Filling out the IRS Form 940 can be a daunting task for many taxpayers and tiny business owners who are new to the process. Fortunately, this guide provides a step-by-step breakdown of the form to help taxpayers avoid mistakes, learn the details, and get it done correctly.
- Step 1: Gather the Necessary Information
The information needed to fill out the IRS Form 940 includes your business’s Employer Identification Number (EIN), its legal name, address, contact information, and amounts for wages paid, taxes withheld, and other related financial information. Before beginning the form, ensure you have this information on hand. - Step 2: Report the Appropriate Type of Tax
The form will ask taxpayers to select the type of tax they are filing, including Federal Unemployment Tax, Federal Income Tax Withholding, and Social Security and Medicare Tax. Make sure to select the correct type of tax that you are filing for. - Step 3: Enter Your Business Information
The form will ask for your business’s legal name, address, and contact information. Ensure to enter the correct information, which will be used to identify the taxpayer. - Step 4: Enter the Wages Paid
The form requires taxpayers to enter the total wages paid during the tax period. This includes wages paid to all employees, including part-time and seasonal employees. Ensure to include any wages paid to employees who are not US citizens, as these wages are still subject to FUTA taxes. - Step 5: Enter the Taxes Withheld
The form requires taxpayers to enter the taxes withheld from employee wages. This includes taxes withheld for Federal Income Tax, Social Security and Medicare, and any other applicable taxes. Make sure to include all taxes that were withheld during the tax period. - Step 6: Enter the Uncollected Social Security and Medicare Tax
The form requires taxpayers to enter the amount of uncollected Social Security and Medicare tax. This is the tax that was not collected from employee wages, usually due to the employee not having enough wages to be subject to the tax. - Step 7: Enter the Amount of Tax Deposited
The form requires taxpayers to enter the amount of tax they have deposited with the IRS. This amount should match the total amount of taxes withheld and uncollected taxes. The taxpayer may be subject to penalties and interest if the amount entered does not match the amount deposited. - Step 8: Calculate the Net Tax Liability
The form requires taxpayers to calculate their net tax liability by subtracting the total amount of taxes deposited from the total amount of taxes due. The taxpayer must send in the difference if the amount due is more significant than the amount deposited. If the amount due is less than the amount deposited, the taxpayer may be eligible for a refund. - Step 9: Sign and Submit the Form
The form must be signed and submitted to the IRS by the period indicated in the form instructions. Make sure to keep a copy of the submitted form for your records.
Filling out the IRS Form 940 can be a daunting task, but with this step-by-step guide, taxpayers can be sure to get it done correctly. Be sure to gather the necessary information, select the appropriate type of tax, enter your business’ information, enter the wages paid and taxes withheld, enter the uncollected Social Security and Medicare tax, enter the amount of tax deposited, calculate the net tax liability, sign and submit the form, and keep a copy for your records. With these steps, taxpayers can avoid mistakes and complete the form correctly.
