940 FUTA Tax Form
The 940 FUTA Tax Form is an employer’s annual federal unemployment (FUTA) Tax return. Only the employer pays FUTA Tax. As an employer, you are responsible for reporting the amount per employee on the 940 FUTA tax form.
The FUTA rate for 2010 is 6.2 % of taxable wages for your employees. With that said, there are limitations to the income which you are taxed on. The taxable wage is based on the first $7,000 the employee earns in one year. The maximum amount paid is $434 per employee.
However, employers can take a credit of up to 5.4% of taxable income if they are required to pay state unemployment taxes and those taxes are paid on time. This could reduce your taxed amount to $56 per employee if you qualify. Most states have their own State Unemployment Insurance Tax. Please contact your state unemployment insurance office for rate information specific to your state.
If your tax liability exceeds $500.00, you will be required to make quarterly payments to avoid penalties by the IRS. To make a deposit, you will need a Form 8109 (Federal Tax Deposit Coupon).
What information will you need to complete your 940 FUTA Tax Form?
- Basic company information – address, EIN #, etc.
- Whether or not you were required to pay state unemployment tax
- Total payments made to employees
- Total payments made to each employee in excess of $7,000
- The total amount of any payments you submitted on a quarterly basis
Avoid paying penalties, fees and interest by making your payments on time, filling the appropriate return, and reporting the correct amount due.
Taxes for business owners can be complicated with very specific deadlines, forms, and amounts due. If not reported and paid correctly, you, as the employer, could be assessed a large penalty with interest. Why pay a costly accountant when you can accurately do it yourself?
QuickBooks Payroll will help you through the process. Whether you need an easy, low cost way to process payroll or you want to make sure your taxes are being reported and paid on time, they have it all. You’ll have access to 24 hours a day, 7 days a week customer support that will answer all of your questions.
For more information on 940 FUTA tax forms and other tax-related issues, visit QuickBooks Payroll online today.