IRS Form 940 walkthrough (Employer's Annual Federal Unemployment (FUTA) Tax Return)

Subscribe to our KZbin channel: / @teachmepersonalfinance
Subscribe to our newsletter: tinyurl.com/3b...
Want to discuss your concerns one on one? Schedule an Ask Me Anything meeting here: calendly.com/f...
Do you use TurboTax? If not, is the reason because you're not sure which TurboTax software is the right one for you? In that case, head on over to this page to learn more about all the things that TurboTax has to offer: tinyurl.com/3d...
Please feel free to check out our article, where we've written step by step instructions to help you walk through this tax form! www.teachmeper...
If you’re looking for tutorials for other IRS Forms that you can file directly through the IRS website, check out our free fillable forms page: www.teachmeper...
Here are links to articles and videos we've created about other tax forms and schedules mentioned in this video or its accompanying article:
Line 10 worksheet: • Line 10 worksheet walk...
IRS Form SS-4, Application for Employer Identification Number
Article: www.teachmeper...
Video: • Form SS-4 walkthrough ...
IRS Form 8822-B, Change of Address or Responsible Party, Business
Article: www.teachmeper...
Video: • IRS Form 8822-B walkth...
IRS Form 4070, Employee’s Report of Tips to Employer
Article: www.teachmeper...
Video: • IRS Form 4070 walkthro...
IRS Schedule H, Household Employment Taxes
Article: www.teachmeper...
Video: • IRS Schedule H walkthr...

[@christinahartinger-beard4197]

Hello! I have a client that switched from sole prop to corp mid year. Both had payroll. When she switched, gross went back to 0 for employees that had already reached FUTA and SUI thresholds. Is there a credit so shes not paying again up till 7k? Do i combine them and mark successor? But how would IRS know to apply sole prop futa payments already made? Any guidance would be appreciated.

[@teachmepersonalfinance]

Technically, this would be two separate employers, if the corporation had a different EIN from the sole proprietorship (which I imagine it does). So I think this would fall under the guidance for excess tax withheld by two or more employers: Two or more employers - If you had more than one employer during the taxable year and your total wages and compensation were over the wage base limit for the year, the total Social Security tax or Social Security equivalent tier 1 RRTA tax withheld may have exceeded the maximum amount due for the tax year. If you had more than one employer and too much Social Security tax or tier 1 RRTA tax withheld, you may be able to claim the excess as a credit against your income tax on your income tax return. Refer to “Excess Social Security and tier 1 RRTA tax withheld” in the Instructions for Form 1040 (and Form 1040-SR) for more information. You may be entitled to a refund if you paid excess tier 1 RRTA tax over the tier 1 RRTA compensation base or if you paid excess Social Security tax over the Social Security wage base. You may be entitled to a refund if you paid both tier 1 RRTA tax and Social Security tax which, combined, exceed the Social Security wage base. If you had more than one employer and too much tier 2 RRTA tax withheld, you may request a refund of the excess tier 2 RRTA tax using Form 843 PDF. Attach copies of your Forms W-2 for the year to Form 843. So either she can adjust the withholdings, or each employee would need to file IRS Form 843 to inform the IRS of the overcollection: IRS Form 843, Claim for Refund and Request for Abatement Article: www.teachmepersonalfinance.com/irs-form-843-instructions/ Video: kzbin.info/www/bejne/mJaqqJp4iJaMj6s

[@christinahartinger-beard4197]

Yes 2 EINs...🫤 thank you so much..

[@jeffnorvesh1944]

thanks for the video! But I need to know how to file the last $4.13 that I owe.... we paid the majority due ($84 grand total due for the year) in the 1st Qtr, but need to pay $4.13 more to finish paying it off for this year (2024), but I don't know if I need to do that, or if I can just wait till the end of the year and file the 940 for '24 in 2025 and pay the $4.13 then? Any help would be appreciated!

[@teachmepersonalfinance]

To make sure that I understand, the $4.13 that you owe--was that from 2024? If so, then you can pay the $4.13 at any point during the 2024 year, and you'd probably be okay. To be sure, you'd double check the calculations in Part 5 but this isn't required, since your total FUTA (Line 12) is less than $500. If this were for the 2023 year, then you'd have to file the same form (there is no Form 940-X), then amend it to include the $4.13. I'm sure that a tax professional who would charge for an amended return might recommend something different, since the $4.13 and any penalties or interest probably would still be less than the cost of an amended return, but that's technically the correct approach. If you simply want to pay the $4.13 for the prior tax year, you should be able to do that online through the Treasury Department's payment portal: www.eftps.gov/. You would walk through the prompts to make sure that it's applied to the correct tax return and for the correct year.

[@IvannaVillegas-z4d]

How can I calculate line 5?

[@teachmepersonalfinance]

Step 1: You add up the entire payroll. Let's imagine that you end up with $200,000 as your total payroll figure. Step 2: For each employee, you subtract $7,000 from that total. For example, if you had 3 employees, you would subtract $21,000 from that amount. In this example, that would be: $200,000 - $21,000 = $179,000. There's another example in our article: www.teachmepersonalfinance.com/irs-form-940-instructions/