With the help of tax filing software, you can be aware of the deadlines for each form and submit them in a timely manner. Submitting the forms past the due date or failing to file them can result in penalties and interest charges. The assistance of your payroll provider can help ensure payroll accuracy, so when it comes to year-end, you are prepared with the correct information. It is important to make sure calculations, including wages, taxes withheld, and any credits or deductions claimed are accurate year around. Calculation ErrorsĮrrors in calculations can occur when determining the amounts of taxes owed or paid. In fact, the IRS noted that incorrect company addresses have been one of the main causes of form rejections. Be sure to double-check your employer identification number (EIN), business name, address, and more. When filling out forms, it is critical to review your information to ensure each required field is completed and the information is accurate. Here are some of them: Incorrect or Incomplete Information When dealing with Form 940 and Form 941 there are several common mistakes that taxpayers make. Additionally, the 941 forms are used to fulfill the employer's obligation of paying their share of the Social Security or Medicare tax. On the other hand, Form 941 needs to be submitted quarterly to report the income taxes, Social Security tax, and Medicare tax that have been withheld from employees' paychecks. It's important to note that only employers are responsible for paying the FUTA tax, and it should not be collected or deducted from their employees' wages. Alongside state unemployment tax systems, the FUTA tax supplies the necessary funds for providing unemployment compensation to individuals who are unemployed, most employers are required to pay these taxes. What is the Difference Between Form 940 and 941?Įmployers use Form 940 to declare the yearly Federal Unemployment Tax Act (FUTA) tax. It is critical to understand common mistakes and learn how to sidestep them, you can ensure a seamless tax filing process while staying compliant with the IRS regulations. These forms are essential for reporting federal unemployment taxes and quarterly employment tax liabilities, so they require meticulous attention to detail to avoid costly mistakes. When it comes to fulfilling your tax obligations as an employer, navigating through the complex landscape of filing IRS Form 940 (Employer's Annual Federal Unemployment (FUTA) Tax Return) and 941 (Employer's Quarterly Federal Tax Return) can be a daunting task.
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