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Intuit
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How QuickBooks Populates The 940

This article will provide troubleshooting and QuickBooks information about lines on the Form 940.

For a detailed explanation of each line, refer to Instructions for Form 940.

  • QuickBooks Desktop customers - if you use the worksheet while creating forms, also click the "View details about this form" link at the bottom of the worksheet for additional information.

Employers must use Form 940 to report annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax. Do not deduct or collect FUTA tax from your employees' wages.

Although Form 940 covers a calendar year, you may have to deposit your FUTA tax before you file your return. If your FUTA tax is more than $500 for the calendar year, you must deposit at least one quarterly payment.

You must determine when to deposit your tax based on the amount of your quarterly liability. If your FUTA tax is $500 or less in a quarter, carry it over to the next quarter. Continue carrying your tax liability over until your cumulative tax is more than $500. At that point, you must deposit your tax for the quarter. Deposit your FUTA tax by the last day of the month after the end of the quarter. If your tax for the next quarter is $500 or less, you are not required to deposit your tax again until the cumulative amount is more than $500.

If your undeposited FUTA tax is more than $500 on Deposit your tax by
March 31 April 30
June 30 July 31
September 30 October 31
December 31 January 31

 

 

Lines on page 1

Employer Identification Number (EIN)

How QuickBooks populates this lineQuickBooks pulls this information from the EIN (Federal Employer Identification Number) field.

To verify your QuickBooks

  • Online:
    • QuickBooks Online Payroll Enhanced:  Select the Gear icon > Payroll Settings > Federal Taxes. Under Federal Tax Setup, update your EIN.
    • QuickBooks Full Service Payroll: Select the Gear icon > Account and Settings > Company.
  • Desktop: To change your EIN, click on Company and then on My Company.  Click the edit icon and click the Company Information tab.  Enter the correct EIN in the Federal Employer Identification Number field, and click OK.   You will have to create a new form once you've changed your company EIN.

Name, Trade Name, Address

How QuickBooks populates this line

  • Online:
    • QuickBooks Online Payroll Enhanced pulls this information from the data provided in the Company General Tax Information window.
    • QuickBooks Full Service Payroll pulls this information from what was provided at the time of sign up.
  • Desktop: QuickBooks Desktop pulls this information from data provided in the Company Information window.

To verify your QuickBooksTo change the information in this section, choose My Company from the Company menu. Make any necessary changes, and click OK.

  • Online:  Select the Gear icon > Payroll Settings General Tax information.  Under Company General Tax Information update your Filing Name and Filing Address.
  • ​Desktop: From the Company menu, choose My Company.  Click the edit icon and click the Contact Information and Legal Information tabs to make any necessary correction to the address, and click OK. You will have to create a new form once you've change your company address.

Type of Return

How QuickBooks  populates this line QuickBooks does not supply this information.

Line 1a - Required to pay state unemployment tax in one state only

How QuickBooks  populates this line QuickBooks supplies the state abbreviation if you paid state unemployment in only one state.

Line 1b - Required to pay state unemployment tax in more than one state

How QuickBooks  populates this line QuickBooks checks this box if you have accrued state unemployment taxes in more than one state.

Line 2 - Paid wages in a state subject to credit reduction

How QuickBooks  populates this line QuickBooks checks this box if you paid state unemployment in a credit reduction state.

Line 3 - Total payments to all employees

How QuickBooks populates this lineFrom your employee's paychecks, QuickBooks totals all the payroll item types of Compensation, Reported Tips, Dependent Care FSA, Section 457 Distribution, Non-qual. Plan Distr, Fringe Benefits, Other Moving Expenses, 401(k), 403(b), 408(k)(6) SEP, Elective 457(b), Simple IRA, Taxable Grp Trm Life, Med Care Flex Spend, Premium Only/125, SCorp Pd Med Premium.

To verify your QuickBooks

Online:

  1. Select Reports > and search for the Payroll Details Report.
  2. Filter by the Quarter and include All Employees, then click Run Report.
  3. Scroll to the bottom.  Review the total wages for the quarter affected.

Desktop:

  1. Run a Payroll Item Listing Report.
  2. Filter the report and, in the Columns, clear everything but the Payroll Item and tax-tracking type.
  3. Print the report.
  4. Place a check mark next to any item that has a tax-tracking type of Compensation, Reported Tips, Dependent Care FSA, Section 457 Distribution, Non-qual. Plan Distr, Fringe Benefits, Other Moving Expenses, 401(k), 403(b), 408(k)(6)SEP, Elective 457(b), Simple IRA, Taxable Grp Trm Life, Med Care Flex Spend, Premium Only/125, SCorp Pd Med Premium.
  5. Run a Payroll Summary report for the calendar year.
  6. Click Customize Report.
  7. Click the Filters tab.
  8. Under Current filter choices, click Payroll Item.
  9. In the drop-down box in the middle, pick Multiple Payroll Items. Check off all the payroll items you marked earlier.
  10. Add together the Adjusted Gross Pay, Total Employer Taxes, and Contributions.

If any of them are incorrect, the tax-tracking type needs to be modified.

To change a tax-tracking type:

  1. Go to the Payroll Item List.
  2. Double-click the payroll item in question.
  3. Click Next, until you get to Tax Tracking Type.
  4. Correct the tracking type and click Next until you reach Finish. This will correct the form, but if the taxability changed, a Payroll Checkup should be run to correct the taxable wage bases.

Line 4 - Payments exempt from FUTA tax

How QuickBooks populates this lineIn QuickBooks exempt payments are included in the total payments to all employees. They are computed from the total exempt payments on the interview worksheet.  Exempt payments include QuickBooks payroll items with the following tax tracking types: Fringe benefits, Group Term Life Insurance, Retirement/Pension, Dependent Care, other exempt payments, and any payroll item set to calculate before FUTA withholding. If you selected the "Federal Unemployment" tax setting for a particular payroll item, the amount for that payroll item is calculated before FUTA withholding. QuickBooks includes the amount for that payroll item in the Exempt Payments total.

To verify your QuickBooksDesktop:

  1. Run a Payroll Item Listing report to see the tax tracking types assigned to the payroll items in QuickBooks.
    • To run a Payroll Item Listing report, go to the Reports menu, choose Employees & Payroll, and click Payroll Item Listing. The Payroll Item Listing report displays detailed information about all defined payroll items, including their tax tracking types. With this report, you can identify the items that impact the amount on Line 4.
      • These tax tracking types are Fringe benefits, Group Term Life Insurance, Retirement/Pension, Dependent Care
  2. Run a Payroll Summary report for the Form 940 filing period and note the amounts for the payroll items with the matching tax tracking types.
    • To run a Payroll Summary report, go to the Reports menu, choose Employees & Payroll, and click Payroll Summary. If necessary, change the date range in the report window to Last Calendar Year. NOTE: You can also filter the Payroll Summary report to show only the desired payroll items and their amounts.

Online:

  1. Select Reports and search for the Payroll Details Report.
  2. Filter by the Year and include All Employees, then click Run Report.
  3. Scroll to the bottom. Review the total wages and deductions for the period affected, subtracting pre-tax items that are  such as 401(k), pre-tax medical, fringe benefits, etc.

 

Line 5 - Total of payments made to each employee in excess of $7,000

How QuickBooks populates this lineLine 5 is the total payments from line 3, less the total amount over $7,000 (the FUTA wage base) paid to each employee during the year. If an employee received less than the FUTA wage base during the year, the entire amount is excluded from the amount on line 5. Exempt payments are not included in total payments.

To verify your QuickBooks

Online:Run a Tax and Wage Summary report.  In QuickBooks Online, Select Reports > and search for the Tax and Wage Summary Report.  Filter by quarter, then click Run Report.  Look for the totals under Federal Unemployment (940) .  Excess wages would listed under the column titled Excess Wages.

Desktop:To see the amounts over the FUTA wage base, run a Payroll Item Detail report:

  1. Go to the Reports menu
  2. Choose Employee & Payroll, and click Payroll Item Detail. Change the date to This Calendar Year.
  3. Scroll down to Federal Unemployment.
  4. The Wage Base column shows the amount subject to FUTA tax up to the $7,000 FUTA wage base.
  5. To determine the amount for line 5, subtract the wage base from the amount on line 3, total payments.

Line 6 - Subtotal

How QuickBooks populates this lineQuickBooks calculates the amount by adding the amount of FUTA-exempt wages and the amount of wages over the FUTA wage base.

To verify your QuickBooksIf the amount of wages exempt from FUTA is incorrect, see the verification instructions for line 4 and line 3.

Line 7 - Total taxable FUTA wages

How QuickBooks populates this lineQuickBooks calculates the line 7 amount by subtracting the subtotal on line 6 from your total employee payments.

How to verify your QuickBooksIf the amount from line 6 or line 3 is incorrect, this line will be incorrect. See the verification instructions for lines 3 and 4, which make up the numbers in this calculation.

Line 8 - FUTA tax before adjustments

How QuickBooks populates this lineQuickBooks populates this amount.

To verify your QuickBooksIf the amount from line 7 is incorrect, this line will be incorrect. See the verification instructions for lines 3 and 4, which make up the numbers in this calculation.

Line 9 - If all taxable FUTA wages were excluded

How QuickBooks populates this lineIf all wages you paid to employees were not subject to state unemployment tax (as defined in your setup interview), QuickBooks Desktop adds them together and multiplies that amount by .054.

If there is a value for line 9, QuickBooks will not figure a value for lines 10 and 11.

To verify your QuickBooks

OnlineRun a Tax and Wage Summary report.  In QuickBooks Online, Select Reports > and search for the Tax and Wage Summary Report.  Filter by quarter, then click Run Report.  Look for the totals under Federal Unemployment (940) .  Excess wages would listed under the column titled Excess Wages.

Desktop:If this figure is incorrect, you may have incorrectly set up the tax-tracking type of one or more of payroll items.

  1. Run a Payroll Item Listing Report.
  2. Filter the report and, in the Columns, clear everything but the Payroll Item and Tax Tracking type.
  3. Print the report.
  4. Put a check mark next to any item that has a tax tracking of Compensation, Filter Reported Tips, Dependent Care FSA, Section 457 Distribution, Non-qual. Plan Distr, Fringe Benefits, Other Moving Expenses, 401(k), 403(b), 408(k)(6)SEP, Elective 457(b), Simple IRA, Taxable Grp Trm Life, Med Care Flex Spend, Premium Only/125, SCorp Pd Med Premium.
  5. Run a Payroll Summary report for the calendar year.
  6. Click Customize Report.
  7. Click the Filters tab.
  8. Under Current filter choices, click Payroll Item.
  9. In the drop-down box in the middle, pick Multiple Payroll Items. Check off all the payroll items you marked earlier. If any of them are incorrect, the tax-tracking type needs to be modified.

To change a tax-tracking type:

  1. Go to the Payroll Item List.
  2. Double-click the payroll item in question.
  3. Click Next until you get to Tax-Tracking Type.
  4. Correct the tracking type and click Next until you reach Finish. This will correct the form, but if the taxability changed, you should run a Payroll Checkup to correct the taxable wage bases.

Line 10 - If some taxable FUTA wages were excluded or state unemployment tax paid late

How QuickBooks Desktop populates this lineIf you answer "YES" on part 3 of the QuickBooks Form 940 interview to the statement that some wages were exempt from state unemployment or that state unemployment was paid late, QuickBooks calculates the amount for line 7 of the 940 worksheet.

If there was a value calculated for line 9, QuickBooks does not enter an amount for line 10.

If there was no value for line 9, QuickBooks adds together all wages paid that have a FUTA-taxable tax-tracking type.

To verify your QuickBooksOnline:To verify result, check worksheet that is offered along with your 940.

DesktopIf any state unemployment taxes were paid late, fill out the worksheet in the Interview, and QuickBooks will enter the amount from line 7 of the worksheet onto line 10 of the Form 940.

Line 11 - If credit reduction applies

How QuickBooks populates this lineIn calculating the amount for line 2a (which is also entered on line 3) of Schedule A, QuickBooks does the following:

  • If you only paid wages in credit reduction states, QuickBooks enters the total taxable FUTA wages.
  • If you paid wages in one of the credit reduction states and in additional states, QuickBooks calculates this amount by allocating the credit reduction states' SUI wages applicable to FUTA.

To verify your QuickBooksThere are two scenarios in which QuickBooks might overstate this amount:

  1. If you have employees that are not subject to SUI in one of the credit reduction states but are subject to FUTA, you should not include these wages on line 2a of Schedule A.
  2. If you have employees that made less than $9,000 in a credit reduction state, the amount on line 2a may be overstated because QuickBooks  allocates wages based on total wages paid by the company, and you will need to recalculate it and adjust the amount on line 2a of Schedule A.

Online:To verify result, Run the Tax and Wage Summary for the year and verify wage amount.

DesktopTo verify your employee wages for a credit reduction state run a Payroll Item Detail report in QuickBooks Desktop:

  1. From the Report menu, choose Employee & Payroll, and click Payroll Item Detail.
  2. On the Display tab, verify that the Report Date Rate includes the date ranges for the current calendar year.
  3. Click the Filters tab. In the Choose Filter section, click Payroll Item in the Filter drop-down.
  4. In the Payroll Item drop-down, select Multiple payroll items, and then select Federal Unemployment and XX-Unemployment Company, where XX is the abbreviation for each credit reduction state.
  5. Click OK twice.

Line 12 - Total FUTA tax after adjustments

How QuickBooks populates this lineQuickBooks calculates this amount by adding together the amounts for lines 8, 9, 10, and 11.

To verify your QuickBooksIf the amount from line 8, 9 10, or 11 is incorrect, this box will be incorrect. See the verification instructions for boxes 8, 9, 10, and 11 which make up the numbers in this calculation.

Line 13 - FUTA tax deposited for the year

How QuickBooks populates this lineQuickBooks calculates the total of FUTA payments processed during the filing period prior to creating this form.

To verify your QuickBooksIf this number is incorrect, you can check your FUTA payments.

Online: In you QuickBooks Online program, from the left, select Taxes > Payroll Tax.  Choose the Tax Payments tab.  Look for the Federal Unemployment (940) amount.

Desktop

  1. Run a Payroll Liability Balances Report by going to the Reports drop-down menu, selecting Employees & Payroll and clicking Payroll Liability Balances.
  2. Change the date range to January 1 through December 31.
  3. Double-click the total for Federal Unemployment. Your report will now reflect Transactions by Payroll Liability.
  4. Click Customize Report.
  5. Click the Filters tab and choose Transaction Type from the scroll box.
  6. Click the Transaction Type drop-down menu and choose Payroll Liability Check.
  7. To see a list of transactions that make up an amount, double-click the amount.

Line 14 - Balance due

How QuickBooks populates this lineLine 14 is based on the Tax Liability Payments entered into QuickBooks for the tax period prior to creating this form.

To verify your QuickBooksIf the amount from line 12 or 13 is incorrect, this line will be incorrect. See the verification instructions for lines 12 and 13, which make up the numbers in this calculation.

Line 15 - Overpayment

How QuickBooks populates this lineIf line 13 is more than line 12, QuickBooks enters the result here.

To verify your QuickBooksIf the amount from line 12 or 13 is incorrect, this line will be incorrect. See the verification instructions for lines 12 and 13, which make up the numbers in this calculation.

Lines on page 2

Line 16 - FUTA tax liability for each quarter

How QuickBooks populates this lineIf your Federal Unemployment Liabilities were $500 or less, QuickBooks leaves this part blank. Otherwise, QuickBooks calculates the amounts based on the amount of Federal Unemployment on paychecks.

How to verify your QuickBooks

Online: Run a Tax and Wage Summary report.  In QuickBooks Online, Select Reports > and search for the Tax and Wage Summary Report.  Filter by quarter, then click Run Report.  Look for the totals under Federal Unemployment (940) .  Select FUTA Employer.  Change the Date Range to the quarter you want to verify.  Review the total Tax Amount.

DesktopTo find out what each quarter's Federal Unemployment was:

  1. Go to the Reports menu and select Employees & Payroll.
  2. Select Payroll Summary.
  3. Click Customize Report.
  4. Set the date range to the calendar year.
  5. Set the columns to Quarter.
  6. Click Filters, and under Current Filter Choices, select Payroll Item.
  7. Under the Payroll Item drop-down, select Federal Unemployment.
  8. Click OK.

Line 17 - Total tax liability for the year

How QuickBooks populates this lineQuickBooks enters the same figure in lines 12 and 17.

To verify your QuickBooksIf the amount from line 8, 9, 10, or 11 is incorrect, this box will be incorrect. See the verification instructions for boxes 8, 9, 10, and 11, which make up the numbers in this calculation.

Part 6 - Third-party designee

For a detailed explanation of this line, refer to the Instructions for Form 940.

Part 7 - Signature

For a detailed explanation of this line, refer to the Instructions for Form 940.

Paid Preparer Use Only

For a detailed explanation of this line, refer to the Instructions for Form 940.

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