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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I need help figuring out what I will owe for FUTA, I am confused

Resolved Question:

I need help figuring out what I will owe for FUTA, I am confused by the 940 Worksheet.
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

Ok. what confuses yo?

Stephen G :

you

Stephen G :

Are you incorporated? How many employees do you have?

Customer:

My wages are exempt from state unemployment tax, all other employees of the company had unemployment withheld and it was paid to the state by the due date. So how do I complete the worksheet correctly. I tried doing the numbers and came up with over $21000 owed for FUTA!!! since this was half my total earnings I know I screwed up somewhere on the worksheet. Total wages including my own were 132254.66 for 2012, my wages totaled $51000. SUI for AK is 1.76%

Customer:

No I am a single member LLC, I had at any given time no more than 5 employees excluding myself.

Stephen G :

ok, let me read what you just wrote

Stephen G :

So are you filing as a sole proprietor for income tax purposes?

Stephen G :

When you say you withheld SUTA, what do you mean? In Alaska the employees have to contribute? that is normally just an employer tax;

Stephen G :

Are you preparing Form 940?

Stephen G :

Did you make any SUTA payments late?

Customer:

SUI in AK is also an employer tax, there is a cap on it though. Yes I file taxes both personal and business combined but am considered single member LLC by IRS although I am 100% owner therefore liable for the trust account. I have a payroll program but it is not giving me correct #'s so I am double checking by doing a form 940 myself to make sure that I will be paying a correct FUTA, I got hit in the shorts last year by a miscalculation. No I made all SUI payments before they were due.

Stephen G :

My guess is that you have a math error.

Stephen G :

Have you filled out the Form 940? I'll pull one up & we can go through it.

Stephen G :

There's no SUTA withholding, correct?

Customer:

there is no SUI on my wages of $51000

Stephen G :

I know that; see my questions? can you answer them?

Customer:

Yes I am filing as sole proprietor

Customer:

I paid all SUTA on time to Alaska as an employer

Customer:

yes I am preparing form 940 to insure I have the correct amount to pay to FUTA for 2012

Customer:

NO none of my SUTA were paid late.

Stephen G :

do you file your own payroll returns?

Customer:

Yes through Intuit Payroll online. I E-File form 941 semi weekly

Stephen G :

let's go through the form

Stephen G :

what do you have on lines 3,4, &5?

Customer:

Line 1 = 132254.66 total wages paid to employees including myself

Customer:

Sorry line 3 not 1

Stephen G :

ok

Stephen G :

line 4 is your gross

Customer:

line 4 I have nothing as I do not have benefits of any kind

Customer:

Line 5 = 88548.48

Customer:

What do you mean lne 4 is my gross? Line 4 should be the same as Line 3?

Stephen G :

you wages are exempt so I'd put them on line 4 & check "other"

Stephen G :

your personal gross

Customer:

OK that is where I screwed up, but aren't my wages still taxable by FUTA?

Stephen G :

no

Stephen G :

as you know you can't collect unemployment

Stephen G :

unemployment is federal, paid by the states

Customer:

Ok so my wages are exempt from BOTH federal and state, that's where my confusion was. I had made the assumption that I still had to pay into federal even though I was exempt from state.

Stephen G :

if you paid all your state unemployment, your federal FUTA shouldn't be more than 56. for each employee that made at least $7,000.

Customer:

Then I'm confused again as to why I had to pay over 1200 in FUTA last year when I didn't have that many employees

Customer:

My biggest concern is that I pay enough, I would rather overpay and have them apply it to my taxes then under pay and have the penalty

Stephen G :

You may be due a refund, but let's get one problem solved at a time.

Stephen G :

You probably didn't figure in the credit for SUTA on your 940.

Customer:

do I include my wages when calculating line 5?

Stephen G :

refigure line 5

Stephen G :

no, you've already subtracted 100% of your wages; you are out of the picture with that adjustment

Customer:

OK, big difference in numbers... so I don't have to do the worksheet that started this whole ball of confusion in the first place

Stephen G :

you take the company's gross, subtract the 51,000 for you & then the employees wages over 7,000 for each employee

Stephen G :

because the feds are taxing only 7,000 for FUTA

Stephen G :

somewhere it says only do the worksheet if you paid SUTA late I think.............

Stephen G :

the way you'll check the number which is going to go on line 7 eventually is:

Customer:

It also says if any of the "FUTA taxable" wages were excluded from state UI, this is where my confusion began. As I saw it my wages were excluded from SUI payments.

Stephen G :

for each employee that made over $7,000. you'll figure 7,000. each , then you'll add 100% of the other employees wages (the ones who made under 7,000); that result should agree to the one you compute on the form for that line - ie line 7

Stephen G :

It says if TAXABLE FUTA wages were excluded

Customer:

OK I was close, I was off by 80 cents, which is a lot better than the 21195.15 I started out with

Stephen G :

the answer there is zero, so you leave those line blank

Stephen G :

usually, you round everything to the nearest dollar

Customer:

That's where my confusion began, I assumed my wages were "taxable FUTA wages"... misunderstanding on my part.

Stephen G :

how much do you owe?

Customer:

220.24

Stephen G :

now, you need to check the number the way I said

Stephen G :

so you didn't make any FUTA deposits during the year?

Customer:

no

Stephen G :

ok, so you can use the voucher & pay with the return as it is under $500.

Customer:

Printing it now

Stephen G :

You better recheck last year now that you know how to do it; you are going to have to file an amended for 940 along with a refund claim I believe that form is 843; they should pay you interest;

Customer:

IRS is the one telling me I screwed up and didn't pay enough, so I will be checking the numbers to find out where they came up with THEIR number. I really would rather not piss off the IRS, I already have enough issues

Stephen G :

You won't be, payroll is a completely different section; you need to get your money back before they start collection efforts;

Customer:

Thank you for your help, this took alot of confusion out of the mix and I at least know now how to double check my payroll software is feeding me the right information.

Stephen G :

Good, glad to help.If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you

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