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Department of the Treasury

Internal Revenue Service

Instructions for Form 940

Employer’s Annual Federal Unemployment

(FUTA) Tax Return

Section references are to the Internal Revenue Code unless otherwise noted.

If an envelope was received with the tax package, please

What’s New

use it. Otherwise, see Where To File on page 3.

Credit reduction state. A state that has not repaid

Signature on Form 940. Only an authorized individual

money it borrowed from the federal government to pay

may sign Form 940. See Signature on page 8.

unemployment benefits is a “credit reduction state.” The

State unemployment information. You must contact

U.S. Department of Labor determines these states. If an

your state unemployment tax office to receive your state

employer pays wages that are subject to the

reporting number, state experience rate, and details

unemployment tax laws of a credit reduction state, that

about your state unemployment tax obligations.

employer must pay additional federal unemployment tax

Worksheet for computing the Part II, line 4 credit if

when filing its Form 940. Employers in a credit reduction

state contributions were paid late. Filers who made

state cannot file Form 940-EZ.

contributions to their state unemployment fund after the

For 2005, New York is a credit reduction state. If you

due date for filing Form 940 should complete the

paid any wages that are subject to the unemployment

worksheet provided in the instructions for Part II, line 4,

compensation laws of the State of New York, you are not

on page 7, to compute the allowable credit. Do not report

allowed .006 of the regular .054 credit. Use Form 940,

such contributions in Part II, line 3, column (i) or on line

Part I, line 7 to show this tax. If you must complete Form

3b. Any credit allowed for such state contributions will

940, Part III, Record of Quarterly Federal Unemployment

appear on line 4.

Tax Liability, include any additional tax from Part I, line 7

Electronic Filing and Payment

in the fourth quarter column and include the amount with

your fourth quarter tax deposit.

Now, more than ever before, businesses can enjoy the

Payment of state unemployment taxes. A state

benefits of filing and paying their federal taxes

agency’s waiver of “de minimis” balances due on your

electronically. Whether you rely on a tax professional or

state unemployment tax returns will not affect the amount

handle your own taxes, IRS offers you convenient

or timeliness of your state unemployment contributions

programs to make it easier.

for FUTA purposes.

Spend less time and worry on taxes and more time

Credit card payments. Effective January 2006, you

running your business. Use e-file and Electronic Federal

may pay your FUTA tax shown on Part II, line 9 using a

Tax Payment System (EFTPS) to your benefit.

•

major credit card. For information on paying your taxes

For e-file, visit for additional information.

•

with a credit card, visit the IRS website at

For EFTPS, visit or call EFTPS

and type “e-pay” in the search box.

Customer Service at 1-800-555-4477.

Alternative signature method. Effective with returns

Use electronic options available from IRS and make

filed after June 30, 2005, corporate officers or duly

filing and paying taxes easier.

authorized agents may sign Form 940 by rubber stamp,

Photographs of Missing Children

mechanical device, or computer software program. For

details and required documentation, see Rev. Proc.

The Internal Revenue Service is a proud partner with the

2005-39. You can find Rev. Proc. 2005-39 on page 82 of

National Center for Missing and Exploited Children.

Internal Revenue Bulletin 2005-28 at /pub/

Photographs of missing children selected by the Center

irs-irbs/irb05-28.pdf.

may appear in instructions on pages that would otherwise

be blank. You can help bring these children home by

General Instructions

looking at the photographs and calling 1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

Reminders

Purpose of Form

Additional employment tax information. Visit the IRS

Use Form 940 (or Form 940-EZ) to report your annual

website at and type “Employment Tax” in the

Federal Unemployment Tax Act (FUTA) tax. FUTA tax,

search box for a list of employment tax topics. For

together with state unemployment systems, provides for

telephone help, call the IRS toll free at 1-800-829-4933.

payments of unemployment compensation to workers

Mailing address change. You may need to mail Form

who have lost their jobs. Most employers pay both

940 to a different address than in previous years because

federal and state unemployment taxes. Only the

the IRS has changed the filing location for several areas.

employer pays FUTA tax. Do not collect or deduct it

Cat. No. 13660I

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2005

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