Form 940 FUTA Tax for 2011, 2012

Employers must report their annual FUTA (Federal Unemployment Tax Act) tax on form 940. It is solely the employers’ responsibility for paying FUTA tax. This tax is to provide funds to pay for unemployment compensation to workers who have lost their jobs.

As the employer, you do not collect or deduct the FUTA Tax from your employees' wages. The tax applies to the first $7,000 you pay each employee in a year after subtracting any exempt payments. The $7,000 amount is the federal wage base.

You are required to file a form 940 if you, as an employer, have paid wages of more than $1,500.00 in a calendar quarter, or if you have at least one employee that has worked for at least part of the day for 20 weeks or more.

A very important requirement of form 940 FUTA tax is that you most likely will have to deposit your tax due before you file your tax return. This tax is due per quarter for most business owners and you do not want to be late. Double check your completed form 940 for accuracy.

The IRS offers detailed instructions for filling the 940 FUTA tax form as part of your tax return. The tax form consists of 4 pages. 2 of the pages are the worksheet including your company information, total amount of wages paid, etc. The 3^rd page is instructions for the payment voucher attached in submitting your payment. The 4^th page is the privacy statement and doesn’t need to be returned.

There are many requirements of a business in filing the correct tax returns, especially when you have employees and payroll. I recommend using
the payroll tax rates calculator by Intuit to calculate your employees FUTA tax for form 940.