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Jean   Murray

Filing Form 940 by January 31 - Check Before You File

By January 19, 2014

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A reader asked, "Do I have to file Form 940 if my tax payments are up to date?" The short answer is YES. You must submit Form 940 even if you are up to date on your unemployment tax payments. Form 940 is due January 31, 2014, for 2013 unemployment taxes.

Form 940 is a report for federal unemployment taxes. It provides information for the IRS on what you (your business) thinks is your federal unemployment tax liability.

By completing the form, you show your FUTA tax liability based on your payroll, and the payments you have made, either quarterly or annually. If your liability and payments don't match, the IRS will start asking questions.

Employers owe FUTA tax on the first $7,000 of wages or salaries paid to each employee each year and must make payments either quarterly or annually, depending on the size of the deposits. Employees do not have to contribute to unemployment taxes; these taxes should not be withheld from employee pay.

Here's a quick explanation of  how to complete Form 940.

Can I pay 940 taxes along with my Form 940?

The IRS says,

"To avoid a penalty, make your payment with your 2013 Form 940 only if your FUTA tax for the fourth quarter (plus any undeposited amounts from earlier quarters) is $500 or less. If your total FUTA tax after adjustments (Form 940, line 12) is more than $500, you must make deposits by electronic funds transfer."

The "electronic funds transfer" method is the EFTPS system.

Where do I send Form 940?

See the Instructions for Form 940 (PDF) (PDF) for information on where to send Form 940, depending on your state and whether or not you are making a payment.

More about Federal and State Unemployment Taxes

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