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Department of the Treasury

Internal Revenue Service

Instructions for Form 940

Employer’s Annual Federal Unemployment

(FUTA) Tax Return

Section references are to the Internal Revenue Code unless otherwise noted.

of Form 940. You may use it instead of Form 940 to

General Instructions

report your annual FUTA tax if —

1. You paid unemployment contributions to only one

What’s New for 2001?

state,

2. You paid all state unemployment contributions by

Electronic filing of Form 940. Form 940 can now be

January 31, 2002 (February 11, 2002, if you deposited all

filed electronically. See Magnetic Media and Electronic

FUTA tax when due), and

Reporting on page 3.

3. All wages that were taxable for FUTA tax were also

taxable for your state’s unemployment tax. If, for

Third party designee. You can now allow an employee

example, you paid wages to corporate officers (these

or paid preparer to resolve certain tax issues with the

wages are taxable for FUTA tax) in a state that exempts

IRS. See Third party designee on page 4 for more

corporate officers’ wages from its unemployment tax, you

information.

cannot use Form 940-EZ.

Items To Note

A successor employer claiming a credit for state

Electronic deposit requirement. You may be required

unemployment contributions paid by the prior

to deposit Federal taxes, such as employment tax, excise

employer must file Form 940.

CAUTION

tax, and corporate income taxes, electronically using the

Electronic Federal Tax Payment System (EFTPS). See

Electronic deposit requirement on page 3 for details.

When To File

State unemployment information. You must contact

File Form 940 for 2001 by January 31, 2002. However, if

your state unemployment tax office to receive your state

you deposited all FUTA tax when due, you may file on or

reporting number, state experience rate, and details

before February 11, 2002. Your return will be considered

about your state unemployment tax obligations.

timely filed if it is properly addressed and mailed First

Class or sent by an IRS designated delivery service by

Worksheet for computing the Part II, line 6 credit if

the due date. See Circular E, Employer’s Tax Guide

state contributions were paid late. Filers who made

(Pub. 15), for a list of designated delivery services. Also

contributions to their state unemployment fund after the

see Where To File on page 2.

due date for filing Form 940 should complete the

worksheet provided in the instructions for Part II, line 6,

Private delivery services cannot deliver items to

on page 5, to compute the allowable credit. Do not report

P.O. boxes.

such contributions in Part II, line 3, column (i) or on line

CAUTION

3b. Any credit allowed for such state contributions will

appear on line 6.

Who Must File

Photographs of Missing Children

Except as noted below, you must file Form 940 if Test 1

The Internal Revenue Service is a proud partner with the

or Test 2 applies.

National Center for Missing and Exploited Children.

Test 1. You paid wages of $1,500 or more in any

Photographs of missing children selected by the Center

calendar quarter in 2000 or 2001.

may appear in instructions on pages that would otherwise

be blank. You can help bring these children home by

Test 2. You had one or more employees for at least

looking at the photographs and calling 1-800-THE-LOST

some part of a day in any 20 or more different weeks in

(1-800-843-5678) if you recognize a child.

2000 or 20 or more different weeks in 2001.

Count all regular, temporary, and part-time employees.

Purpose of Form

A partnership should not count its partners. If a business

Use Form 940 (or 940-EZ) to report your annual Federal

changes hands during the year, each employer who

Unemployment Tax Act (FUTA) tax. FUTA tax, together

meets Test 1 or 2 must file. For purposes of Test 1 or

with state unemployment systems, provides for payments

Test 2 only, do not include wages paid by the prior (or

of unemployment compensation to workers who have lost

subsequent) employer. But see Successor employer on

their jobs. Most employers pay both Federal and state

page 5.

unemployment taxes. Only the employer pays FUTA

Household employers. File a FUTA tax return only if

tax. Do not collect or deduct it from your employees’

you paid total cash wages of $1,000 or more (for all

wages. The tax applies to the first $7,000 you pay each

household employees) in any calendar quarter in 2000 or

employee in a year after subtracting any exempt

2001 for household work in a private home, local college

payments. The $7,000 amount is the Federal wage base.

club, or local chapter of a college fraternity or sorority.

Your state wage base may be different.

Individuals, estates, and trusts that owe FUTA tax for

Form 940-EZ, Employer’s Annual Federal

household work in a private home, in most cases, must

Unemployment (FUTA) Tax Return, is a simpler version

file Schedule H (Form 1040), Household Employment

Cat. No. 13660I

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2001

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