Page 281 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
8. Gross FUTA tax (Part I, Line 6). Multiply the total taxable wages
noted on the last line by 6.2 percent to arrive at the maximum
possible FUTA tax liability.

9. Total FUTA tax deposited (Part I, Line 7). Summarize all FUTA
payments already made, as well as any overpayment carried for-

ward from the previous year.
10. Balance due (Part I, Line 8). Subtract the total amount of FUTA
taxes already deposited from the total amount of the tax to arrive

at the net liability. If the amount due is less than $1, do not pay it.

11. Record of quarterly FUTA liability (Part II). This section should only
be completed if a company’s total annual FUTA tax exceeds $100.
If so,enter the amount of the liability for each quarter of the year,
as well as the grand total.

For both Form 940 and Form 940-EZ, if a fourth quarter payment
of less than $100 is due,fill out the payment voucher located at the bot-
tom of either form, listing the amount of the payment, the business
name and address, and its EIN number. It is also useful to list the EIN,
form number,and payment period covered on the accompanying check,
in case the IRS loses the voucher.

State Unemployment Tax
Tax rates imposed by states can be quite low, but can also range up to
5.4 percent (the amount of the credit allowed against the federal unem-
ployment tax), and some states even exceed this amount. The rate
charged is based on a company’s history of layoffs, which is called an
experience rating. If it has a history of laying off a large proportion of its
employees, then this action will likely drain a significant amount from

the state’s unemployment funds through the payment of unemployment

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