Looking for a Form 940 Templates? Download it for free!

If you were not required to pay state unemployment tax

Example for successor employers:

because all of the wages you paid were excluded from state

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

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

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

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

wages paid to corporate officers or employees in specific

acquisition, you employed Employee A and paid Employee A an

occupations, and the only wages you paid were to corporate

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

officers or employees in those specific occupations, you must

were payments exempt from FUTA tax.

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

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

$5,000 Wages paid by predecessor employer

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

+ 3,000 Wages paid by you

state unemployment tax payments. Because you did not pay

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

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

amount on line 3.

figure this adjustment.

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

$8,000 Total payments to Employee A

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

– 7,000 FUTA wage base

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

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

10. If SOME of the taxable FUTA wages you paid

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

were excluded from state unemployment tax,

+ 5,000 Taxable FUTA wages paid by predecessor employer

OR you paid ANY state unemployment tax late

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

Fill out the worksheet on the next page. The worksheet takes

you step by step through the process of figuring your credit. On

6. Subtotal

page 9, you’ll find an example of how to use it. Do not complete

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

the worksheet if line 9 applied to you (see instructions above).

enter the result on line 6.

Before you can properly fill out the worksheet, you will

need to gather the following information:

line 4

•

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

+ line 5

•

Taxable state unemployment wages (state and federal wage

line 6

bases may differ),

•

7. Total taxable FUTA wages

The experience rates assigned to you by the states where

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

Do not include any penalties, interest, or unemployment

8. FUTA tax before adjustments

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

CAUTION

by .008 and enter the result on line 8.

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.)

For line 3 of the worksheet:

Part 3: Determine Your Adjustments

•

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

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

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

assigned experience rate separately on the worksheet.

•

9. If ALL of the FUTA wages you paid were

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

excluded from state unemployment tax. . .

another sheet to figure the additional credits and then include

Multiply line 7 by .054 and enter the result on line 9.

those additional credits in your line 3 total.

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 - 2007 Page 7

Related Articles

Related forms

Related Categories