In the United States, employers must fulfill their tax obligations by understanding and completing certain tax forms. Two frequently used forms for employment taxes are Form 940 and Form 941. Although both forms are related to employment taxes, they have different purposes.

In this blog post, we will explore the differences between Form 940 and Form 941, helping you navigate these forms accurately. If you want to learn more about Form W-2 and 941, you can check out our webinar on “amending Form W-2 and 941” to ensure compliance with the Internal Revenue Service (IRS).

Form 940

Tax Form FUTA is used to file the employer’s annual federal unemployment tax. The FUTA is a payroll tax that employers pay to provide unemployment compensation to workers.  Here are some key points to know about Form 940:

1. Purpose: The main purpose of Form 940 is to report and pay the FUTA tax, which helps provide unemployment compensation to the workers who lose their jobs. It helps fund the federal unemployment program.

2. Filing Frequency: Form 940 is filed annually, summarizing the employer’s liability for FUTA taxes over the course of a calendar year.

3. Filing Deadline: Employers must file Form 940 by January 31st of the following year. If you paid all the FUTA tax by the deadline for Form 940, you can have 10 extra days to file, until February 10th.

4. Criteria for Filing: Form 940 must be filed by employers if they meet specific criteria. This includes paying wages of $1,500 or more in any calendar quarter or having one or more employees for at least part of a day in 20 or more weeks in a year.

Form 941

This is the Employer’s Quarterly Federal Tax Return. It is used by employers to report and pay their federal payroll taxes, including income tax withholding, Social Security tax, and Medicare tax. Form 941 is filed every three months to report employee wages, taxes withheld, and employer’s Social Security and Medicare taxes. Let’s take a closer look at Form 941:

1. Purpose: The main purpose of Form 941 is to report taxes withheld from employees’ wages, including income tax, Social Security tax, and Medicare tax. It also includes the employer’s part of Social Security and Medicare taxes.

2. Filing frequency: Form 941 is filed quarterly, covering a three-month period. The filing quarters end on March 31st, June 30th, September 30th, and December 31st.

3. Filing deadline: Each quarter, employers must file Form 941 by the last day of the month following the end of the quarter. There are four deadlines: April 30th, July 31st, October 31st, and January 31st.

4. The information included: Form 941 provides information about the number of employees, wages, tips, federal income tax, Social Security and Medicare taxes, and any adjustments or credits.

Conclusion

In summary, understanding the distinctions between Form 940 and Form 941 is crucial for employers to accurately report and pay their employment taxes. While Form 940 focuses on annual Federal Unemployment Tax Act (FUTA) liabilities, Form 941 deals with quarterly income tax withholding, Social Security tax, and Medicare tax obligations. By adhering to the proper filing schedules and providing accurate information on these forms, employers can ensure compliance with IRS regulations and fulfill their tax responsibilities.

It’s important to note that tax regulations and forms can change, so it’s advisable to consult the official IRS website, tax professional, or industry expert for the most up-to-date information and guidance.