Filling out the 940 tax form is a complicated process that requires careful attention to detail. Knowing how to properly complete this form is essential for businesses to ensure they comply with federal tax laws.
To begin, it is important to understand the purpose of the 940 tax form. This form is used to report an employer's annual Federal Unemployment Tax Act (FUTA) tax liability. It also reports any additional FUTA tax payments made during the tax year.
- The first step in filling out the form is to provide the employer's basic information. This includes the employer's name, address, and Federal Employer Identification Number (FEIN). It is important to ensure the information is accurate and up to date.
- The employer will then need to provide the total amount of wages paid to their employees during the tax year. This should include all wages and salaries, bonuses, commissions, and other employee payments. It is important to note that wages paid to contractors or independent contractors should not be included.
- Next, the employer must provide the total taxable wages paid to their employees. This should include all wages, salaries, bonuses, commissions, and any other payments made to employees that are subject to FUTA tax. All wages that were paid to employees who are exempt from FUTA tax should be excluded.
- After all, wages have been reported, the employer must enter the total FUTA tax liability. This is the total amount of FUTA tax owed by the employer for the tax year. The amount should include any additional FUTA tax payments made during the tax year.
- Finally, the employer will need to enter the total amount of FUTA tax payments made during the tax year. This should include any payments made to the IRS or state unemployment agency. It is important to ensure that all payments are accurately reported on the form.
Following these instructions will help ensure that the 940 tax form is correctly completed. A sample of a correctly completed form is shown below.
- Employer Name: ABC Business Solutions
- Address: 123 Main Street
- FEIN: 01-1234567
- Total wages paid to employees: $1,000,000
- Total taxable wages: $900,000
- Total FUTA tax liability: $56,000
- Total FUTA tax payments made: $56,000