940 questions

[MGC94]

Can someone help me understand the 940 and what I can deduct from it or should I look at the 941? 

I believe it is SS 6.2% + Medicare 1.45%  =7.65%

On the 940 line 3 total payments to all employees $1,408,517.37 

940 line 5 $1,226,517.37

940 line 6 $1,226,517.37

940 line 7 FUTA $182,000

940 line 8 $1,092

Does line 3 go on line 26? 

Do I find the SS and Medicare tax on the 940 or the 941? 

Thank you for your help. 

[sjrcpa]

940 is Federal Unemployment Tax (FUTA), filed annually. All paid by the employer. Deductible by the employer.

941 is quarterly federal payroll tax return. It reports employer and employee shares of Social Security and Medicare taxes and federal withholding tax. The Employer share of Social Security and Medicare tax is deductible by the employer.

Medicare tax paid by the employer is 1.45% of Medicare wages. Social Security tax is 6.2% of Social Security wages. Note that Social Security wages and Medicare wages may not be the same as total wages.

[IRonMaN]

This is at least the second time recently that you asked about form 941.  Sometimes things can stick in a person's brain a little better if they actually look at the form and instructions to see where the numbers are coming from.

[MGC94]

So can I also write off the FUTA?

line 7 940 total taxable futa wages = $182,000

line 8 940 FUTA tax before adjustments = $1,092

which is the deduction?  

[meoleson]

Easy solution is to ask the client what they paid!!

[dkh]

which is the deduction?      does $182,000. sound reasonable to you as the tax?

Sometimes we just have to admit when a tax situation is beyond our ability.   What is in the best interest of your client?  You continuing with something you do not understand ?  Probably Not. 

Also, how many other returns could you have prepared in the amount of time you have struggled with this one?    

[meoleson]

Easy smell test.  If each employee made $7,000 they would need 4,333 employes to hit that amount.

[MGC94]

with a payroll of $1,408,517.37 maybe $182,000 would be right. Since the $1,902 seems very low. That is why I am asking for help. 

I am doing other returns while I was waiting for help from the community. Maybe someone simply could have said FUTA tax before adjustments is the write off for $1,092 instead of trying to humiliate me or complaining if I ask a question more than once because I did not understand the responses of people in the first group. 

My grandmother did his taxes for 26 years. She passed away in October from cancer in 1 month (scan, biopsy, diagnoses, chemo, hospice). I asked the taxpayer if he wanted to go somewhere else this year and he said no. Whatever he pays me I am donating to a Christian school in memory of my mommom because she wanted to have a fundraiser for the school this year for their sports team. I do not deserve how much he pays my mommom to do his taxes. She earned it as she worked with him when he had nothing. And yes he pays her very extravagantly. I am sure there are many people who would love to have a client like him. 

I should in no way be doing a return for someone who made millions of dollars on 1099s, but with the help of God and my grandmother I am hoping that I can pull it off. I am in my early 20s and new to this. I am not a CPA. I do not do payroll, but we do have over 1,000 accounts in our little home office and I also got hired by Intuit to work remotely and I am hoping that will help me with tax laws and skills. I graduated with a 4.0 and was the speaker of my class at college. I am not dumb, I am just asking for help and guidance for the 940s and 941s. I will just call ADP, I will google it, I will get a book from the library and read.  

Sometimes I ask questions I already know the answer to just to double check because my mommom is not here to ask the question to or lean on and I want to double check if I am right or if there is a new law or something that I missed. 

On the taxpayers bookwork they have:

payroll tax liabilities $114,531

payroll $1,405,498 

I also want to double check that their math is correct and that I understand what exactly I am putting down. I want to make sure I am learning and not just being a bean counter putting down fictitious numbers. 

[IRonMaN]

Please quit trying to send folks on a guilt trip just because we don’t automatically spoon feed you.  Just please take some time to learn rather that just expect that spoon feeding.  Look back in the return that your grandmother prepared.  Do the numbers look reasonable?  Have you read the instructions to a 940 so that you can lean the difference between total wages, taxable wages, and tax paid?  Folks have been more than helpful to you here even if you have a tendency to often challenge the advice you are given.  We are willing to help you but you have to be willing to help yourself.

[qbteachmt]

You cannot due blanket math for purposes of the 940, and you should ignore the 941, the Social Security and Medicare, entirely for purposes of the 940. I taught payroll for years. Let's review 940:

The Feds offer Unemployment but they let the State run it. That means FUTA and SUI are intertwined.

The Feds only assess this tax up to the first $7,000 per employee gross wage. Think of that as an Admin function. The States take over from there. The reason you cannot do blanket math is that people come and go through the year, and each time a person is a new hire, they start over on the $7,000 limit.

Any time a person reaches the limit, their wages are still reported, but there is no further assessment.

It is not even assessed unless the person meets specific requirements:

https://www.irs.gov/taxtopics/tc759

The rate is not the same for all employers or all employees, as it hits the ground. It starts at 6.0%. If, for a specific employee, there is no State assessment or offset, it stays at 6.0%. For those employees who also are subject to SUI, the FUTA rate is typically credited back 5.4%, taking the FUTA rate to .6%. That means the typical annual max is $42 per employee, assuming their wages hit $7k and the employer is not in a credit reduction State, etc.

Someone would have been making payments and reporting to the Feds. You would use these amounts for determining the Employer Expense of this payroll provision.

I hope that helps.

You need to find a Payroll Professional to mentor you.