Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2010


Department of the Treasury
Internal Revenue Service
Instructions for Form 940
Employer’s Annual Federal Unemployment (FUTA) Tax Return
you have questions about your state account, you must contact
Section references are to the Internal Revenue Code unless
your state unemployment agency. A contact list (for general
otherwise noted.
information only) of state unemployment tax agencies is
provided on page 12.
What’s New
You can file and pay electronically. Using electronic options
available from the Internal Revenue Service (IRS) can make
FUTA tax rate for 2011. The FUTA tax rate will remain at
filing a return and paying your federal tax easier. You can use
6.2% through June 30, 2011. The tax rate is scheduled to
IRS e-file to file a return and EFTPS to make deposits or pay in
decrease from 6.2% to 6.0% beginning July 1, 2011. Visit
full whether you rely on a tax professional or prepare your own for updated information.
For IRS e-file, visit for additional information.
Electronic deposit requirement. The IRS has issued
For EFTPS, visit
or call EFTPS Customer
proposed regulations under section 6302 that provide beginning
Service at 1-800-555-4477, 1-800-733-4829 (TDD), or
January 1, 2011, you must deposit all depository taxes (such as
1-800-244-4829 (Spanish).
employment tax, excise tax, and corporate income tax)
Electronic funds withdrawal (EFW). If you file Form 940
electronically using the Electronic Federal Tax Payment System
(EFTPS). Under these proposed regulations, which are
electronically, you can e-file and e-pay (electronic funds
expected to be finalized by December 31, 2010, Forms 8109
withdrawal) the balance due in a single step using tax
and 8109-B, Federal Tax Deposit Coupon, cannot be used after
preparation software or through a tax professional. However,
do not use EFW to make federal tax deposits. For more
December 31, 2010. For more information about EFTPS or to
enroll in EFTPS, visit the EFTPS website at , or
information on paying your taxes using EFW, visit the IRS
call 1-800-555-4477. You can also get Pub. 966, The Secure
website at A fee may be charged to file
Way to Pay Your Federal Taxes.
You can pay your balance due by credit or debit card. You
Credit reduction state. A state that has not repaid money it
may pay your FUTA tax shown on line 14 using a major credit
borrowed from the federal government to pay unemployment
card or debit card. However, do not use a credit or debit card to
benefits is a “credit reduction state.” The Department of Labor
pay taxes that are required to be deposited. (See When Must
determines these states. If an employer pays wages that are
You Deposit Your FUTA Tax? on page 3.) For more information
subject to the unemployment tax laws of a credit reduction
on paying your taxes with a credit or debit card, visit the IRS
state, that employer must pay additional federal unemployment
website at
tax when filing its Form 940.
Photographs of missing children. IRS is a proud partner
For 2010, Indiana, Michigan, and South Carolina are credit
with the National Center for Missing and Exploited Children.
reduction states. If you paid any wages that are subject to the
Photographs of missing children selected by the Center may
unemployment compensation laws of the state of Indiana, you
appear in instructions on pages that would otherwise be blank.
are not allowed .003 of the regular .054 credit; if you paid any
You can help bring these children home by looking at the
wages that are subject to the unemployment compensation
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
laws of the state of Michigan, you are not allowed .006 of the
you recognize a child.
regular .054 credit; and if you paid any wages that are subject
to the unemployment compensation laws of the state of South
How Can You Get More Help?
Carolina, you are not allowed .003 of the regular .054 credit.
Use Schedule A (Form 940), Part 2, to figure the tax. For more
If you want more information about this form, see Pub. 15
information, see the Specific Instructions on page 2 of Schedule
(Circular E), visit our website at, or call
A (Form 940) or visit
Aggregate Form 940 filers. Agents must complete Schedule
For a list of related employment tax topics, visit the IRS
R (Form 940), Allocation Schedule for Aggregate Form 940
website at and click on the “Businesses” tab.
Filers when filing an aggregate Form 940. Aggregate Forms
940 are filed by agents of home care service recipients
General Instructions:
approved by the IRS under section 3504 of the Internal
Revenue Code. To request approval to act as an agent for an
Understanding Form 940
employer, the agent must file Form 2678, Employer/Payer
Appointment of Agent, with the IRS.
What’s the Purpose of Form 940?
Use Form 940 to report your annual Federal Unemployment
Disregarded entities and qualified subchapter S
Tax Act (FUTA) tax. Together with state unemployment tax
subsidiaries (Qsubs). For wages paid on or after January 1,
systems, the FUTA tax provides funds for paying
2009, business entities that are disregarded as separate from
unemployment compensation to workers who have lost their
their owner, including qualified subchapter S subsidiaries, are
jobs. Most employers pay both a federal and a state
required to withhold and pay employment taxes and file
unemployment tax. Only employers pay FUTA tax. Do not
employment tax returns using the name and EIN of the
collect or deduct FUTA tax from your employees’ wages.
disregarded entity. For more information, see Disregarded
entities on page 5.
The FUTA tax applies to the first $7,000 you pay to each
employee during a calendar year after subtracting any
State unemployment information. You are no longer
payments exempt from FUTA tax.
required to list your state reporting number(s) on Form 940.
When you registered as an employer with your state, the state
These instructions give you some background information
assigned you a state reporting number. If you do not have a
about the Form 940. They tell you who must file the form, how
state unemployment account and state experience tax rate, or if
to fill it out line by line, and when and where to file it.
Cat. No. 13660I


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