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Department of the Treasury
Internal Revenue Service
Instructions for Form 940
Employer’s Annual Federal Unemployment (FUTA) Tax Return
FUTA Tax? on page 3.) For more information on paying your
Section references are to the Internal Revenue Code unless
taxes with a credit card, visit the IRS website at
and click on the electronic irs link.
Photographs of missing children. IRS is a proud partner
with the National Center for Missing and Exploited Children.
Photographs of missing children selected by the Center may
Credit reduction state. A state that has not repaid money it
appear in instructions on pages that would otherwise be blank.
borrowed from the federal government to pay unemployment
You can help bring these children home by looking at the
benefits is a “credit reduction state.” The Department of Labor
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
determines these states. If an employer pays wages that are
you recognize a child.
subject to the unemployment tax laws of a credit reduction
state, that employer must pay additional federal unemployment
How Can You Get More Help?
tax when filing its Form 940.
If you want more information about this form, see Pub. 15
For 2009, Michigan is a credit reduction state. If you paid
(Circular E), visit our website at , or call
any wages that are subject to the unemployment compensation
laws of the State of Michigan, you are not allowed .003 of the
For a list of related employment tax topics, visit the IRS
regular .054 credit. Use Schedule A (Form 940), Part 2, to
website at and click on the “Businesses” tab.
compute the tax. For more information, see the Specific
Instructions on page 2 of Schedule A (Form 940)
or visit .
Disregarded entities and qualified subchapter S
subsidiaries (Qsubs). For wages paid on or after January 1,
Understanding Form 940
2009, business entities that are disregarded as separate from
their owner, including qualified subchapter S subsidiaries, are
What’s the Purpose of Form 940?
required to withhold and pay employment taxes and file
employment tax returns using the name and EIN of the
Use Form 940 to report your annual Federal Unemployment
disregarded entity. For more information, see Disregarded
Tax Act (FUTA) tax. Together with state unemployment tax
entities on page 5.
systems, the FUTA tax provides funds for paying
unemployment compensation to workers who have lost their
jobs. Most employers pay both a federal and a state
State unemployment information. You are no longer
unemployment tax. Only employers pay FUTA tax. Do not
required to list your state reporting number(s) on Form 940.
collect or deduct FUTA tax from your employees’ wages.
When you registered as an employer with your state, the state
The FUTA tax applies to the first $7,000 you pay to each
assigned you a state reporting number. If you do not have a
employee during a calendar year after subtracting any
state unemployment account and state experience tax rate, or if
payments exempt from FUTA tax.
you have questions about your state account, you must contact
your state unemployment agency. A contact list (for general
These instructions give you some background information
information only) of state unemployment tax agencies is
about the Form 940. They tell you who must file the form, how
provided on page 12.
to fill it out line by line, and when and where to file it.
You can file and pay electronically. Using electronic options
Who Must File Form 940?
available from the Internal Revenue Service (IRS) can make
filing a return and paying your federal tax easier. You can use
Except as noted below, if you answer “Yes” to either one of
IRS e-file to file a return and Electronic Federal Tax Payment
these questions, you must file Form 940:
System (EFTPS) to make deposits or pay in full whether you
Did you pay wages of $1,500 or more to employees in any
rely on a tax professional or prepare your own taxes.
calendar quarter during 2008 or 2009?
For IRS e-file, visit for additional information.
Did you have one or more employees for at least some part
For EFTPS, visit or call EFTPS Customer
of a day in any 20 or more different weeks in 2008 or 20 or
Service at 1-800-555-4477, 1-800-733-4829 (TDD), or
more different weeks in 2009? Count all full-time, part-time, and
temporary employees. However, if your business is a
Electronic funds withdrawal (EFW). If you file Form 940
partnership, do not count its partners.
electronically, you can e-file and e-pay (electronic funds
If your business was sold or transferred during the year,
withdrawal) the balance due in a single step using tax
each employer who answered “Yes” to at least one question
preparation software or through a tax professional. However,
above must file Form 940. However, do not include any wages
do not use EFW to make federal tax deposits. For more
paid by the predecessor employer on your Form 940 unless you
information on paying your taxes using EFW, visit the IRS
are a successor employer. For details, see Successor employer
website at and click on the electronic irs link. A fee
under Type of Return on page 5.
may be charged to file electronically.
You can pay your balance due by credit card. You may pay
If you received a preprinted Form 940 and are not liable for
your FUTA tax shown on line 14 using a major credit card.
FUTA tax for 2009 because you made no payments to
However, do not use a credit card to pay taxes that are
employees in 2009, check box c in the top right corner of the
required to be deposited. (See When Must You Deposit Your
form. Then go to Part 7, sign the form, and file it with the IRS.
Cat. No. 13660I