Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2005 Page 6

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For example, during 2005, prior employer P paid
shown in column (a). If your experience rate is zero
$5,000 to employee Jones before the acquisition and
percent, enter the wages that would have been subject to
acquirer A paid $3,000 to Jones after the acquisition.
state unemployment tax if the zero percent rate had not
Subtracting the $5,000 from $7,000 yields $2,000.
been granted.
Subtracting the $2,000 from $3,000 (wages paid by
Column (d). Enter the beginning and ending dates of
acquirer A to Jones) yields $1,000. Acquirer A reports
the experience rate shown in column (e).
$8,000 (total payments) on line 1 and $6,000 ($5,000
Column (e). Enter your state experience rate —the
paid by prior employer P and $1,000 in excess of the
rate the state assigned to you for paying your state
$7,000 wage base) on line 3. See section 3306(b)(1) and
unemployment tax. This rate may change based on your
Regulations section 31.3306(b)(1)-1(b) for details.
“experience” with the state unemployment fund, for
Line 5 — Total taxable wages. This is the total amount
example, because of unemployment compensation paid
subject to FUTA tax. Use this amount in Part II to
to your former employees. If you do not know your
compute the gross FUTA tax and the maximum credit.
experience rate, contact your state unemployment office.
Line 6 — Credit reduction for unrepaid advances.
The state experience rate can be stated as a percentage
Enter the amount of wages included on line 5 subject to
or as a decimal (for example, 2.7% or .027).
the unemployment compensation laws of New York. The
Column (f). Multiply the amount in column (c) by .054.
wages shown on line 6 cannot exceed the total taxable
Column (g). Multiply the amount in column (c) by the
wages shown on line 5. If no wages are subject to these
rate in column (e).
laws, enter “-0-” on line 6. Multiply the wages by the rate
Column (h). Subtract column (g) from column (f). If
shown.
zero or less, enter zero. This additional credit is the
The amount of this adjustment increases your FUTA
difference between 5.4% and your state experience rate.
tax by reducing the credit otherwise allowable against the
Column (i). Enter the contributions you actually paid
FUTA tax for contributions made to state unemployment
to the state unemployment fund by the due date for filing
funds. However, the increase cannot be more than the
your Form 940. Do not include amounts you are required
credit otherwise allowable.
to pay but have not paid by the Form 940 due date
(January 31 or February 10 as explained under When To
Part II. Tax Due or Refund
File on page 2). If you are filing Form 940 after the due
Line 1 — Gross FUTA tax. Multiply the total taxable
date, include only payments made by the return due
wages from Part I, line 5, by .062. This is the maximum
date, and see the instructions and worksheet under Line
amount of FUTA tax.
4 — Credit below. If you are claiming excess credits
as payments of state unemployment contributions, attach
Line 2 — Maximum credit. Multiply the total taxable
a copy of the letter from your state. Do not include any
wages from Part I, line 5, by .054. This is the maximum
penalties, interest, or special administrative taxes (such
credit against FUTA tax for state contributions.
as surcharges, employment and training taxes, excise
Line 3 — Computation of tentative credit. You must
tax, and assessments, which are generally listed as a
complete all applicable columns to receive any credit.
separate item on the state’s quarterly wage report) not
Your state will provide an experience rate to you. If you
included in the experience rate assigned to you.
have been assigned an experience rate of zero percent
Line 3a — Totals. Enter the totals of columns (h)
or more, but less than 5.4%, for all or part of the year,
and (i).
use columns (a) through (i). If you have not been
assigned any experience rate, use columns (a), (b), (c),
Line 3b — Total tentative credit. Add line 3a, columns
and (i) only. If you have been assigned a rate of 5.4% or
(h) and (i). As noted above, column (i) includes only
higher, use columns (a), (b), (c), (d), (e), and (i) only. If
payments to your state unemployment fund that you
you were assigned an experience rate for only part of the
made by the due date for filing Form 940. Payments
year or the rate was changed during the year, complete a
made after the due date are eligible for a reduced credit
separate line for each rate period.
and will appear on line 4 as described below.
If you need additional lines, attach a separate
Line 4 — Credit. This is the credit allowable for your
statement with a similar format. Also, if you are a
payments to state unemployment funds. If you made no
successor employer, see Special credit for successor
late state contributions, enter the smaller of the amount
employers, on page 3.
from Part II, line 2 or line 3b. If you do not have to make
payments to the state, enter zero on this line.
Column (a). Enter the two-letter postal abbreviation
for the state(s) to which you were required to pay
If any state contributions were made after the
contributions (including the District of Columbia, Puerto
!
Form 940 due date (January 31 or February 10 as
Rico, and the U.S. Virgin Islands).
explained under When To File on page 2), your
CAUTION
Column (b). Enter the state reporting number
credit for late contributions is limited to 90% of the
assigned to you when you registered as an employer with
amount that would have been allowable as a credit if
each state. Failure to enter the correct number may result
such contributions were paid on or before the Form 940
in unnecessary correspondence.
due date.
Column (c). Enter the state taxable payroll on which
you must pay state unemployment taxes for each state
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