Playlist:    • 1100 – Payroll and Current Liabilities  
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Class code: 527wmle
https://accountinginstruction.info/
Payroll Accounting
Form 940 is the Employer's Annual Federal Unemployment (FUTA) Tax Return, not to be confused with Form 941 which are quarterly tax returns. The annual form 940 payroll tax return report the federal tax of federal unemployment or (FUTA). Because the form number is close to the form number of the quarterly form, form 940 and form 941, it is easy to think they are related, that the annual payroll tax form 940 summarizes the quarterly payroll tax forms 941, but this is not true. Form 941 reports federal income tax (FIT), social security, and Medicare while the yearly payroll tax form 940 reports federal unemployment (FUTA) tax. Unlike the other federal payroll taxes the IRS only requires the reporting of FUTA yearly rather then quarterly, possibly because of the smaller dollar amount involved. FUTA is an employer only tax, meaning it does not come out of the employee gross pay to arrive at net pay.
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