Instructions For Form 940 - 2016 (Page 7 of 12) in pdf

For more information on payments exempt from FUTA tax,

Example:

see section 15 in Pub. 15.

You had 3 employees. You paid $44,000 to Employee A, $8,000

Example:

to Employee B, and $16,000 to Employee C.

$44,000 Amount paid to Employee A

You had 3 employees. You paid $44,000 to Employee A

8,000 Amount paid to Employee B

including $2,000 in health insurance benefits. You paid $8,000 to

+ 16,000 Amount paid to Employee C

Employee B, including $500 in retirement benefits. You paid

$68,000 Total payments to employees. You would enter this amount on

$16,000 to Employee C, including $2,000 in health and

line 3.

retirement benefits.

4. Payments Exempt from FUTA Tax

$ 2,000 Health insurance benefits for Employee A

500

Retirement benefits for Employee B

If you enter an amount on line 4, check the appropriate box or

+ 2,000 Health and retirement benefits for Employee C

boxes on lines 4a through 4e to show the types of payments

$4,500 Total payments exempt from FUTA tax. You would enter this

exempt from FUTA tax. You only report a payment as exempt

amount on line 4 and check boxes 4a and 4c.

from FUTA tax on line 4 if you included the payment on

line 3.

5. Total of Payments Made to Each Employee in

Some payments are exempt from FUTA tax because the

Excess of $7,000

payments aren't included in the definition of wages or the

Only the first $7,000 you paid to each employee in a calendar

services aren't included in the definition of employment.

year, after subtracting any payments exempt from FUTA tax, is

Payments exempt from FUTA tax may include:

subject to FUTA tax. This $7,000 is called the FUTA wage base.

Fringe benefits, such as:

Enter on line 5 the total of the payments over the FUTA wage

—The value of certain meals and lodging.

base you paid to each employee during 2016 after subtracting

—Contributions to accident or health plans for employees,

any payments exempt from FUTA tax shown on line 4.

including certain employer payments to a Health Savings

Account or an Archer MSA.

—Employer reimbursements (including payments to a third

Following our example:

party) for qualified moving expenses, to the extent that these

expenses would otherwise be deductible by the employee.

You had three employees. You paid $44,000 to Employee A, $8,000 to

—Payments for benefits excluded under section 125

Employee B, and $16,000 to Employee C, including a total of $4,500 in

(cafeteria) plans.

payments exempt from FUTA tax for all three employees. To determine the

Group term life insurance.

total payments made to each employee in excess of the FUTA wage base,

For information about group term life insurance and other

the payments exempt from FUTA tax and the FUTA wage base must be

payments for fringe benefits that may be exempt from FUTA tax,

subtracted from total payments. These amounts are shown in parentheses.

see Pub. 15-B.

Employees

Retirement/Pension, such as employer contributions to a

Total payments to employees

$44,000

$8,000

$16,000

qualified plan, including a SIMPLE retirement account (other

Payments exempt from FUTA tax

(2,000)

(500)

(2,000)

than elective salary reduction contributions) and a 401(k) plan.

FUTA wage base

(7,000)

Dependent care, such as payments (up to $5,000 per

$35,000

$ 500

$ 7,000

employee, $2,500 if married filing separately) for a qualifying

Total of payments made to each employee in excess of the

$42,500

person's care that allows your employees to work and that would

FUTA wage base. You would enter this amount on line 5.

be excludable by the employee under section 129.

Other payments, such as:

—All non-cash payments and certain cash payments for

If you’re a successor employer . . . When you figure the

agricultural labor, and all payments to “H-2A” visa workers.

payments made to each employee in excess of the FUTA wage

See For Agricultural Employers, earlier, or see Pub. 51.

base, you may include the payments that the predecessor made

—Payments made under a workers' compensation law

to the employees who continue to work for you only if the

because of a work-related injury or sickness. See section 6

predecessor was an employer for FUTA tax purposes resulting

of Pub. 15-A.

in the predecessor being required to file Form 940.

—Payments for domestic services if you didn't pay cash

wages of $1,000 or more (for all domestic employees) in any

Example for successor employers:

calendar quarter in 2015 or 2016, or if you file Schedule H

(Form 1040). See For Employers of Household Employees,

earlier, or Pub. 926.

During the calendar year, the predecessor employer paid $5,000 to Employee A. You

acquired the predecessor's business. After the acquisition, you employed Employee A and

—Payments for services provided to you by your parent,

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

spouse, or child under the age of 21. See section 3 of Pub.

were payments exempt from FUTA tax.

15.

$5,000 Wages paid by predecessor employer

—Payments for certain fishing activities. See Pub. 334,Tax

+ 3,000 Wages paid by you

Guide for Small Business.

$8,000 Total payments to Employee A. You would include this amount on line 3.

—Payments to certain statutory employees. See section 1 of

Pub. 15-A.

$8,000 Total payments to Employee A

– 7,000 FUTA wage base

—Payments to nonemployees who are treated as your

$1,000 Payments made to Employee A in excess of the FUTA wage base.

employees by the state unemployment tax agency.

$1,000 Payments made to Employee A in excess of the FUTA wage base.

See section 3306 and its related regulations for more

+ 5,000 Taxable FUTA wages paid by predecessor employer

information about FUTA taxation of retirement plan

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

contributions, dependent care payments, and other payments.

Instructions for Form 940 (2016)

Instructions For Form 940 - 2016 Page 7

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