Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2017 rates were used for FUTA and SUTA.
Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers.
As the accountant for Monroe Trucking Company, you are preparing the company's annual return, Form 940 and Schedule A. Use the following information to complete Form 940 and Schedule A.
The net FUTA tax liability for each quarter of 2018 was as follows: 1st, $97.00; 2nd, $87.00; 3rd, $69.70; and 4th, $59.50.
Since the net FUTA tax liability did not exceed $500, the company was not required to make its first deposit of FUTA taxes until January 31, 2019. Assume that the electronic payment was made on time.
a. One of the employees performs all of his duties in another stateLouisiana.
b. Total payments made to employees during calendar year 2018:
| Texas | $53,450 |
| Louisiana | 22,150 |
| Total | $75,600 |
c. Employer contributions into employees' 401(k) retirement plan: $1,250.
d. Payments made to employees in excess of $7,000: $22,150.
e. Confirm that the form was signed by Vernon Scott, Vice President.
f. Confirm that the correct phone number has been inserted on the form (834) 555-5551.
If an input box does not require an entry, leave it blank. When required, round amounts to the nearest cent.
| Form940 for 20--: | Employer's Annual Federal Unemployment (FUTA) Tax Return | | Department of the Treasury Internal Revenue Service | OMB No. 1545-0028 | | Employer identification number (EIN) | | | Name (not your trade name) | MONROE TRUCKING COMPANY | | | | | Address | | | | | Number | Street | Suite or room number | | | | | | | | | | | | | | Foreign country name | | Foreign province/county | | Foreign postal code | | | | | | | Type of Return (Select one.) | | Instructions and prior-year forms are available at www.irs.gov/form940. | | | | Read the separate instructions before you fill out this form. Please type or print within the boxes. | | Part 1: | Tell us about your return. If any line does NOT apply, leave it blank. | | 1a | If you had to pay state unemployment tax in one state only, enter the state abbreviation . . . . . . . . . . | 1a | | | 1b | If you had to pay state unemployment tax in more than one state, you are a multi-state employer . . . | 1b | Check here. Complete Schedule A (Form 940). | | 2 | If you paid wages in a state that is subject to CREDIT REDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2 | Check here. Complete Schedule A (Form 940). | | Part 2: | Determine your FUTA tax before adjustments. If any line does NOT apply, leave it blank. | | 3 | Total payments to all employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 3 | | | 4 | Payments exempt from FUTA tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4 | | | | | Check all that apply: | | | | | 5 | Total of payments made to each employee in excess of $7,000 . . . . . . . . . . . | 5 | | | | 6 | Subtotal (line 4 + line 5 = line 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 6 | | | 7 | Total taxable FUTA wages (line 3 line 6 = line 7. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7 | | | 8 | FUTA tax before adjustments (line 7 x 0.006 = line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 | | | Part 3: | Determine your adjustments. If any line does NOT apply, leave it blank. | | 9 | If ALL of the taxable FUTA wages you paid were excluded from state unemployment tax, multiply line 7 by 0.054 (line 7 x 0.054 = line 9). Go to line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9 | | | 10 | If SOME of the taxable FUTA wages you paid were excluded from state unemployment tax, OR you paid ANY state unemployment tax late (after the due date for filing Form 940), fill out the worksheet in the instructions. Enter the amount from line 7 of the worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10 | | | 11 | If credit reduction applies, enter the total from Schedule A (Form 940) . . . . . . . . . . . . . . . . . . . . . . . . . . . | 11 | | | Part 4: | Determine your FUTA tax and balance due or overpayment. If any line does NOT apply, leave it blank. | | 12 | Total FUTA tax after adjustments (lines 8 + 9 + 10 + 11 = line 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12 | | | 13 | FUTA tax deposited for the year, including any overpayment applied from a prior year . . . . . . . . . . . | 13 | | | 14 | Balance due. If line 12 is more than line 13, enter the excess on line 14. If line 14 is more than $500, you must deposit your tax. If line 14 is $500 or less, you may pay with this return. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . | 14 | | | 15 | Overpayment. If line 13 is more than line 12, enter the excess on line 15 and check a box below. . . . . . . . . | 15 | | | | | You MUST fill out both pages of this form and SIGN it. | Check one: | Apply to next return. | Send a refund. | | | | | For Privacy Act and Paperwork Reduction Act Notice, see the back of Form 940-V, Payment Voucher. | Cat. No. 11234O | Form 940 (2016) | |
| Name (not your trade name) | Employer identification number (EIN) | | MONROE TRUCKING COMPANY | 00-0003793 | | Part 5: | Report your FUTA tax liability by quarter only if line 12 is more than $500. If not, go to Part 6. | | 16 | Report the amount of your FUTA tax liability for each quarter; do NOT enter the amount you deposited. If you had no liability for a quarter, leave the line blank. | | | 16a 1st quarter (January 1 March 31) . . . . . . . . . . . . . . . . . . . . . . . . . | 16a | | | | | 16b 2nd quarter (April 1 June 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 16b | | | | | 16c 3rd quarter (July 1 September 30) . . . . . . . . . . . . . . . . . . . . . . . . . | 16c | | | | | 16d 4th quarter (October 1 December 31). . . . . . . . . . . . . . . . . . . . . . . | 16d | | | | 17 | Total tax liability for the year (lines 16a + 16b + 16c + 16d = line 17) | 17 | | Total must equal line 12. | | Part 6: | May we speak with your third-party designee? | | | Do you want to allow an employee, a paid tax preparer, or another person to discuss this return with the IRS? See the instructions for details. | | | | Designee's name and phone number | | | | | | Select a 5-digit Personal Identification Number (PIN) to use when talking to IRS | | | | | | | | | | | | Part 7: | Sign here. You MUST fill out both pages of this form and SIGN it. | | | | Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete, and that no part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments made to employees. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. | | | | Vernon Scott | | Print your name here | Vernon Scott | | | Print your title here | Vice President | | | | Date | 1/31/19 | | Best daytime phone | 834-555-5551 | | | | Paid Preparer Use Only | Check if you are self-employed . . . . | | Preparer's name | | PTIN | | | Preparer's signature | | Date | | | Firm's name (or yours if self-employed) | | EIN | | | Address | | Phone | | | City | | | ZIP code | | | Page 2 | Form 940 (2016) Source: Internal Revenue Service | |
| Schedule A (Form 940) for 20--: | | Multi-State Employer and Credit Reduction Information Department of the Treasury Internal Revenue Service | OMB No. 1545-0028 | | Employer identification number (EIN) | | | Name (not your trade name) | MONROE TRUCKING COMPANY | | | | |
| Place an "X" in the box of EVERY state in which you had to pay state unemployment tax this year. For each state with a credit reduction rate greater than zero, enter the FUTA taxable wages, multiply by the reduction rate, and enter the credit reduction amount. Don't include in the FUTA Taxable Wages box wages that were excluded from state unemployment tax (see the instructions for Step 2). If any states don't apply to you, leave them blank. | | Postal Abbreviation | FUTA Taxable Wages | Reduction Rate | Credit Reduction | Postal Abbreviation | FUTA Taxable Wages | Reduction Rate | Credit Reduction | | AK | | 0.000 | | NC | | 0.000 | | | AL | | 0.000 | | ND | | 0.000 | | | AR | | 0.000 | | NE | | 0.000 | | | AZ | | 0.000 | | NH | | 0.000 | | | CA | | 0.018 | | NJ | | 0.000 | | | CO | | 0.000 | | NM | | 0.000 | | | CT | | 0.000 | | NV | | 0.000 | | | DC | | 0.000 | | NY | | 0.000 | | | DE | | 0.000 | | OH | | 0.000 | | | FL | | 0.000 | | OK | | 0.000 | | | GA | | 0.000 | | OR | | 0.000 | | | HI | | 0.000 | | PA | | 0.000 | | | IA | | 0.000 | | RI | | 0.000 | | | ID | | 0.000 | | SC | | 0.000 | | | IL | | 0.000 | | SD | | 0.000 | | | IN | | 0.000 | | TN | | 0.000 | | | KS | | 0.000 | | TX | | 0.000 | | | KY | | 0.000 | | UT | | 0.000 | | | LA | | 0.000 | | VA | | 0.000 | | | MA | | 0.000 | | VT | | 0.000 | | | MD | | 0.000 | | WA | | 0.000 | | | ME | | 0.000 | | WI | | 0.000 | | | MI | | 0.000 | | WV | | 0.000 | | | MN | | 0.000 | | WY | | 0.000 | | | MO | | 0.000 | | PR | | 0.000 | | | MS | | 0.000 | | VI | | 0.018 | | | MT | | 0.000 | | | | | | | Total Credit Reduction. Add all amounts shown in the Credit Reduction boxes. Enter the total here and on Form 940, line 11 . . | | | For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 940. | Cat. No. 16997C | Schedule A (Form 940) 2016 Source: Internal Revenue Service | |
