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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

CAUTION

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

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