Basic Payroll Customers: Completing Form 940
Background
Form 940 is the annual IRS tax form that is used to report your Federal Unemployment Taxes (FUTA) for the year. Click here for IRS instructions for Form 940.
If you are a Full-Service Payroll customer at the end of the year, Patriot will file your 940 for you with your 4th quarter tax filings. For more info, see Viewing Your Company Tax Filings in Patriot Software.
If you are a Basic Payroll customer and you pay and file your own payroll taxes, you will need to complete and file the annual Form 940 yourself, which reports your Federal Unemployment Taxes (FUTA) for the year.
How to download Form 940 in Patriot Software
- Reports > Payroll Tax Reports > 940s.
- Select the year for the form you want to download.
- Click Download 940. A partially completed Form 940 will download and appear as a PDF. You can now save this to your computer.
- If your business needs to file 940 Schedule A, due to either being a multi-state employer or paying wages in a state that is subject to FUTA credit reduction, click Download 940 Schedule A. This form will also appear as a PDF for you to save to your computer.
You will need to fill in any required data, print and sign the form(s). See the IRS Instructions for Form 940 for assistance.
Also see Basic Payroll Customers: Completing Form 941 for instructions on how to obtain partially filled Employer’s Quarterly Federal Tax Return.
Why doesn’t my Form 940 match the Payroll Tax Liabilities report?
FUTA tax is 6% for each employee, but most companies receive a credit of 5.4% if they pay their SUTA taxes, resulting in a 0.6% FUTA tax rate per employee.
Beginning with tax year 2022, we calculate your liability for all employees at a 0.6% FUTA rate, whether they’re SUTA-exempt or not.
At the end of the year, we calculate a potential tax adjustment based on the FUTA worksheet of the 940. We then determine, based on payments to the state, whether or not employees are indeed subject to the entire 6% of FUTA. These adjustments will be reflected as “System Edits” at the end of the year.
You can view system edits in your payroll details report by going to Reports > Payroll > Payroll Details. Select the year 1/1/XX – 12/31/XX and “System Edits” as the source. This report will also reflect all adjustments for any states that are part of the FUTA credit reduction for that year.
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