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from your employees’ wages. The tax applies to the first

Generally, employers of household employees should

$7,000 you pay each employee in a year after subtracting

file Schedule H ( Form 1040) instead of Form 940 or

any exempt payments. The $7,000 amount is the federal

Form 940-EZ. However, if you have other employees in

wage base. Your state wage base may be different.

addition to household employees, you can choose to

include the FUTA taxes for your household employees on

Form 940-EZ, Employer’s Annual Federal

the Form 940 or Form 940-EZ instead of filing Schedule

Unemployment (FUTA) Tax Return, is a simpler version

H ( Form 1040). If you choose to include household

of Form 940. You may use Form 940-EZ instead of Form

employees on your Form 940 or Form 940-EZ, you must

940 to report your annual FUTA tax if:

•

also report social security, Medicare, and withheld federal

You paid unemployment contributions to only one

income taxes for your household employees on your

state,

•

Form 941, Employer’s Quarterly Federal Tax Return, or

You paid all state unemployment contributions by

Form 943, Employer’s Annual Federal Tax Return for

January 31, 2006 (February 10, 2006, if you deposited all

Agricultural Employees. See Pub. 926, Household

FUTA tax when due),

•

Employer’s Tax Guide for more information.

All wages that were taxable for FUTA tax were also

taxable for your state’s unemployment tax. If, for

Agricultural employers. File a FUTA tax return if either

example, you paid wages to corporate officers (these

1 or 2 below applies:

wages are taxable for FUTA tax) in a state that exempts

1. You paid cash wages of $20,000 or more to

corporate officers’ wages from its unemployment tax, you

farmworkers during any calendar quarter in 2004 or

cannot use Form 940-EZ, and

2005, or

•

You did not pay wages in a credit reduction state (that

2. You employed 10 or more farmworkers during at

is, New York).

least some part of a day (whether or not at the same

time) during any 20 or more different weeks in 2004 or 20

A successor employer claiming a credit for state

or more different weeks in 2005.

unemployment contributions paid by the prior

employer must file Form 940.

CAUTION

Count wages paid to aliens admitted on a temporary

basis to the United States to perform farmwork, also

When To File

known as “H-2(A)” visa workers, to see if you meet either

1 or 2 above. However, wages paid to “H-2(A)” visa

File Form 940 for 2005 by January 31, 2006. However, if

workers are not subject to FUTA tax.

you deposited all FUTA tax when due, you may file on or

before February 10, 2006. Your return will be considered

Indian tribal governments. Services rendered to a

timely filed if it is properly addressed and mailed First

federally-recognized Indian tribal government (including

Class or sent by an IRS-designated delivery service by

any subdivision, subsidiary, or wholly-owned business

the due date. See Pub. 15 (Circular E), Employer’s Tax

enterprise) after December 20, 2000, are exempt from

Guide, for a list of designated delivery services. Also see

FUTA tax and no Form 940 or Form 940-EZ for 2005 is

Where To File on page 3.

required. However, the tribe must have participated in the

state unemployment system for the full year and be in

Private delivery services cannot deliver items to

compliance with applicable state unemployment law.

P.O. boxes.

Nonprofit organizations. Religious, educational,

CAUTION

charitable, etc., organizations described in section

501(c)(3) and exempt from tax under section 501(a) are

Who Must File

not subject to FUTA tax and are not required to file.

Except as noted below, you must file Form 940 if Test 1

State and local government employers. State or local

or Test 2 applies.

government employers are not subject to FUTA tax and

Test 1. You paid wages of $1,500 or more in any

are not required to file.

calendar quarter in 2004 or 2005.

Final return. If you will not have to file Form 940 (or

Test 2. You had one or more employees for at least

Form 940-EZ) in the future, check the box on the line

some part of a day in any 20 or more different weeks in

below question D and complete and sign the return. If

2004 or 20 or more different weeks in 2005.

you start paying FUTA wages again, file Form 940 (or

Form 940-EZ).

Count all regular, temporary, and part-time employees.

A partnership should not count its partners. If a business

Amended Returns

changes hands during the year, each employer who

meets Test 1 or 2 must file. For purposes of Test 1 or

Use a new Form 940 to amend a previously filed Form

Test 2 only, do not include wages paid by the prior (or

940. Check the “Amended Return” box above Part I.

subsequent) employer. But see Successor employer on

Enter all amounts that should have been on the original

page 5.

return, and sign the form. Attach an explanation of the

Household employers. If you are a household

reasons for the amended return. For example, you are

employer, you must pay FUTA tax on wages that you

filing to claim credit for contributions paid to your state

paid to your household employees only if you paid cash

unemployment fund after the due date of Form 940. File

wages of $1,000 or more in any calendar quarter in 2004

the amended return with the Internal Revenue Service

or 2005. A household employee performs household

address where you would have filed the original return

work in a private home, local college club, or local

without payment. Do not mail an amended Form 940

chapter of a college fraternity or sorority.

(even if it includes a payment) to a P.O. box location.

-2-

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2005 Page 2

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