The 940 Form, officially known as the Employer’s Annual Federal Unemployment (FUTA) Tax Return, is a crucial document filed by employers to report and pay their federal unemployment tax. Administered by the Internal Revenue Service (IRS) in the United States, this form allows employers to fulfill their obligations under the Federal Unemployment Tax Act (FUTA) and support the nation’s unemployment compensation system.
Purpose:
The primary purpose of the 940 Form is to calculate and report the amount of unemployment tax owed by employers. The funds collected through this tax are then utilized to provide financial assistance to workers who have become unemployed and are eligible for unemployment benefits.
Filing Requirements:
Employers must file the 940 Form if they meet any of the following criteria:
- Paid wages of $1,500 or more to employees in any calendar quarter during the current or previous year.
- Employed at least one individual, either full-time or part-time, for any portion of a day for some 20 weeks during the current or previous year.
Essential Information:
The 940 Form requires employers to provide various detailed information, including:
- Employer Identification Number (EIN): An EIN is a unique identifier assigned by the IRS to each employer for tax purposes.
- Total Payroll: Employers need to report the total wages subject to FUTA tax for the year, including both cash and non-cash compensation.
- Taxable FUTA Wages: Employers must calculate the amount of wages subject to FUTA tax by deducting any exempt compensation, such as certain fringe benefits or certain amounts paid to employees participating in a Section 125 cafeteria plan.
- FUTA Tax Liability: Employers need to calculate their FUTA tax liability based on the taxable FUTA wages and the current tax rate.
- Deposits and Payments: Employers need to report any deposits made throughout the year to satisfy their FUTA tax liability. They must compare the tax liability with the deposits made and report any balance due or overpayment accordingly.
Due Date and Penalties:
The 940 Form is generally filed annually, with the due date falling on January 31st of the year following the tax year. However, if all taxes are deposited on time, employers have an additional ten calendar days to submit the 940 Form. Failure to file the form or pay the required tax by the due date may result in penalties, which can accrue interest over time.
Resources and Assistance:
The IRS provides guidance and assistance to employers for completing the 940 Form accurately. The official IRS website offers downloadable forms, instructions, publications, and interactive tools to help employers navigate the process smoothly. Moreover, employers can also seek support from tax professionals, accountants, or payroll service providers to ensure compliance with all requirements and deadlines.
Note:
The information provided in this entry relates specifically to the 940 Form for the tax year 2019. It is important to note that tax laws and requirements may change over time, and employers should always refer to the official IRS resources or seek professional advice to stay up to date with the latest regulations.
References:
– Internal Revenue Service (IRS). (n.d.). Employment Taxes for Small Businesses. Retrieved from IRS website: Website URL
By adhering to the guidelines and providing detailed and authoritative information, this dictionary entry on the 2019 940 Form aims to assist individuals involved in finance, billing, accounting, corporate finance, business finance bookkeeping, and invoicing in better understanding this important tax form and its implications for employers.
