Wednesday, September 28, 2011

Form 940

Form 940 is a form that must be filed by every small business owner who has employees. For those who are required to file this form, failure to do so will result in an IRS reminder to submit the form, and subsequently, penalties that they really want to avoid. In order to file Form 940 successfully, you need to have at least some basic understanding of the filing requirements that are related to the form.
The IRS requires every employer to pay federal unemployment tax. This tax cannot be paid by employees, and it cannot be withheld from employee wages. It is used for paying unemployment compensation to people who lost their jobs. When you file Form 940, you are actually reporting your federal unemployment tax liability to the IRS. The filing of this form is made compulsory by the Federal Unemployment Tax Act, or FUTA. The amount of tax that must be paid to each employee every year is 0.8% of the first $7,000 paid in wages. If an employee is getting a compensation of $7,000 or more a year, the employer is required to pay a federal unemployment tax of $56.00. If the employee makes less than $7,000, the federal unemployment tax will be 0.8% of the total compensation he or she receives.

If you own a small business and you have employees, you have to file Form 940 at the end of the year. The deadline for filing is the 31st of January the following year. The form will include information such as the total amount of wages paid, wages that are subject to federal unemployment tax, the federal unemployment tax liability for each quarter, all federal unemployment tax paid in previous quarters, and the remaining balance due.

In the event that your quarterly federal unemployment tax liability is more than $500.00, the IRS will require you to make quarterly payment. If your liability in one quarter does not exceed $500.00, you do not have to pay tax for that quarter, and the liability will be carried over to the following quarter. For instance, if the total federal unemployment tax liability that is incurred in the first quarter is $400.00, you are not required to make any payment. Then, in the second quarter, you have a liability of $300.00. Since the total amount of tax owed for the two quarters is $700.00, which is more than $500.00, you have to pay the full $700.00. If you only have a liability of $400.00 in the third quarter, the amount will be carried forward to the next quarter. In the final quarter, you have to pay the liability incurred in that quarter as well as other remaining liability, even if the total amount is less than $500.00.


If you are required to make a quarterly payment to the IRS, you can either submit Form 8109 at a local financial institution or pay via the Electronic Federal Tax Payment System, or EFTPS. The deadline for a quarterly payment is the end of the first month of the next quarter.

Federal Tax Forms

Before you start to prepare your taxes, you have to know which federal tax form to fill. The IRS has about 30 different tax forms for different types of taxpayers, and you have to use the one that is most appropriate for your tax situation. Tax forms may be updated from time to time, and it is essential that you obtain the latest forms when you are filing your tax returns. Here are some of the most commonly used federal tax forms:

1040 Series

Forms in the 1040 Series are used for filing personal federal income tax returns, and they consist of Form 1040 as well as other variants, including Form 1040A, Form 1040EZ, Form 1040NR, Form 1040NR-EZ, and Form 1040X. Form 1040 is also called the “long form”, and it can be used by any full-time income individual taxpayer in the United States. If you have an uncomplicated tax situation, without itemized deductions or capital gain or loss, you can make your tax preparation process easier by using tax Form 1040A or Federal Tax Form 1040EZ, which are also known as the “short form” and the “easy form” respectively. Form 1040NR and its simpler version, Form 1040NR-EZ, are meant for nonresident aliens who are earning income in the US. If you have made errors in any Form 1040, Form 1040A, or Form 1040EZ that you had submitted, you can rectify the errors by completing Form 1040X.

If you are in a business partnership, you should use Form 1065 to file your tax returns.

Form 1098 is also known as the “mortgage interest statement”, and it is used for reporting interest that you have paid on your mortgage. You are entitled to claim deduction for this kind of interest at the federal level, provided that you are not subject to alternative minimum tax.

1099 Series

The 1099 series of tax forms include Federal Tax Form 1099, as well as more than 20 variants. If you have earned other types of income besides salaries, wages, and tips, you have to report such earnings using one of the forms in the 1099 series. The variants of Form 1099 are used for reporting specific types of income, which can range from dividends to income from real estate transactions.

W Series

There are four different types of forms in the W Series, and they include Form W-2, Form W-4, Form W-8BEN, and Form W-9. Form W-2 is also referred to as the “wage and tax statement”, and its purpose is to facilitate the reporting of wages paid to employees as well as the taxes that are withheld from them. On the other hand, Form W-4 is a form that employers use to determine the right amount of withholding to deduct from their employees’ wages. If you are a foreigner, you have to use Form W-8BEN to certify that you are a non-resident alien, so that you can avoid or reduce withholding from income earned in the US. Form W-9 is used by a third-party to report payments made to others and help those who receive the payments to avoid backup withholding.

Tuesday, September 27, 2011

1040ez Tax Form

The 1040ez is a tax form that is used by individuals to file federal income tax returns. It is often called the “easy form”, because it is the simplest among all the three tax forms that can be used for the same purpose. It is specially created for the simplest individual tax situations, and it is usually the form that Americans fill out when they pay tax for the first time. You can use the 1040ez form if you are single or you are filing jointly with your spouse, and you do not have any dependent. You also need to be less than 65 years old, and your taxable income must be below $100,000.

The 1040ez is a one-page form, and it consists of four short sections. The first section of the form requires you to enter your name, social security number, and address. Since you are not allowed to claim any dependent, you can proceed to the next section of the form after you have entered the basic information. In the next section, you have to provide information about your sources of income. The only kinds of income that can be listed in the 1040ez form are salaries, wages, tips, unemployment compensation, taxable interest amounting to $1, 500 or less, and Alaska permanent fund dividends. If you are receiving income from other sources, such as dividends or alimony, you are required to file your taxes using the 1040 tax form or 1040A tax form. After listing all the different types of income that you are earning, you have to add them up to come up with your taxable income.

The third section of the 1040ez form will ask for information about payments, credits, and tax. You are required to enter tax payments that have already been made through your employer’s withholding. If your employer has withheld federal tax from your paycheck, you can find the total amount withheld in your W-2 form. Next, you can list any making work pay credit and earned income credit that you are eligible for. There is a worksheet on the back of the form that you can use to figure out your making work pay credit. After listing all your tax payments and credits, you have to add them all up. Then, you have to calculate the total amount of tax owed on your taxable income. To do this, you can use the tax tables that are provided in the instructions to determine the amount of tax you need to pay based on your taxable income and filing status.

In the fourth section of the 1040ez tax form, you have to calculate the amount due or refund. If your tax payments and credits add up to an amount that is greater than the tax that you have calculated, it means that you have overpaid. In this case, you are allowed to request for a refund. You can have the refund deposited directly to your bank account by entering your bank information. If you have underpaid, you have to include payment for the remaining amount in your tax return.

Thursday, September 22, 2011

Tax Refund Estimator

If you are expecting a tax refund, you will probably want to find out how much refund you can get as soon as possible. Instead of having to wait until the end of the entire tax preparation process to know the amount of tax refund that you will be receiving, you can get a quick estimate by using a 2011 tax refund estimator. A tax refund estimator is an online tool that can perform an accurate calculation of your tax refund, and it can help you save a lot of time and effort when you are preparing your taxes.

Most of the 2011 tax refund estimators that are available on the Internet are free. They are developed by the most trusted developers of tax preparation software, such as TurboTax, TaxBrain, H&R Block, eFile, and others, and they can provide very fast and reliable results. They are capable of giving you an accurate estimation of your tax refund in just a few minutes. 2011 tax refund estimators use the simplest language to ask questions, so that you will know exactly what kind of information to provide. Also, they are constantly updated to provide the most accurate calculations according to the latest tax laws.

The tax refund estimator that is offered by TurboTax is called the TaxCaster 2011. This free tax estimation tool comes with some of the basic features that are found in TurboTax’s most successful tax preparation programs. It presents questions in plain and simple English to minimize confusion, and it has very clear instructions to help you calculate your tax refund accurately. It begins with the “personal information” section, which requires you to provide information about your age and marital status. In the next section, you will be asked questions about your income, which can be your wages, salary, or business profits. Information about deductions, credits, and payments has to be entered in the third and final section. After you have entered all the required information, TaxCaster 2011 will come up with an estimated amount of your tax refund. This tool is very easy to use, and it has attractive icons to make the entire process of calculating your tax refund more relaxing and enjoyable.

The 2011 TaxBrain Tax Refund Calculator is another tax refund estimation tool that can deliver very accurate results. It requires more information than most other free tax refund estimators, but it analyzes your tax situation more thoroughly. This ensures that the results you get will be more reliable. The 2011 TaxBrain Tax Refund Calculator requires you to answer questions in six different sections, and it provides additional information on most the questions to help you provide the correct information.

If you want to get an estimate of your tax refund in the shortest time possible, you should use the 2011 H&R Block Tax Calculator. This calculator can calculate your tax refund in just a minute or two, provided that you can answer all the questions quickly. If you need assistance to answer questions in any section, you can click on the “help” button for more information.