Employer’s Annual Federal Unemployment Tax Return , Form 940 (p. 375)
Preprinted government form used by the employer to report unemployment taxes for the calendar year.
Employer’s Quarterly Federal Tax Return, Form 941 (p. 364)
Preprinted government form used by the employer to report payroll tax information relating to social security, Medicare, and employee income tax withholding to the Internal Revenue Service. The due date for Form 941 is the last day of the month following the end of each calendar quarter. If the taxes for the quarter wer deposited when due, the due date is extended by 10 days.
Experience rating system (p. 373)
A system that rewards an employer for maintaining steady employment conditions by reducing the firm’s state employment tax rate (also called “merit rating system”). This reduction does not affect the credit allowable against the federal tax - it is as though the federal unemployment tax were paid at the normal rate even though the employer pays less. In contrast, some states levy penalty rates as high as 10% for employers with poor records of providing steady employment.
Transmittal of Wage and Tax Statements, Form W-3 (p. 371)
Preprinted government form submitted with Forms W-2 to the Social Security Administration. Form W-3 reports the total social security and Medicare wages; total social security, Medicare tax, and federal income tax withheld; total wages, tips, and other compensation. Etc. Form W-3 is due by the last day of February following the end of the calendar year.
Unemployment insurance program (p. 373)
A program that provides unemployment compensation through a tax levied on employers.
Wage and Tax Statement, Form W-2 (p. 369)
Preprinted government form that contains information about an employee’s earnings and tax withholdings for the year (also called “withholding statement”). Employers provide Form W-2 to each employee by January 31 for the previous calendar year’s earnings.
Lookback Period (p. 361)
The lookback period is a four-quarter period ending on June 30 of the preceding year.
The Electronic Federal Tax Payment System (EFTPS) (p. 360)
This is a system for electronically depositing employment taxes using a telephone or computer. Electronic filing of taxes due is now required in most instances. An employer must use EFTPS if the nanual federal tax deposits are more the $200,000.
Tax liability threshhold (p. 360)
A tax liability threshold is the minimum amount of tax you owe before certain tax rules apply.
Payroll Tax deposit schedule (p. 361)
The deposit schedules are based on the amount currently owed and the amount reported in the lookback period. If the amount owed is less than the tax liability threshhold, payment is due quarterly with the payroll tax return (Form 941). If the amount owed meets the threshhold or exceeds it, the schedule is determined from the total taxes reported on Form 941 during the lookback period. If the amount in lookback period is $50,000 or less, the employer is subject to the Monthly Deposit Schedule Rule (due on the 15th day of the following month). If it is more than 50,000, the employer is subject to the Semiweekly Deposit Schedule Rule (Due on either Wed. or Fri., depending on payday). If the total accumulated tax liability reaches $100,000 or more on any day, a deposit is due on the next banking day.
Due date for the state unemployment tax return (p. 374)
The last day of the month following the end of the quarter. Generally, the tax is paid, electronically, with the return.
Due date for federal unemployment taxes (p. 375)
Deposits are made quarterly and are due on the last day of the month following the end of the quarter.
What is the purpose of Form 941?
Accounts for all employee gross wages and federal tax–required withholdings during a quarter.
Employers usually record social security taxes in the accounting records at the end of:
Each payroll period.
