Page 274 - Essentials of Payroll: Management and Accounting

Unemployment Insurance
2. Questions A–C. If the answers to all three questions posed in this
section are yes,then you may file the simpler Form 940-EZ instead.
Any no answers require completion of Form 940.The questions
match the logic steps given earlier in Exhibit 10.2.

3. Amended or final return. There are two check-off boxes immedi-

ately above the Part I section. Check the first box if there will be
no future FUTA filings; check the second one if this is an
amended return. Otherwise, continue to Part I.

4. Total payments (Part I, Line 1). Enter the total gross wages paid
during the calendar year to employees, including wages not eli-
gible for the FUTA tax. Total gross wages should include com-
missions, bonuses, 401k plan contributions, the fair value of
goods paid, and vacation and sick pay.

5. Exempt payments (Part 1,Line 2). Include all wages that are exempt
from the FUTA tax. Many of these exemptions were noted earlier
in the “Federal Unemployment Tax” section. Do not include on
this line any wages exceeding the statutory $7,000 annual wage
limitation on the FUTA tax, since this is addressed by the next

line item.

6. Wages exceeding $7,000 (Part I, Line 3). Enter the total amount
of wages paid that exceed the $7,000 annual wage limitation on
the FUTA tax.

7. Total taxable wages (Part I, Line 5). Subtract the total exempt pay-
ments and total payments exceeding $7,000 from the total pay-
ments to arrive at this figure.

8. Gross FUTA tax (Part I, Line 2). Multiply the total taxable wages
noted in the last line by 6.2 percent to arrive at the maximum
possible FUTA tax liability.

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