Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2001 Page 5


Total payments (10 x $9,000) . . . . . . . . . . . . . $90,000
Column (b). Enter the state reporting number
assigned to you when you registered as an employer with
Less: Exempt payments (10 x $500) . . . . . . . . ($5,000)
each state. Failure to enter the correct number may result
in unnecessary correspondence.
Less: Total wage base amount (10 x $7,000) . . ($70,000)
Column (c). Enter the state taxable payroll on which
Amount reported on line 3 . . . . . . . . . . . . . $15,000
you must pay state unemployment taxes for each state
shown in column (a). If your experience rate is 0%, enter
Only the first $7,000 paid to each employee is
the wages that would have been subject to state
subject to FUTA tax. Do not use the state wage base
unemployment tax if the 0% rate had not been granted.
for this entry. The state wage base may be different
Column (d). Enter the beginning and ending dates of
from the Federal wage base of $7,000. Do not include
the experience rate shown in column (e).
exempt payments from line 2 in figuring the $7,000.
Column (e). Enter your state experience rate — the
Successor employer. If you acquired a business
rate the state assigned to you for paying your state
from an employer who was required to file Form 940 (or
unemployment tax. This rate may change based on your
940-EZ), you may count the wages that employer paid to
“experience” with the state unemployment fund, for
the employees who continue to work for you when you
example, because of unemployment compensation paid
figure the $7,000 wage base. Include on line 3 the
to your former employees. If you do not know your
payments made by the previous employer that you
experience rate, contact your state unemployment office.
included on line 1.
The state experience rate can be stated as a percent or
If the first employer paid $7,000 or more to the
as a decimal.
employee, also include on line 3 all the wages you paid
Column (f). Multiply the amount in column (c) by .054.
to that employee. If the first employer did not pay at least
Column (g). Multiply the amount in column (c) by the
$7,000 to the employee, subtract what the first employer
rate in column (e).
paid from $7,000. Then subtract that result from the
Column (h). Subtract column (g) from column (f). If
wages you paid to the employee, and include any result
zero or less, enter -0-. This additional credit is the
on line 3.
difference between 5.4% and your state experience rate.
For example, during 2001, prior employer P paid
Column (i). Enter the contributions actually paid to
$5,000 to employee Jones before the acquisition and
the state unemployment fund by the due date for filing
acquirer A paid $3,000 to Jones after the acquisition.
Form 940. Do not include amounts you are required to
Subtracting the $5,000 from $7,000 yields $2,000.
pay but have not paid by the due date (January 31 or
Subtracting the $2,000 from $3,000 (wages paid by
February 11 as explained under When To File on page
acquirer A to Jones) yields $1,000. Acquirer A reports
1). If you are filing Form 940 after the due date, include
$8,000 (total payments) on line 1 and $6,000 ($5,000
only payments made by the return due date, and see the
paid by prior employer P and $1,000 in excess of the
instructions and worksheet under Line 6 — Credit
$7,000 wage base) on line 3. See section 3306(b)(1) and
below. If you are claiming excess credits as payments
Regulations section 31.3306(b)(1)-1(b).
of state unemployment contributions, attach a copy of the
Line 5 — Total taxable wages. This is the total amount
letter from your state. Do not include any penalties,
subject to FUTA tax. Use this amount in Part II to
interest, or special administrative taxes (such as
compute the gross FUTA tax and the maximum credit.
surcharges, employment and training taxes, excise tax,
and assessments, which are generally listed as a
Part II — Tax Due or Refund
separate item on the state’s quarterly wage report) not
included in the experience rate assigned to you.
Line 1 — Gross FUTA tax. Multiply the total taxable
wages from Part I, line 5, by .062. This is the maximum
Line 3a — Totals. Enter the totals of columns (h)
amount of FUTA tax.
and (i).
Line 2 — Maximum credit. Multiply the total taxable
Line 3b — Total tentative credit. Add line 3a, columns
wages from Part I, line 5, by .054. This is the maximum
(h) and (i). As noted above, column (i) includes only
credit against FUTA tax for state contributions.
payments to your state unemployment fund that you
made by the due date for filing Form 940. Payments
Line 3 — Computation of tentative credit. You must
made after the due date are eligible for a reduced credit
complete all applicable columns to receive any credit.
and will appear on line 6 as described below.
Your state will provide an experience rate to you. If you
have been assigned an experience rate of 0% or more,
Line 6 — Credit. This is the credit allowable for your
but less than 5.4%, for all or part of the year, use
payments to state unemployment funds. If you made no
columns (a) through (i). If you have not been assigned
late state contributions, enter the smaller of the amount
any experience rate, use columns (a), (b), (c), and (i)
from Part II, line 2 or line 3b. If you do not have to make
only. If you have been assigned a rate of 5.4% or higher,
payments to the state, enter zero on this line.
use columns (a), (b), (c), (d), (e), and (i) only. If you were
If any state contributions were made after the
assigned an experience rate for only part of the year or
Form 940 due date (January 31 or February 11 as
the rate was changed during the year, complete a
explained under When To File on page 1), your
separate line for each rate period.
credit for late contributions is limited to 90% of the
If you need additional lines, attach a separate
amount that would have been allowable as a credit if
statement with a similar format. Also, if you are a
such contributions were paid on or before the Form 940
successor employer, see Special credit for successor
due date.
employers, on page 3.
Column (a). Enter the two-letter abbreviation for the
state(s) to which you were required to pay contributions
(including the District of Columbia, Puerto Rico, and the
U.S. Virgin Islands).


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