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requires an employer to make to its unemployment fund for the

how much of the first $7,000 of each employee’s annual wages

payment of unemployment benefits. They do not include:

you paid during that quarter.

•

any payments deducted or deductible from your employees’

Figure your tax liability

pay;

•

penalties, interest, or special administrative taxes; and

Before you can figure the amount to deposit, figure your FUTA

•

voluntary amounts you paid to get a lower assigned state

tax liability for the quarter. To figure your tax liability, add the

experience rate.

first $7,000 of each employee’s annual wages you paid during

the quarter, then multiply that amount by .008.

Additional credit. You may receive an additional credit if you

have a state experience rate lower than 5.4% (.054). This

The .008 tax rate is based on your receiving the maximum

applies even if your rate varies during the year. This additional

credit against FUTA taxes. You are entitled to the maximum

credit is the difference between your actual state unemployment

credit if you paid all state unemployment tax by the due date of

tax payments and the amount you would have been required to

your Form 940 or if you were not required to pay state

pay at 5.4%.

unemployment tax during the calendar year due to your state

experience rate.

Special credit for successor employers. You may be

eligible for a credit based on the state unemployment taxes paid

Example. During the first quarter, you have 3 employees:

by a predecessor. You may claim this credit if you are a

Employees A, B, and C. You paid $11,000 to Employee A,

successor employer who acquired a business in 2009 from a

$2,000 to Employee B, and $4,000 to Employee C during the

predecessor who was not an employer for FUTA purposes and,

quarter.

therefore, was not required to file Form 940 for 2009. See

section 3302(e). You can include amounts paid by the

predecessor on the Worksheet on page 8 as if you paid them.

To figure your liability for the first quarter, add the first $7,000 of each

For details on successor employers, see Successor employer

employee’s wages:

under Type of Return, on page 5. If the predecessor was

$7,000 Employee A’s wages subject to FUTA tax

required to file Form 940, see the line 5 instructions on page 6.

2,000 Employee B’s wages subject to FUTA tax

+ 4,000 Employee C’s wages subject to FUTA tax

When Must You Deposit Your FUTA Tax?

$13,000 Total wages subject to FUTA tax for the first quarter

Although Form 940 covers a calendar year, you may have to

x .008 Tax rate (based on maximum credit of 5.4%)

deposit your FUTA tax before you file your return. If your FUTA

$104 Your liability for the first quarter

tax is more than $500 for the calendar year, you must deposit at

least one quarterly payment.

In this example, you do not have to make a deposit because your liability is

You must determine when to deposit your tax based on the

$500 or less for the first quarter. However, you must carry this liability over to

the second quarter.

amount of your quarterly tax liability. If your FUTA tax is $500 or

less in a quarter, carry it over to the next quarter. Continue

If any wages subject to FUTA tax are not subject to state

carrying your tax liability over until your cumulative tax is more

unemployment tax, you may be liable for FUTA tax at a higher

than $500. At that point, you must deposit your tax for the

rate (up to 6.2%). For instance, in certain states, wages paid to

quarter. Deposit your FUTA tax by the last day of the month

corporate officers, certain payments of sick pay by unions, and

after the end of the quarter. If your tax for the next quarter is

certain fringe benefits are excluded from state unemployment

$500 or less, you are not required to deposit your tax again until

tax.

the cumulative amount is more than $500.

Example. Employee A and Employee B are corporate

Fourth quarter liabilities. If your FUTA tax for the fourth

officers whose wages are excluded from state unemployment

quarter (plus any undeposited amounts from earlier quarters) is

tax in your state. Employee C’s wages are not excluded from

more than $500, deposit the entire amount by February 1,

state unemployment tax. During the first quarter, you paid

2010. If it is $500 or less, you can either deposit the amount or

$11,000 to Employee A, $2,000 to Employee B, and $4,000 to

pay it with your Form 940 by February 1, 2010.

Employee C.

In years when there are credit reduction states, you

$ 9,000 Total FUTA wages for Employees A and B in 1

quarter

must include liabilities owed for credit reduction with your

x .062 Tax rate

fourth quarter deposit.

$558 Your liability for the first quarter for Employees A and B

When To Deposit Your FUTA Tax

$4,000 Total FUTA wages subject to state unemployment tax

x .008 Tax rate (based on maximum credit of 5.4%)

If your undeposited FUTA tax

$32 Your liability for the first quarter for Employee C

is more than $500 on . . .*

Deposit your tax by . . .

March 31

April 30

$558 Your liability for the first quarter for Employees A and B

June 30

July 31

+ 32 Your liability for the first quarter for Employee C

September 30

October 31

$590 Your liability for the first quarter for Employees A, B, and C

December 31

January 31

In this example, you must deposit $590 by April 30 because your liability for

*Also, see the instructions for line 16 on page 10.

the 1

quarter is more than $500.

If any deposit due date falls on a Saturday, Sunday, or

How Must You Deposit Your FUTA Tax?

TIP

legal holiday, you may deposit on the next business day.

You may deposit your FUTA tax electronically by using EFTPS

or by depositing your tax with an authorized financial institution

How Do You Figure Your FUTA Tax

(for example, a commercial bank that is qualified to accept

Liability for Each Quarter?

federal tax deposits). The financial institution will send IRS a

record of your payment to credit to your business account.

You owe a FUTA tax of 6.2% (.062) on the first $7,000 of

You may deposit your FUTA tax using EFTPS

wages that you paid to each employee during the calendar

year. Most employers receive a maximum credit of up to 5.4%

To expedite your deposit and confirm that IRS has received

(.054) against this FUTA tax. Every quarter, you must figure

your payment, you may choose to deposit your tax using

-3-

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2009 Page 3

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