Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2005 Page 7

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Only taxpayers who made late contributions should
If the amount on line 9 is under $1, you do not have to
complete the worksheet below.
pay it. For payments over $500, see Depositing FUTA
Tax on page 3.
You may pay the amount shown on line 9 using
Worksheet for Credit Computation if Any State
TIP
EFTPS. You also have the option of paying the
Contributions Were Paid After the Due Date for Filing
balance shown on line 9 with a major credit card.
Form 940
For more information on electronic payment options, visit
A. Enter the amount from Form 940, Part II,
the IRS website at and type “e-pay” in the
line 2 . . . . . . . . . . . . . . . . . . . . . . . . . .
search box. If you pay using EFTPS or a credit card, file
B. Enter the amount from Form 940, Part II,
your return using the “Return without payment” address
line 3b, if any . . . . . . . . . . . . . . . . . . . .
under Where To File on page 3. Do not complete or file
C. Subtract line B from line A. If zero or less,
Form 940-V, Payment Voucher.
enter -0- . . . . . . . . . . . . . . . . . . . . . . . .
D. Enter total contributions paid to the
Line 10 — Overpayment. If the amount on line 10 is
state(s) after the Form 940 due date . . .
under $1, we will send a refund or apply it to your next
E. Enter the smaller of line C or D . . . . . . .
return only on written request.
F. Multiply line E by .90 (90%) . . . . . . . . . .
G. Add lines B and F . . . . . . . . . . . . . . . . .
Part III. Record of Quarterly Federal
H. Enter the smaller of the amount on line G
Unemployment Tax Liability
or A here and on Form 940, Part II, line 4
Complete this part only if your FUTA tax in Part II,
line 7, is over $500. To figure your FUTA tax for the first
Example of late state contributions. You paid
three quarters, multiply by .008 that part of the first
$1,500 of state contributions by the Form 940 due date
$7,000 of each employee’s annual wages you paid
and $1,000 after that date. Your maximum credit on Form
during the quarter. (However, if any part of the wages
940, Part II, line 2 is $2,000, and your tentative credit on
subject to FUTA is exempt from state unemployment tax,
line 3b is $1,500. The maximum credit less the tentative
you may have to figure more than the tax using the .008
credit is $500. If you had paid the $1,000 state
rate.) Enter the result in the columns for the first through
contributions on time, you would have been allowed an
third quarters.
additional credit of only $500, not the full $1,000.
Therefore, the credit for the late contributions is limited to
To figure your FUTA tax for the fourth quarter
90% of $500. You complete the worksheet as follows:
(including any tax from Part I, line 7), complete Form 940
through Part II, line 7. Enter the amount from Part II, line
A. Enter the amount from Form 940, Part II,
7 in the “Total for year” column. Subtract the sum of the
line 2 . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,000
amounts shown in columns one through three from the
B. Enter the amount from Form 940, Part II,
amount shown in “Total for year” column and enter the
line 3b, if any . . . . . . . . . . . . . . . . . . . .
1,500
result in the column for the fourth quarter. For example, if
C. Subtract line B from line A. If zero or
the amounts in columns one through three show $400,
less, enter -0- . . . . . . . . . . . . . . . . . . . .
500
$200, $100 respectively, and Part II, line 7 shows $900,
D. Enter total contributions paid to the
enter $900 in the “Total for year” column. Then subtract
state(s) after the Form 940 due date . . .
1,000
$700 ($400 + $200 + $100) from the $900 and enter
E. Enter the smaller of line C or D . . . . . . .
500
$200 ($900 - $700) in the column for the fourth quarter
F. Multiply line E by .90 (90%) . . . . . . . . . .
450
FUTA tax liability.
G. Add lines B and F . . . . . . . . . . . . . . . . .
1,950
Record your FUTA tax liability based on when you pay
H. Enter the smaller of the amount on line
wages, not on when you make a tax deposit. For
G or A here and on Form 940, Part II,
example, if you pay wages on March 28, your FUTA tax
line 4 . . . . . . . . . . . . . . . . . . . . . . . . . .
1,950
on those wages is $400, and you deposit the $400 on
April 30, you would record that $400 in the first quarter,
Enter $1,950 from line H of the worksheet on Form
not in the second.
940, Part II, line 4. This is the allowable credit for your
Example. You had ten employees and paid each
contributions to the state unemployment fund.
employee $4,000 in the first quarter, $5,000 in the
Lines 5 and 6 — Credit allowable. Enter the amount
second quarter, $5,000 in the third quarter, and $5,000 in
from Part I, line 7 on Part II, line 5. Subtract this amount
the fourth quarter. (None of these payments were exempt
from Part II, line 4. The result on line 6 is your allowable
from FUTA tax.) For the first quarter, multiply .008 x
credit for contributions to the state.
$40,000 (the amount paid to the employees), and enter
Line 9 — Balance due. Make your check or money
$320 in the space for the first quarter. For the second
order payable to the “United States Treasury.” Write your
quarter, multiply .008 only by $30,000 ($3,000 for each
EIN, “Form 940,” and “2005” on your check or money
employee —the amount remaining to reach the $7,000
order. Enter the amount of your payment on Form 940-V
maximum amount subject to FUTA tax for each
at the bottom of Form 940. If the employer information is
employee), and enter $240 in the space for the second
not preprinted on the payment voucher, enter the
quarter. Because you paid each employee more than
requested information. Make certain that the entity
$7,000 by the end of the second quarter, enter zero in
information above line A is also properly completed.
the space for the third quarter and $560 (from Part II, line
-7-

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