Page 272 - Essentials of Payroll: Management and Accounting

Unemployment Insurance
for multiple quarters, it must still be paid following the year-end quar-
ter, when Form 940 is filed.
If FUTA deposits are filed late, a penalty will be assessed by the
IRS.The amount is 2 percent of the amount of the late deposit if it is no

more than five days late;5 percent if between 6 and 15 days late;10 per-
cent if more than 15 days late; or 15 percent if not paid within 10 days
from the date of the company’s receipt of a delinquency notice from
the IRS. This penalty may be waived for small businesses or those that
have just started filing payments.

Filing 940 and 940-EZ Forms

The FUTA tax return is used to calculate how much was paid out in
wages during the preceding year, how much of this amount was sub-
ject to the FUTA tax, the amount of the tax, and any prior quarterly
deposits made to reduce the payable tax, resulting in a net payment due
to the government. The form must be filed no later than January 31 of
the year following the reporting year, or by February 10 if all quarter-
ly deposits for the calendar year were made in a timely manner. The
form can be filed at an even later date if the company requests an

extension from the IRS, but this is only for submission of the form—
all quarterly payments must still be filed by the required dates.
A company can file Form 940-EZ instead of Form 940 if it paid
unemployment contributions to only one state, paid all state unemploy-
ment taxes by January 31, and all wages that were taxable for the FUTA
tax were also taxable for its state unemployment tax. An IRS chart
showing the logic steps for this decision is shown in Exhibit 10.2.

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