Final return. If you will not have to file Form 940 (or
wages in cash or some other way, such as goods,
940-EZ) in the future, check the box on the line below
lodging, food, or clothing. For items other than cash, use
question C and complete and sign the return. If you start
the fair market value when paid.
paying FUTA wages again, file Form 940 (or 940-EZ).
Line 2 — Exempt payments. The amounts reported on
Third party designee. If you want to allow an employee
line 2 are exempt from FUTA tax. For FUTA tax
of your business or an individual paid preparer to discuss
purposes, “wages” and “employment” do not include
your 2001 Form 940 with the IRS, check the “Yes” box in
every payment and every kind of service an employee
may perform. In general, payments excluded from wages
the “Third Party Designee” section of the return. Also,
enter the name, phone number, and any five numbers
and payments for services excepted from employment
the designee chooses as his or her personal identification
are not subject to FUTA tax. Do not enter payments
number (PIN). The designation must specify an individual
over $7,000 for each employee that you enter on
and may not refer to your payroll office or a tax
You may deduct exempt payments from total
By checking the “Yes” box, you are authorizing the
payments only if you explain them on line 2. Amounts
that may be exempt from your state’s unemployment tax
IRS to call the designated employee or paid preparer to
answer any questions that may arise during the
may not be exempt from FUTA tax. For example,
processing of your return. You are also authorizing the
corporate officers’ wages are not exempt from FUTA
tax even though your state may exempt those wages
from its unemployment tax.
Give the IRS any information that is missing from your
Enter payments for services such as the following on
Call the IRS for information about the processing of
line 2. These payments also must be entered on
your return or the status of your refund or payment(s),
1. Agricultural labor if you did not meet either 1 or 2
Respond to certain IRS notices that you have shared
under Agricultural employers on page 2 and all
with the designee about math errors and return
payments to H-2(A) visa workers.
preparation. The notices will not be sent to the designee.
2. Benefit payments for sickness or injury under a
You are not authorizing the designee to receive any
workers’ compensation law.
refund check, bind you to anything (including additional
3. Household services if you did not pay total cash
tax liability), or otherwise represent you before the IRS. If
wages of $1,000 or more in any calendar quarter in 2000
you want to expand the designee’s authorization, see
Pub. 947, Practice Before the IRS and Power of
4. Certain family employment. (See section 3 in
The designee authorization cannot be revoked.
5. Certain fishing activities. (See Pub. 595, Tax
However, the authorization will automatically expire on
Highlights for Commercial Fishermen.)
the due date (without regard to extensions) for filing your
6. Noncash payments for farmwork or household
2002 Form 940 (or 940-EZ).
services in a private home. (Only cash wages paid to
these workers are taxable.)
Part I — Computation of Taxable
7. Value of certain meals and lodging. (See section 5
in Circular E.)
8. Cost of group-term life insurance.
Line 1 — Total payments. Enter the total payments
9. Payments attributable to the employee’s
(before any deductions) you made during the calendar
contributions to a sick-pay plan.
year for services of employees, even if the payments are
10. Employer contributions to a SIMPLE retirement
not taxable for FUTA tax. Include salaries, wages,
account (other than elective salary reduction
commissions, fees, bonuses, vacation allowances, and
contributions) and employer contributions to a 401(k)
amounts paid to temporary or part-time employees; the
plan (if included on line 1).
value of goods, lodging, food, clothing, and noncash
11. Employer payments to an Archer MSA.
fringe benefits; contributions to a 401(k) plan, payments
12. Benefits excludable under a section 125
to an Archer MSA, payments under adoption assistance
programs, and contributions to SIMPLE retirement
13. Certain statutory employees. (See section 1 in
accounts (including elective salary reduction
contributions); section 125 (cafeteria) plan benefits; and
14. Services performed by an inmate of a penal
sick pay (including third-party sick pay if liability is
transferred to the employer).
15. Employer reimbursements (including payments to a
third-party) for qualified moving expenses, to the extent
For details on sick pay, see Pub. 15-A, Employer’s
such expenses would otherwise be deductible by the
Supplemental Tax Guide. Report amounts deferred
employee. (See Pub. 521, Moving Expenses.)
under a nonqualified deferred compensation plan at the
16. Any other exempt service or pay.
later of (a) when services are performed or (b) when
there is no substantial risk of forfeiture of the rights to the
deferred amount. For details, see Regulations section
For more information, see section 15 in Circular E or
31.3306(r)(2)-1. Include tips of $20 or more in a month
section 15 in Circular A, Agricultural Employer’s Tax
reported to you by your employees. Also, include
Guide (Pub. 51).
payments made by a previous employer if you are
Line 3 — Payments of more than $7,000 for services.
counting those payments for the $7,000 wage base as
Enter the total of amounts over $7,000 you paid each
explained under Successor employer on page 5.
employee during 2001 after subtracting any exempt
Your method of payment does not determine whether
payments shown on line 2. For example, you had 10
employees and paid each $9,000 during the year,
payments are wages. Thus, you may pay wages hourly,
including $500 of exempt payments per employee. Enter
daily, weekly, monthly, or yearly. You may pay wages for
piecework or as a percentage of profits. You may pay
$15,000 on line 3, computed as follows: