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FUTA taxes are used to fund unemployment benefits for people who are laid off or lose their jobs through no fault of their own. IRS Form 940 is used to report unemployment taxes that employers pay to the federal government under the Federal Unemployment Tax Act (FUTA). As a small business owner, you might not like thinking about taxes, but understanding your responsibilities will help you stay in the clear with the IRS and keep more of your hard-earned profits.
#Wrong year in form 940 checkmark payroll how to#
Read on to understand how to fill out each part of the form, as well as when to file it and how to pay your taxes. State unemployment taxes affect your federal tax liability, so you have to understand both FUTA and SUTA pretty well in order to file Form 940. This is because, along with the federal government, states levy unemployment taxes through the State Unemployment Tax Act (SUTA). Small business owners often find this form confusing. The employer alone is responsible for paying unemployment taxes and reporting them on IRS Form 940. Unlike other taxes, these taxes are not withheld from employees’ wages. These taxes fund unemployment benefits for people who lose their jobs. The form is due January 31, or February 10 for businesses that have already deposited their unemployment taxes in full.īusinesses with employees are responsible for paying unemployment taxes. Form 940 shows the amount of federal unemployment taxes the employer owed the previous year, how much has already been paid, and the outstanding balance. Businesses with employees file IRS Form 940 to report their obligations under FUTA-the Federal Unemployment Tax Act.