What Form 940 (2014) Is For
Employers file Form 940 (2014) to report federal unemployment FUTA tax for the 2014 tax year. The form supports unemployment insurance programs that provide unemployment compensation for eligible workers who experience job loss. The filing requirement applies to employer operations that involve employees’ wages that fall within the federal rules for taxable employment.
Employers use the form to report paid wages that create FUTA tax liability for the calendar year. The information helps employers calculate contributions that support unemployment benefits through state and federal unemployment agencies. Employers follow these rules because employees do not pay FUTA tax, and employers carry full responsibility for their own taxes.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive guide to payroll and employment tax forms required for federal and state tax reporting.
When You’d Use Form 940 (2014)
Employers file Form 940 when they manage wages paid to one or more employees during the previous tax year. The filing requirement applies when employers pay cash wages that fall within the rules for annual federal unemployment FUTA reporting. Employers also review whether payments exempt from FUTA are applicable when preparing information for the due date.
Employers submit Form 940 when wage activity remains subject to FUTA for any calendar quarter. Employers file amended returns when errors involve wages paid or when wage categories for agricultural employees change. Employers file final returns when their business ceases to pay salaries and no longer needs to pay taxes for future periods.
Key Rules or Details for 2014
Employers review several requirements that define their responsibilities under the Federal Unemployment Tax Act (FUTA). The rules assign FUTA tax liability based on FUTA taxable wages and employees’ annual wages reported for the previous year. The current FUTA tax rate, as mandated by federal law, determines how employers calculate contributions tied to unemployment programs.
Employers evaluate the wage base to determine amounts that qualify for the FUTA tax credit. The credit depends on timely payments made under the state unemployment tax act, which affects how income taxes and related obligations are aligned. Employers also account for credit reduction states that adjust the final calculation for unemployment programs.
Employers monitor filing rules that relate to FICA taxes and Medicare taxes to ensure accurate reporting. The information supports consistent compliance with federal unemployment FUTA tax requirements. Employers can strengthen their reporting process by carefully applying these rules to every filing period.
Step-by-Step (High Level)
Employers follow several steps to complete Form 940 correctly for the reporting period. The steps help employers organize information tied to total wages paid and employer contributions subject to FUTA. The process also guides employers through the tax payments required to pay FUTA tax on time.
- Employers enter the employer identification number assigned by the federal agency for required reporting.
- Employers list total wages paid and identify all amounts that remain subject to FUTA for the reporting period.
- Employers calculate tax payments that reflect the yearly obligation to support unemployment programs.
- Employers submit payments through a financial institution or through an approved credit or debit card option that meets federal requirements.
- Employers review all entries and sign the form to finalize the filing process in accordance with federal rules.
Common Mistakes and How to Avoid Them
Employers encounter several issues when they prepare Form 940, and each issue affects the accuracy of employer payments for the filing year. The process requires careful review of items exempt from FUTA, wage categories, and entries linked to the employer’s annual federal responsibilities. Employers can reduce future corrections by understanding how each detail affects FUTA liability and reporting accuracy.
- Incorrect Wage Reporting: Employers can avoid this error by verifying total taxable wages and confirming which amounts remain subject to FUTA before submitting the form.
- Late Deposits: Employers prevent delays by scheduling payments that support Social Security tax and Social Security programs through approved deposit systems.
- Misapplied Exemptions: Employers reduce mistakes by comparing payments exempt from FUTA with federal rules that define which items qualify as exemptions.
- Incorrect Treatment of Organizational Status: Employers avoid this issue by confirming whether tax-exempt organizations qualify as exempt from FUTA before completing entries.
- Incorrect Business Category: Employers prevent misclassification by confirming whether work activities qualify under categories for agricultural employees or household employees.
Employers can improve accuracy when evaluating each rule before preparing Form 940. Employers strengthen compliance by confirming each category that influences FUTA liability for the reporting period. Employers support reliable outcomes when they organize each required detail before filing the unemployment tax form.
What Happens After You File
Employers receive confirmation from the federal government after they submit the unemployment FUTA tax return for the previous tax year. The agency processes employer contributions, applies each payment to the correct tax liability, and updates records that support unemployment benefits. The process also includes verification steps for household employees and entries connected to social security categories.
Employers receive notices when refunds apply or when balances remain due after review. The agency may request information when entries reference tax-exempt organizations or when the employer stopped paying wages during the reporting period. Employers maintain organized records to support accurate reporting for future years.
FAQs
Who must file Form 940?
Most employers must file Form 940 when the Federal Unemployment Tax Act (FUTA) applies to paid wages for the year. The requirement supports the employer's annual federal unemployment system and ensures accurate reporting for federal income tax purposes. Employers review wage activity to confirm when they must file Form 940.
Are agricultural employees covered under FUTA?
Agricultural employers follow specialized rules that apply only when paid wages reach federal thresholds. The rules consider whether agricultural employees worked enough days or earned enough during the period. Employers compare totals with the FUTA wage base to confirm coverage.
Do employees pay (FUTA) tax?
Employees are exempt from paying FUTA tax under federal requirements. Employers assume full responsibility for payments because FUTA tax rules assign the duty to employers. Employers include certain fringe benefits and group term life insurance only when required.
Are household employees included in the (FUTA) requirements?
Household employees fall under FUTA only when paid wages meet federal limits for the reporting year. Employers review totals to determine whether coverage applies to the individual worker. Employers apply unemployment taxes to these workers only when wage levels meet federal standards.
How does a successor employer handle Form 940?
A successor employer reports wages from a prior business when federal rules require the transfer. The employer must identify amounts subject to unemployment taxes and confirm the correct employer identification number before filing. The employer reviews quarterly payment history to ensure complete reporting.
For more resources on filing or understanding prior-year IRS forms, visit our complete list of IRS-approved federal fillable tax forms you can use to prepare and file your return online.
