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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

IRS.gov for updated information.

taxes.

•

For IRS e-file, visit IRS.gov 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 IRS.gov/e-pay. A fee may be charged to file

Way to Pay Your Federal Taxes.

electronically.

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 IRS.gov/e-pay.

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 IRS.gov, or call

A (Form 940) or visit IRS.gov.

1-800-829-4933.

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 IRS.gov 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?

Reminders

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

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

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