IRS Publication 15
Authoritative Statutory Source
Form 940 (Employer Annual FUTA Return)
Annual federal tax return reporting employer FUTA unemployment liabilities and credit reductions.
Detailed Definition & Statutory Context
Form 940 (Employer Annual FUTA Return) is governed by IRS Publication 15 standards across corporate payroll administration, statutory tax withholding, and general ledger labor accounting. Rigorous compliance with Form 940 (Employer Annual FUTA Return) prevents IRS Form 941 deposit penalties and FLSA wage-and-hour litigation.
Statutory Formula & Equation
Form 940 Tax Due = Total FUTA Tax Liability - Quarterly FUTA Deposits Made
General Ledger / Payroll Journal Entry Standard
Debit: Gross Payroll Expense / Employer Tax Expense
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Common Operational Pitfalls
- Excluding non-discretionary bonuses from FLSA overtime regular-rate calculations.
- Failing to cap Social Security tax withholding once employee earnings exceed the $168,600 wage base.
- Misclassifying non-exempt hourly employees as exempt salaried workers.