Video instructions and help with filling out and completing What 940 Schedule Return

Instructions and Help about What 940 Schedule Return

Hello in this lecture we will define form 940 according to fundamental accounting principles while 22nd edition the definition of form 940 is IRS form used to report and employers federal unemployment tax futa on an annual filing basis when we're thinking about the form 940 we're talking about a payroll tax when we think about the payroll tax we're usually thinking about the FICA tax Social Security and Medicare this is going to be the federal unemployment tax and it's only gonna be an employer tax meaning it's not being taken out of the employee wages it will be based however on the employee wages but it's paid by the employer only the form is going to be done annually rather than quarterly so the 940 ones reporting the Medicare and the Social Security and the federal unemployment will be on the quarterly 940 ones this will be at the end of the year the 940 it's usually a lot less because the unemployment tax the federal unemployment tax generally is far less in amount the form looks something like this this is a 2021 form from we've got the information for the business up top in essence the calculation of the tax liability would be that we're going to have the employee wages multiplied times the tax rate however there's a cap on the wages something around 7,000 so every employee up to that cap very low cap so just about every employee reaches that cap if they haven't been employed for a significant amount of the year and then we're gonna take that and multiply times the rate and that will give us the liability we're gonna compare that liability to what has actually been paid so remember this is similar to the form 1040 for an individual in that we've already made the payments the IRS expects payments to be made throughout the year and this form is really just confirming the payments as would a form 1040 for an individual a form 1040 for an individual however is almost never going to be exactly correct and it usually results in a refund if all we have are w-2 wages because the withholdings are usually bigger than the amount of the actual tax that's how the system is set up the food attacks however is more of a flat tax rate we don't have that the progressive system therefore it should be exact by the time we get to the end of the year we should just be filing this form to confirm the fact that we have this amount of liability for the year and that's how much we have paid during the year however if that's not the case then we'll have a refund or an amount due at this point in time Music Music you.

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