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
You can file and pay electronically. Using electronic options
available from the Internal Revenue Service (IRS) can make
filing a return and paying your federal tax easier. You can use
IRS e-file to file a return and Electronic Federal Tax Payment
No credit reduction states. The U.S. Department of Labor
System (EFTPS) to make deposits or pay in full whether you
(DOL) has announced that there are no credit reduction states
rely on a tax professional or prepare your own taxes.
for tax year 2006. The lines for credit reduction entries have
For IRS e-file, visit for additional information.
been shaded out on the 2006 Form 940 and on Part 2 of the
For EFTPS, visit or call EFTPS Customer
2006 Schedule A (Form 940).
Service at 1-800-555-4477.
We’ve revised the form and instructions. You may notice a
You can pay your balance due by credit card. You may pay
number of changes in Form 940, Employer’s Annual Federal
your FUTA tax shown on line 14 using a major credit card.
Unemployment (FUTA) Tax Return. We revised the form and
Contact Official Payments Corporation at 1-800-272-9829, or
instructions so they are easier for you to read and fill out. At the
visit to make your payment by credit
same time, the new design makes the form easier and faster for
card. You may also contact Link2Gov Corporation at
us to process. Now we can optically scan Form 940 and will
1-888-729-1040, or visit their website at
capture data more accurately and efficiently than before. Please
However, do not use a credit card to pay taxes that are
read both the form and instructions carefully to become familiar
required to be deposited. (See When Must You Deposit Your
with the changes.
FUTA Tax? on page 3.) For more information on paying your
taxes with a credit card, see Pub. 15 (Circular E), Employer’s
The redesigned Form 940 replaces previous versions of
Tax Guide, or visit the IRS website at and type
both Form 940-EZ and Form 940. We have replaced two
“e-pay” in the search box.
forms with one simplified form that should make preparing your
tax return easier. If you filed Form 940-EZ before, you must
Photographs of missing children. IRS is a proud partner with
now use the redesigned Form 940.
the National Center for Missing and Exploited Children.
Photographs of missing children selected by the Center may
A new schedule was developed for multi-state employers
appear in instructions on pages that would otherwise be blank.
and employers in states that are subject to credit
You can help bring these children home by looking at the
reduction. In addition to the changes on the Form 940, we
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
developed Schedule A (Form 940), Multi-State Employer and
you recognize a child.
Credit Reduction Information. You must use Schedule A (Form
940) if you paid wages to employees in more than one state or
if you paid wages in any state that is subject to credit reduction
How Can You Get More Help?
(if any). However, for 2006 we shaded out the credit reduction
If you want more information about this form, see Pub. 15
part of Schedule A (Form 940) because there are no credit
(Circular E), visit our website at , or call
reduction states for 2006.
We’ve also developed a new worksheet for you to use if
For a list of related employment tax topics, visit the IRS
some of the wages you paid were excluded from state
website at and click on the “Businesses” tab.
unemployment tax or if you paid any state unemployment
tax late. On page 8, you’ll find an easier, all-inclusive
worksheet that you can use to compute the adjustment if you
paid any state unemployment tax late. You also use this
worksheet to figure the adjustment for additional FUTA tax if
Understanding Form 940
your state does not require you to pay state unemployment tax
on all your employees, for example, if wages paid to your
corporate officers are excluded from state unemployment tax.
What’s the Purpose of Form 940?
We’ve added a listing of contact information for state
Use Form 940 to report your annual Federal Unemployment
unemployment agencies. You must contact your state
Tax Act (FUTA) tax. Together with state unemployment tax
unemployment agency to receive your state reporting number,
systems, the FUTA tax provides funds for paying
state experience rate, and details about your state
unemployment compensation to workers who have lost their
unemployment tax obligations. The list, located on page 12,
jobs. Most employers pay both a federal and a state
contains the name of each state, telephone number(s), and web
unemployment tax. Only employers pay FUTA tax. Do not
address. For the most up-to-date information, visit the
collect or deduct FUTA tax from your employees’ wages.
Department of Labor’s website at
The FUTA tax applies to the first $7,000 you pay to each
employee during a calendar year after subtracting any exempt
You are no longer required to list your state reporting
number(s) on Form 940. When you registered as an employer
with your state, the state assigned you a state reporting
These instructions give you some background information
number. We are not asking for the state reporting numbers on
about the Form 940. They tell you who must file the form, how
the redesigned Form 940, because the states will provide the
to fill it out line by line, and when and where to file it.
state reporting numbers to the IRS.
Cat. No. 13660I