Form 940 is a tax form issued by the Internal Revenue Service (IRS) in the United States. Specifically, the 2017 IRS Form 940 is used to report the employer’s annual federal unemployment (FUTA) tax. FUTA tax is a federal tax imposed on employers to fund unemployment compensation programs for workers who have lost their jobs.
As an employer, it is important to understand and comply with the regulations outlined in the 2017 IRS Form 940. Failure to properly file this form can result in penalties and other consequences.
The 2017 IRS Form 940 consists of various sections that require specific information to be provided. Let’s examine these sections in detail:
1. Employer Information:
This section requires employers to provide their legal name, address, employer identification number (EIN), and contact details. It is essential to ensure accurate and up-to-date information is provided to avoid any potential communication issues with the IRS.
2. Liability for FUTA Tax:
Here, employers need to determine if they are liable for FUTA tax by assessing their total annual payroll and the number of employees subject to FUTA tax. It is crucial to correctly determine liability to avoid any underpayment or overpayment of taxes.
3. FUTA Tax Calculation:
This section entails calculating the FUTA tax owed based on the employer’s liability. The FUTA tax rate is typically 6% on the first $7,000 of wages paid to each employee during the calendar year. However, employers may be entitled to a credit of up to 5.4% if they pay their state unemployment taxes on time. The calculation should be done meticulously to ensure accurate reporting.
4. Deposits and Payments:
In this section, employers must report the total FUTA tax liability for the year, as well as any deposits or payments made throughout the year. Timely deposits are essential to avoid penalties. It is crucial to keep accurate records of payments and deposits for reference and future audits.
5. Credit Reduction:
Under certain circumstances, a state may borrow funds from the federal government to pay unemployment benefits. If the state fails to repay the borrowed funds in a timely manner, the federal government may implement a credit reduction. This section provides information on any potential credit reduction and the corresponding rate.
6. Signatures and Authorization:
The 2017 IRS Form 940 requires the signature and title of the authorized person. By signing the form, the authorized person confirms that the information provided is true, accurate, and complete to the best of their knowledge.
It is important to note that the 2017 IRS Form 940 should be filed annually by employers, regardless of whether they have paid wages subject to FUTA tax or not. The form should be filed by January 31st of the following year, along with any required payment.
The completion and submission of the 2017 IRS Form 940 not only fulfill an employer’s legal obligations but also contribute to the overall stability and sustainability of the unemployment compensation program. Employers should consult professional tax advisors or refer to the IRS instructions for detailed guidance on properly completing this form.
In conclusion, the 2017 IRS Form 940 is a crucial document that employers in the United States must complete to report their federal unemployment tax liability. By adhering to the guidelines set forth in this form, employers can ensure compliance with tax regulations and avoid potential penalties or legal issues.
