Instructions For Form 940 - Employer'S Annual Federal Unemployment (Futa) Tax Return - 2004


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Department of the Treasury
Internal Revenue Service
Instructions for Form 940
Employer’s Annual Federal Unemployment
(FUTA) Tax Return
Section references are to the Internal Revenue Code unless otherwise noted.
State unemployment information. You must contact
What’s New
your state unemployment tax office to receive your state
reporting number, state experience rate, and details
Credit reduction state. A state that has not repaid
about your state unemployment tax obligations.
money it borrowed from the federal government to pay
unemployment benefits is a “credit reduction state.” The
Worksheet for computing the Part II, line 4 credit if
Department of Labor determines these states. If an
state contributions were paid late. Filers who made
employer pays wages that are subject to the
contributions to their state unemployment fund after the
unemployment tax laws of a credit reduction state, that
due date for filing Form 940 should complete the
employer must pay additional federal unemployment tax
worksheet provided in the instructions for Part II, line 4,
when filing its Form 940. Employers in a credit reduction
on page 6, to compute the allowable credit. Do not report
state cannot file Form 940-EZ.
such contributions in Part II, line 3, column (i) or on line
3b. Any credit allowed for such state contributions will
For 2004, New York is a credit reduction state. If you
appear on line 4.
paid any wages that are subject to the unemployment
compensation laws of the State of New York, you are not
Electronic Filing and Payment
allowed .003 of the regular .054 credit. Use Form 940,
Now, more than ever before, businesses can enjoy the
Part I, line 6 to show this tax. If you must complete Form
benefits of filing and paying their federal taxes
940, Part III, Record of Quarterly Federal Unemployment
electronically. Whether you rely on a tax professional or
Tax Liability, include any additional tax from Part I, line 6
handle your own taxes, IRS offers you convenient
in the fourth quarter column and include the amount with
programs to make it easier.
your fourth quarter tax deposit.
Spend less time and worry on taxes and more time
New lines for credit reduction computations. We
running your business. Use e-file and Electronic Federal
added Part I, line 6 to show the additional FUTA tax due
Tax Payment System (EFTPS) to your benefit.
from employers in a credit reduction state. We moved the
For e-file, visit for additional information.
“Credit” line in Part II (formerly line 6) to line 4, added
For EFTPS, visit or call EFTPS
Part II, line 5 to show the credit reduction amount, and
Customer Service at 1-800-555-4477.
designated Part II, line 6 as “Credit allowable.”
Use electronic options available from IRS and make
Increase to FUTA tax deposit threshold. The Treasury
filing and paying taxes easier.
Department recently amended Regulations section
31.6302(c)-3 to increase the accumulated FUTA tax
Photographs of Missing Children
deposit threshold from $100 to $500. The $500 threshold
The Internal Revenue Service is a proud partner with the
applies to FUTA tax deposits required for taxes reported
National Center for Missing and Exploited Children.
on Forms 940, 940-EZ, and 940-PR, Employer’s Annual
Photographs of missing children selected by the Center
Federal Unemployment (FUTA) Tax Return, for tax
may appear in instructions on pages that would otherwise
periods beginning after December 31, 2004.
be blank. You can help bring these children home by
New line for name and EIN. We added a new line to the
looking at the photographs and calling 1-800-THE-LOST
top of page 2 on Form 940 to be completed by filers
(1-800-843-5678) if you recognize a child.
using forms that were not preaddressed by the IRS.
Purpose of Form
General Instructions
Use Form 940 (or Form 940-EZ) to report your annual
Federal Unemployment Tax Act (FUTA) tax. FUTA tax,
together with state unemployment systems, provides for
payments of unemployment compensation to workers
Mailing address change. You may need to mail Form
who have lost their jobs. Most employers pay both
940 to a different address than in previous years because
federal and state unemployment taxes. Only the
the IRS has changed the filing location for several areas.
employer pays FUTA tax. Do not collect or deduct it
If an envelope was received with the tax package, please
from your employees’ wages. The tax applies to the first
use it. Otherwise, see Where To File on page 3.
$7,000 you pay each employee in a year after subtracting
Signature on Form 940. Only an authorized individual
any exempt payments. The $7,000 amount is the federal
may sign Form 940. See Signature on page 8.
wage base. Your state wage base may be different.
Cat. No. 13660I


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