940 Schedule A is increasingly used by employers. The form is designed for multi-state filers, allowing employers to list each state where they have employees. The document also allows businesses to make a distinction between FUTA taxable wages for the state, as well as a reduction rate and the credit reduction for the state. Similarly, form 940 Schedule A is used by those who paid wages in a state that is subject to credit reduction.
940 Schedule A, also known as the Multi-State Employer and Credit Reduction, is a good form to know. As businesses increasingly relying on remote workers, more employers will need to complete this form. And, while this schedule may be easy to fill out, securing the data necessary to finish it can be difficult. That’s where tools from Advanced Micro Solutions can help.
Preparing to File 940 Schedule A
Prior to filing Form 940 Schedule A, employers must obtain unemployment accounts in each state for which they are filing. If you do not have an unemployment account for a specific state, contact that state’s unemployment agency to receive one.
The process of completing 940 Schedule A is simple. Employers must only indicate the states in which they have employees and report the FUTA taxable wages, reduction rate, and credit reduction. Most of this information is calculated throughout the year and should be easily accessible for most businesses. For more information, see the IRS form instructions. The IRS provides helpful examples for calculating FUTA tax in a variety of unique scenarios.
That said, there are a few hurdles employers will need to overcome in order to efficiently and accurately prepare this form. First and foremost, employers will need to have a complete record of all payments made to all work from the calendar year. This sounds like an easy data point to track, but businesses are increasingly relying on contracted workers to complete projects. Thus, it may be difficult to track which worker is an employee and which is an independent contractor. Furthermore, the IRS strongly advises filing this schedule electronically, and many businesses may struggle to do this.
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Filling Out 940 Schedule A with AMS
AMS has several software options to support 940 Schedule A filing. Importantly, this form relies on payroll information. Even though FUTA tax is not withheld from employee paychecks, employers must still know the gross payments made to workers throughout the year. The best way to secure this information is to invest in a comprehensive, semi-automated payroll system.
AMS Payroll ($129) is one of our most popular software products. The tool processes both “live” and “after-the-fact” payroll and automatically calculates federal, state, and local payroll taxes. This information is then stored within the system, allowing employers to access wage information for quarterly and end-of-year tax preparation. The system also saves personal information for employees, allowing you to keep track of which states in which you have employed workers.
AMS Payroll also allows employers to file 940, 941, and 944 forms electronically, expediting the tax reporting process. However, if you’re looking for something a bit simpler, our Forms Filer Plus ($49) tool is an excellent option. This filer allows employers to enter information on form facsimiles, making the electronic filing process just a bit easier. Whether you’re looking for 940 Schedule A support or help with other federal forms, AMS has the answer.