Form 941 Schedule B is used to track liabilities by deposit schedule; Form 940 reports FUTA unemployment taxes. Which option best describes this purpose?

• A. Schedule B is used for state tax deposits; Form 940 for FUTA
• B. Schedule B tracks overtime hours; Form 940 handles health insurance
• C. Schedule B tracks liabilities by deposit schedule; Form 940 reports FUTA unemployment taxes.
• D. Schedule B reports annual net pay; Form 940 reports tax credits.

Answer: (C)

Form 941 Schedule B is a specialized schedule used to record the employer’s payroll tax liabilities broken out by the deposit schedule (how often deposits are made, such as monthly or semiweekly). Form 940, on the other hand, is the annual return that reports FUTA unemployment taxes, the federal tax employers pay on wages up to the FUTA threshold. So the description that Schedule B tracks liabilities by deposit schedule and Form 940 reports FUTA unemployment taxes matches exactly how these forms are used. The other options mix up duties (state deposits, overtime or health insurance details, or net pay/tax credits) and don’t reflect the actual purposes of these forms.