What is the difference between form 940 and form 941?

When you say Form 940, this refers to the form that will be used so that the FUTA tax, also known as the Federal Unemployment Tax, will be properly calculated. FUTA is used to provide compensation for employees who do not have jobs anymore. It is the duty of employers to file this type of form.

Form 941 is another type of form, but this time, it is used to report the amount withheld from the different employees. All employers who would pay wages to their employees are required to get this form. There are some employers who will not be required to file this form—for instance, those who are paying for household employees.

Form 941 employment tax is an employer’s federal tax return that indicates what should be paid quarterly. The form is used to report income tax, social security, or Medicare tax withheld from an employee paycheck. It will help compute what the employer portion of Medicare tax or social security tax is.

The employer is required to contribute to these taxes along with the employee. Where form 941 is quarterly, form 940 is the yearly form for the employer to report the state and the FUTA tax, which affords funds for paying unemployment compensation to people who have lost their job. This tax paid by the employer applies to each employee but only to the first $7,000.00 of their pay.