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— Payments to nonemployees who are treated as your

— Payments for certain fishing activities. See Pub. 334,Tax

employees by the state unemployment tax agency.

Guide for Small Businesses.

— Payments to certain statutory employees. See section 1

of Pub. 15-A, Employer’s Supplemental Tax Guide.

Wages may be subject to FUTA tax even if they are

excluded from your state’s unemployment tax.

— Payments to nonemployees who are treated as your

CAUTION

employees by the state unemployment tax agency.

For details on wages and other compensation, see section 5

See section 3306 and its related regulations for more

of Pub. 15-A, Employer’s Supplemental Tax Guide.

information about FUTA taxation of retirement plan

contributions, dependent care payments, and other payments.

Example:

For more information on payments exempt from FUTA tax,

see section 14 in Pub. 15 (Circular E) or section 10 in Pub. 51

You had 3 employees. You paid $44,000 to Employee A, $8,000 to

Employee B, and $16,000 to Employee C.

(Circular A).

$44,000 Amount paid to Employee A

Example:

8,000 Amount paid to Employee B

16,000 Amount paid to Employee C

You had 3 employees. You paid $44,000 to Employee A including

$68,000 Total payments to employees. You would enter this

$2,000 in health insurance benefits. You paid $8,000 to Employee B,

amount on line 3.

including $500 in retirement benefits. You paid $16,000 to Employee C,

including $2,000 in health and retirement benefits.

$ 2,000 Health insurance benefits for Employee A

4. Payments exempt from FUTA tax

500 Retirement benefits for Employee B

If you enter an amount on line 4, check the appropriate box or

+ 2,000 Health and retirement benefits for Employee C

boxes on lines 4a through 4e to show the types of payments

$4,500 Total payments exempt from FUTA tax. You would

exempt from FUTA tax. You only report a payment as

enter this amount on line 4 and check boxes 4a and

exempt from FUTA tax on line 4 if you included the

4c.

payment on line 3.

Some payments are exempt from FUTA tax because the

5. Total of payments made to each employee in

payments are not included in the definition of wages or the

excess of $7,000

services are not included in the definition of employment.

Payments exempt from FUTA tax may include:

Only the first $7,000 you paid to each employee in a calendar

year is subject to FUTA tax. This $7,000 is called the FUTA

•

Fringe benefits, such as:

wage base.

— The value of certain meals and lodging.

— Contributions to accident or health plans for employees,

Enter on line 5 the total of the payments over $7,000 you

including certain employer payments to a Health Savings

paid to each employee during 2009 after subtracting any

Account or an Archer MSA.

payments exempt from FUTA tax shown on line 4.

— Employer reimbursements (including payments to a third

party) for qualified moving expenses, to the extent that these

Following our example:

expenses would otherwise be deductible by the employee.

— Payments for benefits excluded under section 125

You had 3 employees. You paid $44,000 to Employee A, $8,000 to

(cafeteria) plans.

Employee B, and $16,000 to Employee C, including a total of $4,500 in

•

Group term life insurance.

payments exempt from FUTA tax for all 3 employees. (To determine the

For information about group term life insurance and other

total payments made to each employee in excess of the FUTA wage

base, the payments exempt from FUTA tax and the FUTA wage base

payments for fringe benefits that may be exempt from FUTA

must be subtracted from total payments. These amounts are shown in

tax, see Pub. 15-B, Employer’s Tax Guide to Fringe Benefits.

•

parentheses.)

Retirement/Pension, such as employer contributions to a

qualified plan, including a SIMPLE retirement account (other

Employees

than elective salary reduction contributions) and a 401(k) plan.

•

Total payments to

$44,000

$8,000

$16,000

Dependent care, such as payments (up to $5,000 per

employees

employee, $2,500 if married filing separately) for a qualifying

Payments exempt from

(2,000)

(500)

(2,000)

person’s care that allows your employees to work and that

FUTA tax

would be excludable by the employee under section 129.

FUTA wage base

(7,000)

•

Other payments, such as:

$35,000

$ 500

$ 7,000

— All non-cash payments and certain cash payments for

$35,000

agricultural labor, and all payments to “H-2(A)” visa workers.

500

See For agricultural employers on page 2 or get Pub. 51

+ 7,000

(Circular A), Agricultural Employer’s Tax Guide.

$42,500 Total of payments made to each employee in excess of

— Payments made under a workers’ compensation law

$7,000. You would enter this amount on line 5.

because of a work-related injury or sickness. See section 6

of Pub. 15-A, Employer’s Supplemental Tax Guide.

— Payments for domestic services if you did not pay cash

If you are a successor employer . . . When you figure the

wages of $1,000 or more (for all domestic employees) in any

payments made to each employee in excess of $7,000, you

calendar quarter in 2008 or 2009. See Pub. 926, Household

may include the payments that the predecessor made to the

Employer’s Tax Guide.

employees who continue to work for you only if the

— Payments for services provided to you by your parent,

predecessor was an employer for FUTA tax purposes resulting

spouse, or child under the age of 21. See section 3 of Pub.

in the predecessor being required to file Form 940.

15 (Circular E), Employer’s Tax Guide.

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Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2009 Page 6

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