Instructions For Form 940 - 2016 (Page 6 of 12) in pdf

2. If You Paid Wages in a State That is Subject

Acquires substantially all the property used in a trade or

business of another person (predecessor) or used in a separate

to Credit Reduction

unit of a trade or business of a predecessor, and

A state that hasn't repaid money it borrowed from the federal

Immediately after the acquisition, employs one or more

government to pay unemployment benefits is called a “credit

people who were employed by the predecessor.

reduction state.” The U.S. Department of Labor determines

No payments to employees in 2016. If you’re not liable for

which states are credit reduction states.

FUTA tax for 2016 because you made no payments to

If you paid wages that are subject to the unemployment tax

employees in 2016, check box c. Then go to Part 7, sign the

laws of a credit reduction state, you may have to pay more FUTA

form, and file it with the IRS.

tax when filing your Form 940.

Final: Business closed or stopped paying wages. If this is a

For tax year 2016, there are credit reduction states. If you

final return because you went out of business or stopped paying

paid wages subject to the unemployment tax laws of these

wages and you won't be liable for filing Form 940 in the future,

states, check the box on line 2 and fill out Schedule A (Form

check box d. Complete all applicable lines on the form, sign it in

940). See the instructions for line 9 before completing the

Part 7, and file it with the IRS. Include a statement showing the

Schedule A (Form 940).

address at which your records will be kept and the name of the

person keeping the records.

Part 2: Determine Your FUTA Tax

Disregarded entities. A disregarded entity is required to file

Before Adjustments

Form 940 using its name and EIN, not the name and EIN of its

owner. An entity that has a single owner and is disregarded as

If any line in Part 2 doesn't apply, leave it blank.

separate from its owner for federal income tax purposes is

treated as a separate entity for purposes of payment and

3. Total Payments to All Employees

reporting federal employment taxes. If the entity doesn't

currently have an EIN, it must apply for one using one of the

Report the total payments you made during the calendar year on

methods under Employer identification number (EIN), earlier.

line 3. Include payments for the services of all employees, even

Disregarded entities include single-owner limited liability

if the payments aren't taxable for FUTA. Your method of

companies (LLCs) that haven't elected to be taxed as a

payment doesn't determine whether payments are wages. You

corporation for federal income tax purposes, qualified

may have paid wages hourly, daily, weekly, monthly, or yearly.

subchapter S subsidiaries, and certain foreign entities treated as

You may have paid wages for piecework or as a percentage of

disregarded entities for U.S. income tax purposes. Although a

profits. Include:

disregarded entity is treated as a separate entity for employment

Compensation, such as:

tax purposes, it isn't subject to FUTA tax if it is owned by a

—Salaries, wages, commissions, fees, bonuses, vacation

tax-exempt organization under section 501(c)(3) and isn't

allowances, and amounts you paid to full-time, part-time, or

required to file Form 940. For more information, see Disregarded

temporary employees.

entities and qualified subchapter S subsidiaries in the

Introduction section of Pub. 15.

Fringe benefits, such as:

—Sick pay (including third-party sick pay if liability is

Specific Instructions

transferred to the employer). For details on sick pay, see

Pub. 15-A, Employer's Supplemental Tax Guide.

Part 1: Tell Us About Your Return

—The value of goods, lodging, food, clothing, and non-cash

fringe benefits.

—Section 125 (cafeteria) plan benefits.

1. If You Were Required to Pay Your State

Retirement/Pension, such as:

Unemployment Tax In . . .

—Employer contributions to a 401(k) plan, payments to an

Archer MSA, payments under adoption assistance

You must complete line 1a or line 1b even if you were

programs, and contributions to SIMPLE retirement accounts

not required to pay any state unemployment tax

(including elective salary reduction contributions).

because your state unemployment tax rate(s) was zero.

CAUTION

—Amounts deferred under a non-qualified deferred

You may leave lines 1a and 1b blank only if all of the wages you

compensation plan.

paid to all employees in all states were excluded from state

Other payments, such as:

unemployment tax. If you leave lines 1a and 1b blank, and line 7

is more than zero, you must complete line 9 because all of the

—Tips of $20 or more in a month that your employees

taxable FUTA wages you paid were excluded from state

reported to you.

unemployment tax.

—Payments made by a predecessor employer to the

employees of a business you acquired.

Identify the state(s) where you were required to pay state

—Payments to nonemployees who are treated as your

unemployment taxes.

employees by the state unemployment tax agency.

1a. One state only. Enter the two-letter U.S. Postal Service

Wages may be subject to FUTA tax even if they are

abbreviation for the state where you were required to pay your

excluded from your state's unemployment tax.

state unemployment tax on line 1a. For a list of state

abbreviations, see the Schedule A (Form 940) instructions or

CAUTION

visit the website for the U.S. Postal Service at

For details on wages and other compensation, see section 5

of Pub. 15-A.

1b. More than one state (you’re a multistate employer).

Check the box on line 1b. Then fill out Schedule A (Form 940)

and attach it to your Form 940.

Instructions for Form 940 (2016)

Instructions For Form 940 - 2016 Page 6

Related Articles

Related forms

Related Categories