 in this presentation we will take a look at form 940. 940 is going to be the annual federal unemployment or the FUTA tax return. So the 940 is going to be something that is going to be an annual return as it says here and it's really just reporting the FUTA. Now you might think these these numbers are so close to each other. The 940s which are the quarterly returns and the 941s that one they're easy to get mixed up for that reason. Remember that the 941s for whatever reasons are the quarterly returns and the 940 is kind of like the yearly return. The other thing that's confusing about them is one because numbering is so close and and two just because they're both payroll tax forms it's easy to think that the 940 or the year-end form is going to sum up in some ways the payments that have been recorded or the types of taxes that are on the 941s but that's not exactly the case. The 940 reports a completely different federal income tax which is the FUTA tax the federal unemployment tax. So note that the 941 is going to be covering all other federal payroll taxes so the 941s the four quarters 941s cover the federal income tax again not for the corporation on their net income but for the employees payroll taxes the income tax the FIT and then the social security and Medicare for both the employer and employee sides those are the 941s. The 940 isn't going to recap that again on an annual basis what the 940 does is calculate just the FUTA tax the federal unemployment tax and the reason one reason this is the case is that it's kind of a waste of time to record the 941s or maybe it's it's thought of as immaterial or or not worth the effort to report the FUTA tax on a quarterly basis because it's such a it's a smaller tax there's not as much being recorded so therefore the requirement is really just an annual requirement so it's not really that we have quarterly requirements and then an annual to sum everything up it's more along the lines that we're not going to add the FUTA requirement to be broken down on a quarterly basis in part because it's a smaller type tax therefore will allow it not to be reported until the end of the year although the payments like in all taxes should be paid on the way as we go so because it's a yearly form that's going to be due it's it's we're going to record the whole year's worth of data from january to december and then it's going to be due by january 31st so clearly obviously the end of the year is going to be a a big time for record keeping so we've got to do the last quarter and then we've got to do the 940s so the 940 will look something like this this and again you can get this from the irs just go to irs.gov look up the forms look up form 940 and you can get an idea of what the 940 looks like it'll be much it'll be pretty much the same typically from year to year but we do want to make sure if there's any changes to any rates or anything it will be reflected of course in the new in the newest form so we want to make sure that you that you're down whatever you're working on downloading the newest form this is the 2017 form here so i will have the ein number once again we always need that ein number no matter what type of entity we are in the employer identification number name address then we're going to check the boxes that are applicable up here note that it's not the quarters of course because it's an annual return but if it's an amended return we got to say it's amended if there's no payments for employees in 2017 we want to have that and if it's a final return then we got to note that and the final returns can be a bit of a pain we want to make sure that we close everything out for for a corporation in terms of payroll taxes as well as everything else so the first portion is going to tell ask for the state and ask basically have we paid the state taxes are we subject to state taxes because remember that the state taxes or the art are in some way related suit of taxes related to make sure that we have the lower footer rate so if we paid the state taxes we typically have that lower footer rate which is going to be the 0.006 or the 0.6 percent now when we calculate the futa wages it's a little bit confusing because you might remember that we talked about the fact that the futa has a seven thousand dollar limit per employee so in essence we're going to be paying food tax up to seven thousand dollars per employee which pretty much all employees will will hit that if they've been employed for the entire year unless we hired them in like December or something or you know the last quarter then they're probably going to be paid seven thousand or more and so we're going to have to pay futa for each employee for around seven thousand typically now we've already calculated that probably when we did our when we did our calculations in the register to see what our payroll wages are for futa our futa payroll taxes but the way we're reporting it here is we're going to have to say that here's our our payments to all employees basically what we paid and then any exempt payments we have as well as the total of payments made to each employee in excess of the seven thousand so we're going to have in other words to have total payments and minus everything paid over the seven thousand to get to the number that we basically are going to be using to calculate futa which we which we probably already have which is which is the line six here the subtotal this is kind of like a this is kind of like our futa wages they will have to make the calculation on and that will be here and then we're going to apply the uh futa tax before adjustments is going to be the 0.006 so we'll take line seven the futa taxes times 0.006 that's six percent and that in essence is going to be our futa tax now if we go down to part three we're talking about that types of situations where the futa wages you paid were excluded from the state unemployment tax and that's a case well if you didn't pay state unemployment you're not going to get the six percent you're going to get the higher rate and you're not going to get that exemption you're going to have to add back in you know that that that higher percentage for the federal percentage so if that's applicable we'd have to fill that part in here for any exempt wages from state taxes and pay the higher futa tax once again similar to the 941 we would then have our our tax liability that we would calculate here this is this is a basically a recalculation of the tax liability because we've already calculated it and paid it and this is going to recalculate it on a summary basis meaning we're taking it and kind of as a whole and applying the tax rate which should work because it's a it's a flat tax so even though we calculated it as we went on each individual wages on each individual pay period it will still work out if we take the total the total wages that are futa wages times the the same rate so we're going to report that there and then we're going to report the food attacks uh deposits that we have made so we're going to do the comparison and we're not going to pay the food attacks now we've already been paying it the government wants their payments as the paychecks are being received as we take the money from or we're not withholding money in this case but as uh it because as employees earn money they want to be paid their food attacks in relation to the employees earning money throughout the year so we've already made the payments and we're going to report this so this form is just a reporting form in other words it's not a form to calculate how much tax we owe and then write a check typically if we do we'll probably owe interest and penalties on it if we're paying if we're paying right now so line 12 and 13 should be the same if they're not then we we're going to have to owe money or we're going to get a refund on it but if we did it correctly then they should tie out unlike uh like a 1040 which is impossible to do that the payroll taxes typically is possible because it's a flat tax so we should have paid pretty much exactly exactly what the tax is and we should be able to just report it now and say hey here's a recalculation a recap of how much we owe for futa here's a recap of the deposits that we've already made you can go ahead and verify that those deposits are made on your side of things and just that'll be the summary report for futa and simulation and the simulation