Drake Accounting®: Why do some 940 forms have an additional amount added to the fourth quarter tax liability?
Only Credit Reduction states listed on Form 940 Schedule A will have the additional amount due added to the fourth quarter liability. This amount is calculated on the 940 Schedule A, carried to 940 page 1 line 11, and then added to the amount on 940 page 2 line 16d.
Note: In order for the software to calculate and carry the Credit Reduction payment to line 11, go to the Page 4 tab and select the state(s) that are applicable to the client's situation.
Credit Reduction states are identified by the U.S. Department of Labor each November and available in the Schedule A (Form 940) Instructions. See FUTA Credit Reduction for more information on Credit Reduction states.