Learn How to File Unemployment Taxes with IRS Form 940

An employer is responsible for paying unemployment taxes for any employee whose employment has been terminated so that they may receive compensation. The IRS and state tax agencies collect such taxes each year. The amount of tax is related to an employee’s gross salary. If you’re a business owner, you have a responsibility to report all taxes on time. Use IRS Form 940 for this purpose. The form’s official title is the Employer’s Annual Federal Unemployment (FUTA) Tax Return.

The purpose of this tax is to allocate compensation to terminated employees. As this tax must be paid by companies, its amount(s) can’t be deducted from the payrolls of employees. Below is some additional information for aiding in the filing process for Form 940.

What is IRS Form 940 Used for?

The main purpose of this form is to report FUTA tax (Federal Unemployment Tax Act). Employers should pay this tax to provide financial assistance to workers who have lost their jobs. In most cases, managers are required to pay both the state unemployment and federal taxes. In fact, FUTA tax may be applied to the first $7,000 the company paid to their employees during the year.

Who Files IRS Form 940?

If employers pay $1,500 annually or more to an employee, they’re required to pay tax and file IRS Form 940. The form must also be submitted if an employee has been working in the same capacity for a minimum of twenty weeks of a year.

How to File IRS Form 940?

The form consists of three pages. The first two pages should be filled, the third page provides brief instructions. With PDFfiller, the return may be filed twice as fast. Avoid mistakes and submit your Form 940 on time.

The form is divided into seven parts. Before completing them, enter your name, employer identification number, trade name and full address of your business. The employer must indicate the state or states where they file their return. The next step is to determine the FUTA tax before any adjustments. Calculate the total payments to all employees (total taxable wages). On this form, you may report your tax liabilities by quarter if the FUTA tax after adjustments is more than $500.

When to File IRS Form 940?

File your FUTA tax return by January 31st, 2018. The completed and signed document must be sent directly to the IRS department in your state.



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