■■2nd Quarter 2019: $13,000
Based on this information, Karen's Pet Sup-
ply is a monthly depositor. However, let's say
there was a mistake on Form 941 one quarter.
The second quarter of 2019, where Karen
reported $13,000, should actually have been
$18,000:
■■3rd Quarter 2018: $10,000
■■4th Quarter 2018: $10,000
■■1st Quarter 2019: $13,000
■■2nd Quarter 2019: $18,000
Karen can file Form 941-X to make corrections to the second quarter's report in 2019.
However, the business must use the original
amount reported in the lookback period. As
a result, the business remains a monthly
depositor instead of changing to a semiweekly
depositor.
income taxes before. So, your tax liabilities are
considered as zeros in your lookback period.
This makes you a monthly depositor during your first year as an employer.
Before the beginning of the next calendar
year, make sure you examine your lookback
period. You might have some tax liability to
consider.
For more information on the IRS lookback
period, check out Publication 15. ■
Mike Kappel is the CEO and founder of
Patriot Software. This article first appeared on the Patriot Software blog.
I'M A NEW EMPLOYER. WHAT'S
MY LOOKBACK PERIOD?
If you're a new employer, you obviously haven't
paid Social Security, Medicare, and federal
FEBRUARY 2020 ■
www.CPAPracticeAdvisor.com
23
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CPA Practice Advisor
Table of Contents for the Digital Edition of CPA Practice Advisor
From the Editor: It's Really the 21st Century Now
From the Trenches: Do You Have a Clear Technology Vision?
Three Secrets to Ensure Successful (And Profitable) Meetings
Technology In Practice: CES 2020 Highlights: New Workstations for Accountants
2020 Product Reviews: CRM Systems for Accounting Firms
The Staffing & HR Advisor: 5 Tips to Prevent Staff Burnout During Tax Season
The ProAdvisor Spotlight: Take the Pain Out of Payroll with New Features in QuickBooks Online Payroll
2020 Product Reviews: Expense Management Systems
The Leadership Advisor: A Different Kind of Value: Defining Your Professional Purpose
Apps We Love: Meeting & Calendar Apps
The Millennial Advisor: "Alexa, Call My Accountant": Staying Relevant in an AI World
Three Visionary Trends to Consider in 2020
A Year in the Life of a Payroll Accountant: What is a Payroll Lookback Period for Forms 941 and 944?
AICPA News: A Round-up of Recent Association News and Events
Bridging the Gap: Six Steps for Adopting a Growth Mindset
CPA Practice Advisor - 1
CPA Practice Advisor - 2
CPA Practice Advisor - From the Editor: It's Really the 21st Century Now
CPA Practice Advisor - From the Trenches: Do You Have a Clear Technology Vision?
CPA Practice Advisor - 5
CPA Practice Advisor - Three Secrets to Ensure Successful (And Profitable) Meetings
CPA Practice Advisor - 7
CPA Practice Advisor - Technology In Practice: CES 2020 Highlights: New Workstations for Accountants
CPA Practice Advisor - 9
CPA Practice Advisor - 2020 Product Reviews: CRM Systems for Accounting Firms
CPA Practice Advisor - 11
CPA Practice Advisor - The Staffing & HR Advisor: 5 Tips to Prevent Staff Burnout During Tax Season
CPA Practice Advisor - The ProAdvisor Spotlight: Take the Pain Out of Payroll with New Features in QuickBooks Online Payroll
CPA Practice Advisor - 2020 Product Reviews: Expense Management Systems
CPA Practice Advisor - 15
CPA Practice Advisor - 16
CPA Practice Advisor - The Leadership Advisor: A Different Kind of Value: Defining Your Professional Purpose
CPA Practice Advisor - Apps We Love: Meeting & Calendar Apps
CPA Practice Advisor - 19
CPA Practice Advisor - The Millennial Advisor: "Alexa, Call My Accountant": Staying Relevant in an AI World
CPA Practice Advisor - Three Visionary Trends to Consider in 2020
CPA Practice Advisor - A Year in the Life of a Payroll Accountant: What is a Payroll Lookback Period for Forms 941 and 944?
CPA Practice Advisor - 23
CPA Practice Advisor - AICPA News: A Round-up of Recent Association News and Events
CPA Practice Advisor - Bridging the Gap: Six Steps for Adopting a Growth Mindset
CPA Practice Advisor - 26
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