Payroll Sec 7 - Fed Employment Reporting Forms and Due Dates

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Federal Unemployment Tax (FUTA)

FUTA provides funds to state unemployment agencies that give benefits to workers who have lost their jobs. Only EErs pay it, not EEs (not a withholding tax). (Some state req EEs contibute toward state unempl insurance.) (Under Fed wage-hour law, EErs prohibited from deducting FUTA from EE's wages).

FUTA rule

EEr that pays wages of 1,500 or more in any calendar quarter or employs at least one person for some part of any day in 20 weeks must pay FUTA tax.

FUTA exceptions

1) not-for-profit orgs, 2) certain household EErs, 3) certain agricultural EErs, 4) sole proprietorship that employ family members, 5) certain work performed for a child or spouse, or by child under age 21 for parent (includes foster children, foster parents, stepchildren, stepparents).

FUTA calculation

For 2009: Max FUTA is 6.2% of first $7000 of taxable wages paid to each EE. EEr that makes timely payments to its state unemployment fund may be entitled to a maximum credit of up to 5.4% (reducing FUTA to 0.8%). EErs may assume 0.8% rate for deposits made in the 1st 3 quarters of the year. * Any EEr exempt from state unemployment tax is liable for the entire 6.2% of FUTA unless also exempt from FUTA.

Losing FUTA credit

Any EEr that loses any portion of this 5.4% credit makes up the difference for lost credit in its 4th and final quarter deposit. Lose credits by: 1) failing to make timely payments to its state unemployment fund. 2) its state defaulting on repayments of a federal loan (this credit reduction, if applicable appears on Form 940).

Futa example 1

ie. EEr pays EE 11,000 for the year. EEr is entitled to max FUTA credit. What is FUTA tax for EE's wages? $7,000 x 0.8% = $56.

When FUTA is paid? If FUTA more than $500:

FUTA computed quarterly. 1) If FUTA more than $500, deposit must be made by LAST DAY OF MONTH FOLLOWING END OF QUARTER (p. 122).

When FUTA is paid? If FUTA $500 or less at end of quarter:

2) If FUTA $500 or less at end of quarter, may be rolled over to next quarter and subsequent quarters until liability exceeds $500 or until JAN 31 of following year, whichever first.

When FUTA is paid? If FUTA $500 or less at end of 4th quarter:

3) If FUTA $500 or less at end of 4th quarter, EEr may pay FUTA liability with Form 940.

Futa example 2

ie. As of June 30, EEr has FUTA liability of $510. FUTA must be deposited no later than July 31.

FUTA Deposits

FUTA taxes deposited at qualified local banks (like FITW, FICA). Use 8190 (Fed Tax Deposit Coupon), clearly indicate quarter, amt of deposit, type of tax deposited. If EEr required to remit tax via electronic transfer, make 940 deposits via EFT.

FUTA Form 940 (EEr's Annual Federal Unemployment Tax Return)

Form 940 is an ANNUAL return used to compute EEr's federal unemployment tax liability (FUTA) and to reconcile FUTA deposits made during the year. IRS matches 940 with info from each state's unemployment agency to ensure that reported wages agree.

EFT

If EER req'd to remit fed taxes via EFT, also must make 940 deposits via EFT.

FUTA due date

940 due on JAN 31 of the following yr (the last day of the month following DEC 31). If JAN 31 is a SAT, SUN, or FED HOLIDAY, due the next business day. EERs who make ALL FUTA deposits on time during the yr may extend 940 the due day to FEB 10 or next business day. IRS permission not reqd.

940, Schedule A

Must complete 940, Schedule A (p. 207) if paid state unemployment tax in more than 1 state or had employment in a state subject to credit reduction.

941 (EER's quarterly fed tax return)

941 is federal employment return used to report quarterly wage and tax info. Filed with IRS (as is 944).

Reconcile 941 (or 944) to W-2/W-3

IRS uses 941 (or 944) to reconcile wages EER paid & employment taxes EER withheld TO tax deposited for quarter and W-2 filed for the yr. Also tells IRS periods in which tax liab incurred. IRS and SSA (Social Security Administration) reconcile 941 with W-2 and W-3.

941 (or 944)

All EERs that withhold FITW and FICA must file 941 or 944.

941 (or 944), Exceptions

Do NOT have to file 941 or 944: 1) Household EERs that report with 1040, 2) Agricultural EERs that file 943, or 3) Other EERs that file unique fed employment tax returns, ie. 941-M

940, 941, 944 DUE DATE

941 and 940 (FUTA) due on last day of month after end of the quarter. EER who made all fed tax deposits for the quarter on time may file 941 10-day extension. 944 due JAN 31 (or FEB 10) of following yr. If due date falls on Sat, Sun, Fed holiday --> Due next business day.

941 and 940 DUE DATE Chart

1) Withheld between 1/1-3/31 --> 1st Quarter tax period. 2) Withheld between 4/1-6/30 --> 2nd Quarter tax period. 3) Withheld between 7/1-9/30 --> 3rd Quarter tax period. 4) Withheld between 10/1-12/31 --> 4th Quarter tax period. FUTA and 941 due: 4/30, 7/31, 10/31, 1/31. 941 10-day extensions: 5/10, 8/10, 11/10, 2/10

MONTHLY (941)

Only MONTHLY depositors report liab on 941, Line 15.

SEMIWEEKLY, 1 BANKING DAY (Schedule B)

SEMIWEEKLY and 1 BANKING DAY must complete Schedule B, checking 941 Line 17.

945

945 ANNUAL Return of Withheld Fed Income Tax. To report: 1) BACKUP TAX (under IRC 3406) and FED INCOME TAX (under IRC 3402(q)), 2) AMOUNTS PAID AS RETIREMENT PAY for ARMED FORCES of the US (under IRC 3402), 3) CERTAIN ANNUITIES (under IRC 3402o1B, and 4) PENSIONS, ANNUITIES, IRAS, and CERTAIN OTHER DEFERRED INCOME (under IRC 3405).

945 filed by EER

EER must file 945 if it withholds BACKUP TAX under IRC 3406, or FED INCOME TAX from 1) GAMBLING winnings under IRC 3402q, 2) AMTS PAID AS RETIREMENT PAY FOR SVC IN ARMED FORCES OF US under IRC 3402, 3) CERTAIN ANNUITIES (under IRC 3402o1B, and 4) PENSIONS, ANNUITIES, IRAS, and CERTAIN OTHER DEFERRED INCOME (under IRC 3405). If EER has no 945 liab in the calendar yr, then not reqd to file a 945 for that calendar yr.

945 DUE DATE

945 must be filed ANNUALLY and POSTMARKED by end of month following end of calendar yr (generally JAN 31). 2009 945 must be filed by 2/1/10.

945 and 941 use separate 8109's

945 and 941 taxes are NOT combined for purposes of determining when deposit due/whether 1 BANKING DAY applies/ Safe Harbor applicable. Use SEPARATE 8109 Deposit Coupons.

945 and 941 use separate 8109's, example

ie. T, JAN 25, semiweekly. 941 liab of 99,500. 945 liab of 600. Both due F, JAN 31. Even though combined total is over 100K, 1 BANKING DAY not evoked bc 941 and 945 taxes are separate, and use separate 8109's.

LOOKBACK PERIOD 945

Deposit status for 945 based on Lookback Period of the 2nd calendar yr preceding the current calendar yr (12 mo separation). ie. 1) MONTHLY in 2009 if 50,000 or LESS in accumulated 945 liab in 2007. 2) SEMIWEEKLY for remainder of tax yr and following yr if a MONTHLY depositor incurs liab of 100,000 or more.

W-2 (Wage and Tax Statement)

W-2 is the EE's annual summary of taxable wages and taxes withheld. EEs file copy of W-2 with fed and state income tax returns. Copies also submitted to Social Security Administration with W-3 (transmittal form unless filing electronically). SSA uses W-2 to update EE's retirement earnings account. * Make sure EIN and EE SSN is accurate.

W-2 must be provided to

1) Any EE that EER has paid WAGES, WITHHELD FITW or FICA, or would have w/held income tax had EE not claimed exempt from FITW or claimed more than 1 w/holding allowance. Also applies to EE who is a child of a sole proprietor. 2) Any EE who EER made PAYMENTS in CASH, PROPERTY, or other BENEFITS in exchange for svcs provided. 3) Any EE for whom EER received a stmt from a 3rd party payer of SICK or DISABILITY pay. 4) Any FORMER EE for whom EER paid WAGES or individuals for whom EER paid WAGES in anticipation of employment.

W-2 requirement

W-2 is reqd even when taxes are not withheld and no matter how small the wage amt to report.

W-2 DUE DATE

1) EER must give EEs Copy B, Copy C, Copy 2 of W-2 by JAN 31 (or next available business day). 2) Terminated EEs must be given W-2s by JAN 31 or 30 DAYS FROM DAY REQUESTED, whichever comes 1st. 3) Social Security Administration must receive copies of W-2, Copy A, and W-3 by LAST DAY IN FEB (or next business day). 4) EERs who file W-2 w/SSA electronically due date extended MAR 31.

Copy 2

Some states specify different due date for COPY 2.

W-2 Electronic Filing

EERs with 250 or more W-2's (or 250 or more W-2c's) at end of yr must file with SSA electronically. Most state req MAGNETIC MEDIA or ELECTRONIC FILING of W-2 if a certain threshold is met.

W-3

W-3 = Transmittal of wage and tax statements. W-3 is 1) a transmittal form for sending W-2s to SSA and 2) an annual reconciliation of wage and tax info. W-3 data must equal total of attached W-2 w/respect to wages, tips, and other compensation, FICA taxable wages, FICA tax withheld, FITW, and qualified retirement plan benefits reported in box 12 of W-2.

W-3, Filing

All EERs filing W-2s with SSA must file W-3.

W-3, DUE DATE

W-3, W-2, Copy A filed with SSA by LAST DAY OF FEB. NOT used when filing electronically or magnetically. Due date for electronically submitted W-2 is MARCH 31 (or next business day).

W-3, where to send

Send W-3s to SSA Data Operations Center.

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