Instructions For Form 940 - 2017 (Page 6 of 12) in pdf

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

Acquires substantially all the property used in a trade or

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

Credit Reduction

unit of a trade or business of a predecessor, and

If you paid wages that are subject to the unemployment tax laws

Immediately after the acquisition, employs one or more

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

people who were employed by the predecessor.

when filing your Form 940.

No payments to employees in 2015. If you aren't liable for

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

FUTA tax for 2015 because you made no payments to

government to pay unemployment benefits is called a “credit

employees in 2015, check box c. Then go to Part 7, sign the

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

form, and file it with the IRS.

which states are credit reduction states.

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

For tax year 2015, 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

Report the total payments you made during the calendar year on

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

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

methods under Employer identification number (EIN), earlier.

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

Disregarded entities include single-owner limited liability

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.

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

subchapter S subsidiaries, and certain foreign entities treated as

profits. Include:

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

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.

1. If You Were Required to Pay Your State

—Section 125 (cafeteria) plan benefits.

Unemployment Tax In . . .

Retirement/Pension, such as:

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

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

Archer MSA, payments under adoption assistance

not required to pay any state unemployment tax

programs, and contributions to SIMPLE retirement accounts

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

(including elective salary reduction contributions).

CAUTION

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

—Amounts deferred under a non-qualified deferred

paid to all employees in all states were excluded from state

compensation plan.

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

Other payments, such as:

complete line 9 because all of the taxable FUTA wages you paid

were excluded from state unemployment tax.

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

reported to you.

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

—Payments made by a predecessor employer to the

unemployment taxes.

employees of a business you acquired.

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

—Payments to nonemployees who are treated as your

abbreviation for the state where you were required to pay your

employees by the state unemployment tax agency.

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

Wages may be subject to FUTA tax even if they are

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

excluded from your state's unemployment tax.

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

CAUTION

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

For details on wages and other compensation, see section 5

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

of Pub. 15-A.

and attach it to your Form 940.

Instructions for Form 940 (2015)

Instructions For Form 940 - 2017 Page 6

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