How to Pay Federal Unemployment Taxes
As an employer, you have to pay federal unemployment taxes each tax year that you pay employees under qualifying conditions. If you have any employees who have earned more than $1,500 in a quarter, you have to pay federal unemployment taxes. If you have at least one employee who worked at least 20 weeks in the tax year, you have to pay federal unemployment taxes. If you meet either of those conditions, you're required to pay federal unemployment taxes each year when you file your federal taxes.
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Things You'll Need
- IRS Forms 940 and 940-V
- Employee payroll files
- Calculator
- State unemployment tax info
- Federal tax ID number
Instructions
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Gather payroll files for your employees. Look through the payroll files to determine if you need to pay federal unemployment taxes. Employees don't have to meet both criteria mentioned above. For example, if you have an employee who worked one week in quarter two and you paid that employee $1,800, that means you have to pay federal unemployment taxes since the employee earned more than $1,500 in a quarter.
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Get the appropriate IRS form. You'll need Form 940 to file your federal unemployment taxes. You can get it from the IRS website. Be sure you also get the instruction booklet for Form 940.
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Prepare to fill out Form 940. In order to fill out Form 940, you need any applicable state unemployment tax information, your employee payroll files, your federal tax ID number and a calculator.
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Complete your form. Input your federal tax ID number, name and business name and address at the top. In part 1, input your state unemployment tax information if it applies to you. If not, you can leave it blank. In part 2, enter the total wages you paid to employees for the year, any exemptions -- such as benefits you paid for them -- and calculate to get your total taxable federal unemployment wages. In part 3, input any adjustment if it applies to you. In part 4, calculate your balance to see if you owe or not. Sign the form.
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Mail in your payment along with your forms. Form 940-V is part of Form 940 and is your payment vouchers. Mail this in to the IRS with your payment as calculated on Form 940. Enter in the amount of your payment and your personal details. Then mail Form 940-V with your payment and Form 940 to the address on your instruction booklet.
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