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If you are a successor employer . . . When you figure the

If you were not required to pay state unemployment tax

payments made to each employee in excess of $7,000, you

because all of the wages you paid were excluded from state

may include the payments that the predecessor made to the

unemployment tax, you must pay FUTA tax at the 6.2% (.062)

employees who continue to work for you only if the

rate. For example, if your state unemployment tax law excludes

predecessor was an employer for FUTA tax purposes resulting

wages paid to corporate officers or employees in specific

in the predecessor being required to file Form 940.

occupations, and the only wages you paid were to corporate

officers or employees in those specific occupations, you must

pay FUTA tax on those wages at the full FUTA rate of 6.2%

Example for successor employers:

(.062). When you figured the FUTA tax before adjustments on

line 8, it was based on the maximum allowable credit (5.4%) for

During the calendar year, the predecessor employer paid $5,000 to

state unemployment tax payments. Because you did not pay

Employee A. You acquired the predecessor’s business. After the

state unemployment tax, you do not have a credit and must

acquisition, you employed Employee A and paid Employee A an

figure this adjustment.

additional $3,000 in wages. None of the amounts paid to Employee A

were payments exempt from FUTA tax.

If line 9 applies to you, lines 10 and 11 do not apply to you.

Therefore, leave lines 10 and 11 blank. Do not fill out the

$5,000 Wages paid by predecessor employer

worksheet in the instructions or Part 2, Schedule A (Form 940).

+ 3,000 Wages paid by you

$8,000 Total payments to Employee A. You would include this

10. If SOME of the taxable FUTA wages you paid

amount on line 3.

were excluded from state unemployment tax,

OR you paid ANY state unemployment tax late...

$8,000 Total payments to Employee A

– 7,000 FUTA wage base

You must fill out the worksheet on the next page if:

$1,000 Payments made to Employee A in excess of $7,000.

•

Some of the taxable FUTA wages you paid were excluded

from state unemployment, or

$1,000 Payments made to Employee A in excess of $7,000.

•

Any of your payments of state unemployment tax were late.

+ 5,000 Taxable FUTA wages paid by predecessor employer

The worksheet takes you step by step through the process of

$6,000 You would include this amount on line 5.

figuring your credit. On page 9, you’ll find an example of how to

use it. Do not complete the worksheet if line 9 applied to you

6. Subtotal

(see instructions above).

To figure your subtotal, add the amounts on lines 4 and 5 and

Before you can properly fill out the worksheet, you will

enter the result on line 6.

need to gather the following information:

•

Taxable FUTA wages (from line 7 of Form 940),

line 4

•

+ line 5

Taxable state unemployment wages (state and federal wage

line 6

bases may differ),

•

The experience rates assigned to you by the states where

7. Total taxable FUTA wages

you paid wages,

To figure your total taxable FUTA wages, subtract line 6 from

•

The amount of state unemployment taxes you paid on time

line 3 and enter the result on line 7.

(On time means that you paid the state unemployment taxes by

the due date for filing Form 940), and

line 3

•

The amount of state unemployment taxes you paid late. (Late

− line 6

means after the due date for filing Form 940.)

line 7

8. FUTA tax before adjustments

Do not include any penalties, interest, or unemployment

taxes deducted from your employees’ pay in the amount

To figure your total FUTA tax before adjustments, multiply line 7

of state unemployment taxes. Also, do not include as

by .008 and enter the result on line 8.

CAUTION

state unemployment taxes any special administrative taxes or

voluntary contributions you paid to get a lower assigned

line 7

experience rate or any surcharges, excise taxes, or

x .008

employment and training taxes. (These items are generally

line 8

listed as separate items on the state’s quarterly wage report.)

Part 3: Determine Your Adjustments

For line 3 of the worksheet:

•

If any of the experience rates assigned to you were less than

If any line in Part 3 does not apply, leave it blank.

5.4% for any part of the calendar year, you must list each

9. If ALL of the FUTA wages you paid were

assigned experience rate separately on the worksheet.

excluded from state unemployment tax. . .

•

If you were assigned six or more experience rates that were

less than 5.4% for any part of the calendar year, you must use

If all of the FUTA wages you paid were excluded from state

another sheet to figure the additional credits and then include

unemployment tax, multiply line 7 by .054 and enter the result

those additional credits in your line 3 total.

on line 9.

After you complete the worksheet, enter the amount from

line 7

line 7 of the worksheet on line 10 of Form 940. Do not attach

x .054

the worksheet to your Form 940. Keep it with your records.

line 9

-7-

Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2010 Page 7

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