Washington ESD employer tax questions - which form for annual federal unemployment tax return?

Thank you! Is this something that gets filed at the same time as other business tax returns or is there a different deadline?

Form 940 is due January 31st of the following year. So for 2024 taxes, it would be due January 31, 2025. But if you deposit all FUTA tax when due, you get until February 10th to file.

Wait, so there's quarterly AND annual forms? This is so confusing. Why can't they just make it simple?

I know it's a lot. Federal unemployment tax (FUTA) is annual on Form 940. But you also have quarterly payroll taxes on 941, plus Washington ESD has their own quarterly reporting requirements.

That's helpful to know about the credit! So paying Washington ESD unemployment taxes reduces what we owe federally?

exactly. as long as washington state isnt a credit reduction state (which it usually isnt) you get the full 5.4% credit against the 6% federal rate

Interesting, I hadn't heard of that service. We've definitely had trouble reaching Washington ESD when we have questions.

Claimyr sounds useful but for employer questions, you might also try calling the Washington ESD employer hotline during off-peak hours. Early morning usually works better.

Yes, we're trying to stay on top of both. It's just hard to keep track of all the different deadlines and requirements.

Pro tip: set up a calendar with all the due dates. Federal 940 is annual, but Washington ESD quarterly reports are due on different dates throughout the year.

Honestly, most smart small business owners hire a payroll service or accountant. The cost is worth it to avoid mistakes with unemployment taxes.

or at least use payroll software that handles the calculations and reminds you of deadlines. manual payroll is asking for trouble

That's a good distinction to remember. So FUTA = federal = Form 940, and SUTA = Washington ESD = their own forms and system.

Exactly. And the rates are different too. FUTA is currently 6% (reduced by state credits), while Washington ESD rates vary by employer experience rating.

Good idea, I'll have my friend check out the official instructions. Sometimes the source documents are clearer than third-party explanations.

The IRS instructions are actually pretty good for Form 940. They walk through the calculations step by step.

Thankfully it's just Washington employees, so that should keep it simpler.

Yeah, single state makes it much easier. Just make sure you're using the correct Washington ESD rate for your business when calculating the state credit.

How much does something like that cost? Is it worth it for small businesses?

I'd rather pay a reasonable fee to actually reach someone than waste my whole day redialing Washington ESD. The time savings alone makes it worthwhile.

Oh that's important to know! So if an employee makes $50,000, you only pay FUTA on the first $7,000?

Correct. FUTA wage base is $7,000 per employee per year. So your FUTA tax exposure is limited even for high-wage employees.

Good catch! So 941s are quarterly but 940 is annual. I can see how that would be confusing.

Right. 941 = quarterly payroll taxes. 940 = annual federal unemployment tax. Totally different schedules.

We're definitely looking into payroll software options. This manual approach is getting overwhelming fast.

good call. even basic payroll software will calculate FUTA, SUTA, and all the other taxes automatically. worth every penny

So there are quarterly payment requirements even though the form is annual?

Yes, if you owe more than $500 in FUTA tax in any quarter, you have to deposit it by the end of the following month. But you still file the annual Form 940.

I'll check that out. Having both state and federal guidance in one place would be really helpful.

The Washington ESD employer handbook is actually pretty comprehensive. It covers quarterly reporting, rate calculations, all the stuff you need to know.

What kind of mistakes do people typically make with the state credit calculation?

Usually using the wrong state rate or not understanding how the credit reduction works. Make sure you're using your actual Washington ESD rate, not some generic rate.

It's really not that bad once you understand the system. But yeah, there are definitely a lot of moving parts when you're an employer.

The learning curve is steep but once you get the hang of it, it becomes routine. Just have to stay organized with deadlines.

This is a pretty new business, so that's good to know. I'll make sure they understand how the new employer rates work.

New employers in Washington usually get assigned a standard rate until they build up enough experience for an individual rating. Check with Washington ESD for the current new employer rate.

You're welcome! Just remember the key deadlines - January 31st for Form 940, and Washington ESD has their own quarterly deadlines throughout the year.

And don't hesitate to reach out for help if you get stuck. Whether it's calling Washington ESD directly or using a service like Claimyr to get through, it's better to ask questions than make costly mistakes.

Absolutely. This thread has been incredibly helpful. I feel much more confident about helping my friend navigate all these requirements now.