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Intuit

How QuickBooks Populates The 940

Learn how to troubleshoot and QuickBooks information about lines on Form 940.

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

 

 

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.

Lines on page 1

How QuickBooks populates this line:

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

To check or update your QuickBooks information, see detailed steps for each product.

QuickBooks Online Payroll Enhanced:

    1. Select the Gear icon, then select Payroll Settings.
    2. Select Federal Taxes. Under Federal Tax Setup, update your EIN.

 

QuickBooks Full Service Payroll:

  1. Select the Gear icon.
  2. Select Account and Settings, then select Company.

QuickBooks Desktop:

  1. To change your EIN, go to Company and then select My Company.
  2. Select the edit icon and select the Company Information tab.
  3. Enter the correct EIN in the Federal Employer Identification Number field, select OK.
  4. You will have to create a new form once you've changed your company EIN.

How QuickBooks populates this line

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

To check or update your QuickBooks information, see detailed steps for each product.

Online:

  1. Select the Gear icon.
  2. Select Payroll Settings, then select General Tax information.
  3. Under Company General Tax Information update your Filing Name and Filing Address.

QuickBooks Desktop:

  1. Go to Company, then select My Company.
  2. Select Edit icon, then select Contact Information and Legal Information tabs to make any necessary correction.
  3. Select OK. You will have to create a new form once you've change your company address.

QuickBooks does not supply this information.

QuickBooks supplies the state abbreviation if you paid state unemployment in only one state.

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

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

How QuickBooks populates this line From 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 then select Payroll Details report.
  2. Filter by the Quarter and include All Employees, then select 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. Select Customize Report.
  7. Select the Filters tab.
  8. Under Current filter choices, select Payroll Item.
  9. In the drop-down box in the middle, select 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. Select 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, run a payroll checkup  to correct the taxable wage bases.

How QuickBooks populates this line In 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 QuickBooks result:

Desktop:

  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 select 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 select 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.

How QuickBooks populates this line Line 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 result

Online:

  1. Run a Tax and Wage Summary report.
  2. In QuickBooks Online, select Reports. Select Tax and Wage Summary Report.
  3. Filter by quarter, then select 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. Select Employee & Payroll, then select 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.

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

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

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

How to verify your QuickBooks If 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.

How QuickBooks populates this line QuickBooks automatically populates this amount.

To verify your QuickBooks If 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.

How QuickBooks populates this line If 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

Online:

  1. Run a Tax and Wage Summary report.
  2. In QuickBooks Online, select Reports, then select Tax and Wage Summary Report.
  3. Filter by quarter, then select Run Report.
  4. Look for the totals under Federal Unemployment (940) .  Excess wages are 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. Select Customize Report.
  7. Select the Filters tab.
  8. Under Current filter choices, select 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. Select Next until you get to Tax-Tracking Type.
  4. Correct the tracking type and select 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.

How QuickBooks Desktop populates this line If 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 QuickBooks result

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

Desktop: If 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.

How QuickBooks populates this line In 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 QuickBooks  result

There 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:

  1. Run the Tax and Wage Summary for the year and verify wage amount.

Desktop:

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

  1. Go to Reports menu, select Employee & Payroll, then select Payroll Item Detail.
  2. On the Display tab, verify that the report Date Rate includes the date ranges for the current calendar year.
  3. Select the Filters tab. In the Choose Filter section, then select 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. Select OK twice.

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

To verify your QuickBooks If 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.

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

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

Online:

  1. Log in to your QuickBooks Online program.
  2. From the left, select Taxes, then select Payroll Tax.
  3. Select the Tax Payments tab.
  4. Look for the Federal Unemployment (940) amount.

Desktop

  1. Run a Payroll Liability Balances report.
    1. Go to Reports menu, select Employees & Payroll, then select 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. Select Customize Report.
  5. Select the Filters tab and choose Transaction Type from the scroll box.
  6. Select 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.

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

To verify your QuickBooks If 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.

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

To verify your QuickBooks If 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

How QuickBooks populates this line If 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 result

Online:

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

Desktop: To find out what each quarter's Federal Unemployment was:

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

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

To verify your QuickBooks If 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.

For a detailed explanation of these lines, refer to the Instructions for Form 940.

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