Tip:
Highlight text to annotate it
X
>> This is Learning Objective Five and Six, from Chapter Five.
So, how do you file a 940?
The 940 form is due by January 31st of the next year,
so this is an annual report.
So, for 2012, the 940 would be due January 31st of 2013.
Or if timely deposits have been made --
and we'll talk about what that is --
then you have until February 10th to file.
You need to attach a Schedule A for the Form 940,
if you're a multi-state employer,
meaning you do business in more than one state,
or if you have the SUTA credit reduced.
Then you file with the IRS District Center
in which the business is located.
And after that, the IRS will send a pre-addressed Form 940
to the employer.
You can also e-file the 940s, but you have
to submit an electronic IRS Letter of Application,
where they basically set you up,
so that you can submit these forms online.
It's easy.
When you file a corrected form -- and a lot of times,
companies have to do this -- then you just have to mark,
at the top, there's a square that says "Amended,"
and you have to mark that as being amended,
in the upper right hand corner, where it says Type of Return.
You'll click that, check Amended,
and then an included explanation
as to why you're amending the original return.
A final return has to be filed
in the year a company ceases doing business,
even if they don't owe any Federal Unemployment.
We learned this the hard way with one of my clients.
I didn't realize that she had -- actually, it was my sister,
and I was doing her taxes.
And she had just sort of stopped doing business,
and so her accountant didn't file a Form 940 for the year
that she quit doing business, because there was no activity.
And then a couple of years later,
my sister was getting these notices about owing a bunch
of money, and it's because she hadn't filed a form,
final form to let them know that she was out of business.
So, we did that, and she ended up not having to pay,
but it was kind of a big deal.
It took a lot of my time to straighten that one out.
So, the 940 has multiple sections,
and I would encourage you to that Figure 5.2,
where there's a 940 there.
And you can look at it, as we talk about this.
Part 1 basically is just information
about the SUTA payments.
Part 2 is where you calculate the FUTA tax,
before adjustments.
So, remember, you're going to calculate the FUTA,
and then subtract the SUTA.
So, Part 3 is some of the adjustments
that you're going to make.
The credit reduction is there.
And that is carried over -- it's on Line 11.
That's carried over from the form Schedule A,
for the credit reduction.
Then Part 4, you basically compare the FUTA tax
that is owed, in total, to what was deposited.
And then you either owe money,
because you didn't deposit enough; or you overpaid,
and you'll get some back.
So, Part 5 is determining what your liability was and that's
where you break it down, and you show the first, second,
and third and fourth quarters, what your liability was,
and then your total liability for the year.
And that total from Line 17 needs to equal Line 12.
So, Parts 6 and 7 show a third-party designee,
which a lot of times, if your accountant,
if you've got a paid tax preparer that's doing your
books, and you want them to be able to discuss this return
with the IRS, then you write their contact information
so that they can call up and directly deal with the IRS.
Otherwise, the employer has to deal with the IRS.
Also, you need to sign as the -- if it's...
a sole proprietorship, then the individual can sign.
If it's a corporation that you're filing this report for,
then a principal officer may sign.
If it's a partnership,
then generally there's a designated tax matters partner,
and that would be the one that would sign.
If it's for a trust or an estate,
then a fiduciary can sign this Form 940.
And again, you have to file a Schedule A to accompany the 940
if you've got a multi-state employer --
that's what the ER stands for,
Employer -- or a reduced credit.
So, what about the deposits?
An employer has to deposit quarterly,
but only if the FUTA is over $500.
So, basically, the first quarter that it reaches $500,
that's when you have to pay.
So, if the first quarter, it wasn't $500 yet -- maybe $300 --
and then the next quarter, the cumulative amount is over $500,
then you have to pay or make the deposit in that quarter.
All deposits are required to be done electronically,
unless you have $2,500 or less in quarterly tax liabilities.
So, the due dates for the first quarter, the deposit is due
by April 30th, so you basically get to the end
of next month on all of these.
And if one of these due dates falls on a Saturday,
Sunday or legal holiday,
you have until the following business day
to make that deposit.
How much do you deposit?
Again, we said if it's $500 or more, you have to deposit it
by the last day of the month following the close
of the quarter.
If it's less, you can wait and add it to the next quarter.
And then if it's $500 or more, you must deposit it.
If it never gets over $500,
meaning you're quite a small business,
then you could just pay it when you file your 940
at the end of the year.
And that would be, then, due January 31st
of the following year.
And with that, you can use a 940V And, whenever you see a "V"
after a form, it just means it's a little voucher,
a little coupon, that you send in with your money,
so that they can identify the company, the amount
and the Employer ID number and apply to the right employer.
There are penalties that apply
if you don't file your 940 return,
penalties if you don't pay your taxes
when they're due and/or make timely deposits.
So, there's penalties coming every which way on this.
So, a little overview.
The SUTA requirements vary widely by state.
So, we can't really go into the details here.
In the states where the employee -- that's what EE stand for --
also pays into SUTA, then both the EE, the employee
and the employer's taxes are deposited together.
These will be withheld, and then the employer would put
in their share, as well.
The SUTA Quarterly Contribution Report, in general,
will show the following: each employee's gross wages
and taxable SUTA wages.
The number -- there's limits.
So, there's the gross, and then there's the wages
that are subject to SUTA.
Not all of them may be subject.
And then you'll show the contribution rate timesed
by the SUTA wages, and that gives you the amount
of the required payment.
And then these reports usually include wage information broken
down by each employee and how much they've earned.
There might be some additional forms that the state requires.
It could be status reports,
which shows the initial registration with the state,
as an employer that's liable for SUTA.
Also, wage information report.
I know for Utah, you have to show the earnings
for each employee and the social security numbers.
Also, separation reports would be reports of any employees
who are no longer there.
They're separated.
They've been fired or let go, or they quit.
And that basically aids in determining
if somebody is eligible for benefits.
So if on the separation report you show
that you had an employee, Joe Black, that was fired or quit,
then when Joe Black goes in to apply
for unemployment compensation, they will basically determine
if he's eligible or not.
And they'll be able to see why he was let go.
Also, they might require partial unemployment notices,
because employees can get unemployment, if --
maybe they still have a job, but their hours have been cut back.
So, if you've cut back hours on your employees,
you would show this on a report,
so that when those employees apply
for partial unemployment, it's verified.
The employer is verifying, "Yeah,
I cut back on their hours."
They're eligible to get partial unemployment.
In an increasing number of states, they want you to do all
of this filing online and paying the tax online.
It just cuts back on errors, and it's cheaper in the end
if they don't have to pay somebody to process it.