Differences Between Form 940 And Form 941

Publish date: 2024-04-19

When it comes to filing taxes, there can be a lot of confusion when it comes to the different forms needed. Two of the most important forms for businesses to be aware of are the Form 940 and Form 941. These two forms are often confused and it is important to understand the key differences between them.

Purpose of The Forms

Form 940 is used to report the amount of Federal Unemployment Tax Act (FUTA) taxes that have been paid by an employer. This tax is used to fund state and federal unemployment compensation programs. Form 941, on the other hand, is used to report income and Social Security taxes withheld from employee wages as well as the employer’s portion of Social Security and Medicare taxes.

Who Is Required To File?

Form 940 must be filed by any employer who has had $1,500 or more in wages paid to employees in a calendar quarter. Form 941 must be filed if an employer has paid wages of $2,500 or more to their employees in any quarter or if they have had one employee or more who have worked during a quarter.

Filing Schedule

Form 940 must be filed annually by January 31 of the following year. Form 941 must be filed quarterly by the last day of the month following the end of the quarter.

Taxes Reported

Form 940 reports the federal unemployment taxes that have been paid by the employer while Form 941 reports the income and Social Security taxes withheld from employee wages, as well as the employer’s portion of Social Security and Medicare taxes.

Forms To Be Attached

Form 940 does not require any additional forms to be attached. Form 941 must be accompanied by Form 941-V, a payment voucher, if payment is being made with the filing.

Penalties

If Form 940 is not filed on time, the employer may be subject to a 5% per month penalty up to a maximum of 25%. Form 941 must be filed on time or the employer may be subject to a 5% per month penalty up to a maximum of 25%. The employer may also be subject to a minimum penalty of $100 per return if the taxes are not paid on time.

Filing Method

Form 940 can be filed electronically or by paper. Form 941 must be filed electronically.

State Tax Information

Form 940 does not report any state tax information. Form 941 must report any state income tax withholding information in addition to the federal information.

Form 940-EZ

Form 940-EZ is a simplified version of Form 940 and can be used by employers who meet certain criteria. This form is only two pages long and does not require any additional forms to be filed. Form 941-EZ is not available.

Form 940-X

Form 940-X is used to make corrections to Form 940. It is not necessary to file Form 940-X if Form 941 has been filed incorrectly as corrections to Form 941 can be made directly on Form 941.

Form 944

Form 944 is similar to Form 941 but is used by employers with annual payroll taxes of $1,000 or less. It is filed annually instead of quarterly and is due by January 31 of the following year.

Form 945

Form 945 is used to report federal income tax withheld from nonpayroll payments such as pensions, annuities, and gambling winnings. It is due by January 31 of the following year.

Form 8109-B

Form 8109-B is used to make payments of federal taxes. It must be included with Form 940 or Form 941 when filing electronically.

Form 8974

Form 8974 is used to determine the amount of an employer’s Qualified Small Business Payroll Tax Credit. It is not required to be filed but is available if the employer wishes to take advantage of the credit.

Form 1040-ES

Form 1040-ES is used by self-employed individuals to estimate their taxes and make payments. It is not required to be filed with Form 940 or Form 941.

Form W-2

Form W-2 is used to report wages, tips, and other compensation paid to an employee. It must be filed with the Social Security Administration and is not required to be filed with Form 940 or Form 941.

Form W-3

Form W-3 is used to transmit Form W-2 information to the Social Security Administration. It is not required to be filed with Form 940 or Form 941.

Conclusion

Form 940 and Form 941 are two of the most important forms for businesses to file when it comes to taxes. It is important to understand the differences between the two forms in order to ensure that all taxes are paid on time and accurately. With the right information, filing taxes can be a much less stressful process.

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