(If you need to see the 2013 Form 940, click here.)
Employers must use Form 940 to report annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax. Do not deduct or collect FUTA tax from your employees' wages.
Assisted Payroll users: Assisted Payroll files Form 940 on your behalf. You should use this clickable form for reference only. If your forms need to be corrected, contact Assisted Payroll Support at 888.712.9702. Do not follow the instructions on the clickable form to correct QuickBooks.
Although Form 940 covers a calendar year, you may have to deposit your FUTA tax before you file your return. If your FUTA tax is more than $500 for the calendar year, you must deposit at least one quarterly payment.
You must determine when to deposit your tax based on the amount of your quarterly liability. If your FUTA tax is $500 or less in a quarter, carry it over to the next quarter. Continue carrying your tax liability over until your cumulative tax is more than $500. At that point, you must deposit your tax for the quarter. Deposit your FUTA tax by the last day of the month after the end of the quarter. If your tax for the next quarter is $500 or less, you are not required to deposit your tax again until the cumulative amount is more than $500.
|If your undeposited FUTA tax is more than $500 on||Deposit your tax by|
Fourth quarter liabilities. If your FUTA tax for the fourth quarter (plus any undeposited amounts from earlier quarters) is more than $500, deposit the entire amount by February 2, 2015. If it is $500 or less, you can either deposit the amount or pay it with your Form 940 by February 2, 2015.
In the years when there are credit reduction states, you must include liabilities owed for credit reduction with your fourth quarter deposit.
The due date for filing Form 940 for 2014 is February 2, 2015. However, if you deposited all your FUTA tax when it was due, you may file Form 940 by February 10, 2015.
This is an IRS form. In order to print your forms directly from QuickBooks, you must purchase preprinted forms. Click here to go to our tax forms page where you may purchase forms. If you use QuickBooks preprinted forms, they may look different, but they have been approved by the IRS.
Enter your EIN in the spaces provided. You must enter your name and EIN here and on page 2.
Employer identification number (EIN). An EIN is a unique nine-digit number assigned to sole proprietors, corporations, partnerships, estates, trusts, and other entities for tax filing and reporting purposes. Businesses that need an EIN must apply for a number and use it throughout the life of a business on all tax returns, payments, and reports.
Your business should have only one EIN. If you have more than one and are unsure which to use, call 1-800-829-4933 to verify your correct EIN.
If you do not have an EIN, apply for one by:
If you have not received your EIN by the time a return is due, write "Applied For" and the date you applied in the space shown for the EIN on pages 1 and 2 of your return.
Caution: If you are filing your tax return electronically, a valid EIN is required at the time the return is filed. If a valid EIN is not provided, the return will not be accepted. This may result in penalties.
Tip: Always be sure the EIN on the form you file exactly matches the EIN that the IRS assigned to your business. Do not use a social security number or individual taxpayer identification number (ITIN) on forms that ask for an EIN. Filing a Form 940 with an incorrect EIN or using the EIN of another's business may result in penalties and delays in processing your return.
QuickBooks pulls this number from the Company Information window.
If the EIN is incorrect, choose Company Information from the Company menu. Change the EIN in the Company Identification section, and click OK. Follow the on-screen instructions for changing the EIN with the payroll service.
Enter your name and address in the spaces provided. You must enter your name here and on page 2. Enter the business (legal) name that you used when you applied for your EIN on form SS-4, Application for Employer Identification Number. For example, if you are a sole proprietor, enter "Ronald Smith" on the Name line and "Ron's Cycles" on the Trade Name line. Leave the Trade Name line blank if it is the same as your Name.
If you pay a tax preparer to fill out Form 940, make sure the preparer shows your business name exactly as it appeared when you applied for your EIN.
Notify the IRS immediately if you change your business name or address.
QuickBooks pulls the information for the Name of the company from the Legal Name in the Company Information. The Trade Name is the name given your company in the Name section of the Company Information window.
To change the information in this section, choose Company Information from the Company menu. Make any necessary changes, and click OK.
Review the box at the top of the form. If any line applies to you, check the appropriate box to tell us which type of return you are filing. You may check more than one box.
Amended. If this is an amended return that you are filing to correct a return that you previously filed, check box a.
Successor employer. Check box b if you are a successor employer and:
A successor employer is an employer who:
No payments to employees in 2014. If you are not liable for FUTA tax for 2014 because you made no payments to employees in 2014, check box c. Then go to Part 7, sign the form, and file it with the IRS.
Final: Business closed or stopped paying wages. If this is a final return because you went out of business or stopped paying wages and you will not be liable for filing Form 940 in the future, check box d. Complete all applicable lines on the form, sign it in Part 7, and file it with the IRS. Include a statement showing the address at which your records will be kept and the name of the person keeping the records.
Disregarded entities. A disregarded entity is required to file 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 separate from its owner for federal income tax purposes is treated as a separate entity for purposes of payment and reporting federal employment taxes. If the entity does not currently have an EIN, it must apply for one using one of the methods explained earlier. Disregarded entities include single-owner limited liability companies (LLCs) that have not elected to be taxed as a corporation for federal income tax purposes, qualified subchapter S subsidiaries, and certain foreign entities treated as disregarded entities for U.S. income tax purposes. Although a disregarded entity is treated as a separate entity for employment tax purposes, it is not subject to FUTA tax if it is owned by a tax-exempt organization under section 501(c)(3) and is not required to file Form 940. For more information, see Disregarded entities and qualified subchapter S subsidiaries in the Introduction section of Pub. 15 (Circular E).
QuickBooks does not supply this information.
If you were required to pay state unemployment tax in one state only, enter the two-letter U.S. Postal Service abbreviation for the state where you were required to pay your state unemployment tax on line 1a. For a list of state abbreviations, see the Schedule A (Form 940) instructions or visit the website for the U.S. Postal Service at www.usps.com.
QuickBooks supplies the state abbreviation if you paid state unemployment in only one state.
If you were required to pay state unemployment tax in more than one state (you are a multi-state employer), check the box on line 1b. Then fill out Schedule A (Form 940), and attach it to your Form 940.
QuickBooks checks this box if you have accrued state unemployment taxes in more than one state.
If you paid wages that are subject to the unemployment tax laws of a credit reduction state, you may have to pay more FUTA tax when filing your Form 940.
A state that has not repaid money it borrowed from the federal government to pay unemployment benefits is called a credit reduction state. The U.S. Department of Labor determines which states are credit reduction states.
For tax year 2014, there are credit reduction states. If you paid wages subject to the unemployment tax laws of these states, check the box on line 2 and fill out Schedule A (Form 940). See the instructions for line 9 before completing Schedule A (Form 940).
QuickBooks checks this box if you paid state unemployment in a credit reduction state.
Report the total payments you made during the calendar year on line 3. Include payments for the services of all employees, even if the payments are not taxable for FUTA. Your method of payment does not determine whether payments are wages. You may have paid wages hourly, daily, weekly, monthly, or yearly. You may have paid wages for piecework or as a percentage of profits. Include:
Caution: Wages may be subject to FUTA tax even if they are excluded from your state's unemployment tax.
For details on wages and other compensation, see section 5 of Pub. 15-A.
From your employee's paychecks, QuickBooks totals all the payroll items with a tax-tracking type of Compensation, Reported Tips, Dependent Care FSA, Section 457 Distribution, Non-qual. Plan Distr, Fringe Benefits, Other Moving Expenses, 401(k), 403(b), 408(k)(6) SEP, Elective 457(b), Simple IRA, Taxable Grp Trm Life, Med Care Flex Spend, Premium Only/125, SCorp Pd Med Premium.
If any of them are incorrect, the tax-tracking type needs to be modified.
To change a tax-tracking type:
To find out how to run a Payroll Checkup, click here.
If you enter an amount on line 4, check the appropriate box or boxes on lines 4a through 4e to show the types of payments exempt from FUTA tax. You only report a payment as exempt from FUTA tax on line 4 if you included the payment on line 3.
Some payments are exempt from FUTA tax because the payments are not included in the definition of wages or the services are not included in the definition of employment. Payments exempt from FUTA tax may include :
See section 3306 and its related regulations for more information about FUTA taxation of retirement plan contributions, dependent care payments, and other payments.
For more information on payments exempt from FUTA tax, see section 14 in Pub. 15 (Circular E) or section 10 in Pub. 51 (Circular A).
QuickBooks does not supply this information.
Only the first $7,000 you paid to each employee in a calendar year, after subtracting any payments exempt from FUTA tax, is subject to FUTA tax. This $7,000 is called the FUTA wage base.
Enter on line 5 the total of the payments over the FUTA wage base you paid to each employee during 2014 after subtracting any payments exempt from FUTA tax as shown on line 4.
If you are a successor employer. When you figure the payments made to each employee in excess of the FUTA wage base, you may include the payments that the predecessor made to the employees who continue to work for you only if the predecessor was an employer for FUTA tax purposes resulting in the predecessor being required to file Form 940.
Line 5 is the total payments from line 3, less the total amount over $7,000 (the FUTA wage base) paid to each employee during the year. If an employee received less than the FUTA wage base during the year, the entire amount is excluded from the amount on line 5. Exempt payments are not included in total payments.
To see the amounts over the FUTA wage base, run a Payroll Item Detail report:
To figure your subtotal, add the amounts on lines 4 and 5 and enter the result on line 6.
QuickBooks calculates the amount by adding the amount of FUTA-exempt wages and the amount of wages over the FUTA wage base.
If the amount of wages exempt from FUTA is incorrect, see the verification instructions for line 4 and line 3.
To figure your total taxable FUTA wages, subtract line 6 from line 3 and enter the result on line 7.
QuickBooks calculates the line 7 amount by subtracting the subtotal on line 6 from your total payments.
If the amount from line 6 or line 3 is incorrect, this line will be incorrect. See the verification instructions for lines 3 and 4, which make up the numbers in this calculation.
To figure your total FUTA tax before adjustments, multiply line 7 by .006 and then enter the result on line 8.
QuickBooks calculates this amount.
If the amount from line 7 is incorrect, this line will be incorrect. See the verification instructions for lines 3 and 4, which make up the numbers in this calculation.
If all of the taxable FUTA wages you paid were excluded from state unemployment tax, multiply line 7 by .054 and enter the result on line 9.
If you were not required to pay state unemployment tax because all of the wages you paid were excluded from state unemployment tax, you must pay FUTA tax at the 6.0% (.060) rate. For example, if your state unemployment tax law excludes wages paid to corporate officers or employees in specific occupations, and the only wages you paid were to corporate officers or employees in those specific occupations, you must pay FUTA tax on those wages at the full FUTA rate of 6.0% (.060). When you figured the FUTA tax before adjustments on line 8, it was based on the maximum allowable credit (5.4%) for state unemployment tax payments. Because you did not pay state unemployment tax, you do not have a credit and must figure this adjustment.
If line 9 applies to you, lines 10 and 11 do not apply to you. Therefore, leave lines 10 and 11 blank. Do not fill out the worksheet in the Instructions for Form 940. Complete Schedule A (Form 940) only if you are a multi-state employer.
If all wages you paid to employees were not subject to state unemployment tax (as defined in your setup interview), QuickBooks adds them together and multiplies that amount by .054.
If there is a value for line 9, QuickBooks will not figure a value for lines 10 and 11.
If this figure is incorrect, you may have incorrectly set up the tax-tracking type of one or more of payroll items.
To change a tax-tracking type:
You must fill out the worksheet on page 9 of the IRS Instructions for Form 940 if:
The worksheet takes you step by step through the process of figuring your credit. Do not complete the worksheet if line 9 applied to you (see instructions for line 9).
Before you can properly fill out the worksheet, you will need to gather the following information:
-- Taxable FUTA wages (Form 940, line 7).
-- Taxable state unemployment wages (state and federal wage bases may differ).
-- The experience rates assigned to you by the states where you paid wages.
-- The amount of state unemployment taxes you paid on time (On time means that you paid the state unemployment taxes by the due date for filing Form 940).
-- The amount of state unemployment taxes you paid late. (Late means after the due date for filing Form 940.)
Caution: Do not include any penalties, interest, or unemployment taxes deducted from your employees' pay in the amount of state unemployment taxes. Also, do not include as state unemployment taxes any special administrative taxes or voluntary contributions you paid to get a lower assigned experience rate or any surcharges, excise taxes, or employment and training taxes. (These items are generally listed as separate items on the state's quarterly wage report.)
For line 3 of the worksheet:
After you complete the worksheet, enter the amount from line 7 of the worksheet on Form 940, line 10. Do not attach the worksheet to your Form 940. Keep it with your records.
If you answer "YES" on part 3 of the QuickBooks Form 940 interview to the statement that some wages were exempt from state unemployment or that state unemployment was paid late, QuickBooks calculates the amount for line 7 of the 940 worksheet.
If there was a value calculated for line 9, QuickBooks does not enter an amount for line 10.
If there was no value for line 9, QuickBooks adds together all wages paid that have a FUTA-taxable tax-tracking type.
If any state unemployment taxes were paid late, fill out the worksheet in the Interview, and QuickBooks will enter the amount from line 7 of the worksheet onto line 10 of the Form 940.
If you paid FUTA taxable wages that were also subject to state unemployment taxes in any states that are subject to credit reduction, enter the total amount from Schedule A (Form 940) on Form 940, line 11. However, if you entered an amount on line 9 because all the FUTA taxable wages you paid were excluded from state unemployment tax, skip line 11 and go to line 12.
In calculating the amount for line 2a (which is also entered on line 3) of Schedule A, QuickBooks does the following:
-- If you only paid wages in credit reduction states, QuickBooks enters the total taxable FUTA wages.
-- If you paid wages in one of the credit reduction states and in additional states, QuickBooks calculates this amount by allocating the credit reduction states' SUI wages applicable to FUTA.
There are two scenarios in which QuickBooks might overstate this amount:
To verify your employee wages for a credit reduction state run a Payroll Item Detail report in QuickBooks:
Add the amounts shown on lines 8, 9, 10, and 11, and enter the result on line 12.
Caution: If line 9 is greater than zero, lines 10 and 11 must be zero because they would not apply.
QuickBooks calculates this amount by adding together the amounts for lines 8, 9, 10, and 11.
If the amount from line 8, 9 10, or 11 is incorrect, this box will be incorrect. See the verification instructions for boxes 8, 9, 10, and 11 which make up the numbers in this calculation.
Enter the amount of FUTA tax that you deposited for the year, including any overpayment that you applied from a prior year.
QuickBooks calculates the total of FUTA payments processed during the filing period prior to creating this form.
If this number is incorrect, you can check your FUTA payments.
If line 13 is less than line 12, enter the difference on line 14.
If line 14 is:
Caution: If you do not deposit as required and pay any balance due with Form 940, you may be subject to a penalty.
If you pay by EFT, credit card, or debit card, file your return using the Without a payment address on page 2 of the IRS Instructions for Form 940 under Where Do You File. Do not file Form 940-V, Payment Voucher.
What if I cannot pay in full? If you cannot pay the full amount of tax you owe, you can apply for an installment agreement online. You can apply for an installment agreement online if:
To apply using the Online Payment Agreement Application, go to IRS.gov, click on Tools, then click on Online Payment Agreement.
Under an installment agreement, you can pay what you owe in monthly installments. There are certain conditions you must meet to enter into and maintain an installment agreement, such as paying the liability within 24 months, and making all required deposits and timely filing returns during the length of the agreement.
If your installment agreement is accepted, you will be charged a fee and you will be subject to penalties and interest on the amount of tax not paid by the due date of the return.
Line 14 is based on the Liability Payments entered into QuickBooks for the tax period prior to creating this form.
If the amount from line 12 or 13 is incorrect, this line will be incorrect. See the verification instructions for lines 12 and 13, which make up the numbers in this calculation.
If line 13 is more than line 12, enter the difference on line 15.
If you deposited more than the FUTA tax due for the year, you may choose to have us either:
Check the appropriate box in line 15 to tell us which option you select. If you do not check either box, we will automatically refund your overpayment, less any amount we apply to any past due tax account shown in our records under your EIN.
If line 15 is less than $1, we will send you a refund or apply it to your next return only if you ask for it in writing.
If line 13 is more than line 12, QuickBooks enters the result here.
If the amount from line 12 or 13 is incorrect, this line will be incorrect. See the verification instructions for lines 12 and 13, which make up the numbers in this calculation.
Fill out Part 5 only if line 12 is more than $500. If line 12 is $500 or less, leave Part 5 blank and go to Part 6.
Enter the amount of your FUTA tax liability for each quarter on lines 16a-d. Do not enter the amount you deposited. If you had no liability for a quarter, leave the line blank.
16a - 1st quarter (January 1 to March 31)
16b - 2nd quarter (April 1 to June 30)
16c - 3rd quarter (July 1 to September 30)
16d - 4th quarter (October 1 to December 31)
To figure your FUTA tax liability for the fourth quarter, complete Form 940 through line 12. Then copy the amount from line 12 onto line 17. Lastly, subtract the sum of lines 16a through 16c from line 17 and enter the result on line 16d.
Tip: In years when there are credit reduction states, you must include liabilities owed for credit reduction with your fourth quarter deposit. You may deposit the anticipated extra liability throughout the year, but it is not due until the due date for the deposit for the fourth quarter, and the associated liability should be recorded as being incurred in the fourth quarter.
If your Federal Unemployment Liabilities were $500 or less, QuickBooks leaves this part blank. Otherwise, QuickBooks calculates the amounts based on the amount of Federal Unemployment on paychecks.
To find out what each quarter's Federal Unemployment was:
Your total tax liability for the year must equal line 12. Copy the amount from line 12 onto line 17.
QuickBooks enters the same figure in lines 12 and 17.
If the amount from line 8, 9, 10, or 11 is incorrect, this box will be incorrect. See the verification instructions for boxes 8, 9, 10, and 11, which make up the numbers in this calculation.
If you want to allow an employee, your paid tax preparer, or another person to discuss your Form 940 with the IRS, check the "Yes" box. Then enter the name and phone number of the person you choose as your designee. Be sure to give us the specific name of a person--not the name of the firm that prepared your tax return.
Have your designee select a 5-digit Personal Identification Number (PIN) that he or she must use as identification when talking to the IRS about your form.
By checking "Yes," you authorize us to talk to your designee about any questions that we may have while we process your return. Your authorization applies only to this form, for this year; it does not apply to other forms or other tax years.
You are authorizing your designee to:
You are not authorizing your designee to:
The authorization will automatically expire 1 year after the due date for filing your Form 940 (regardless of extensions). If you or your designee want to end the authorization before it expires, write to the IRS office for your location, using the Without a payment address under Where Do You File? in the Instructions for Form 940.
If you want to expand your designee's authorization or if you want us to send your designee copies of your notices, see Pub. 947, Practice Before the IRS and Power of Attorney.
Failure to sign will delay the processing of your return.
On page 2 in Part 7, sign and print your name and title. Then enter the date and the best daytime telephone number, including area code, where we can reach you if we have any questions.
Who must sign Form 940.
The following persons are authorized to sign the return for each type of business entity.
Form 940 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney or reporting agent authorization (Form 8655, Reporting Agent Authorization) has been filed.
Alternative signature method. Corporate officers or duly authorized agents may sign Form 940 by rubber stamp, mechanical device, or computer software program. For details and required documentation, see Rev. Proc. 2005-39, 2005-28 I.R.B. 82, available at www.irs.gov/irb/2005-28_IRB/ar16.html.
A paid preparer must sign Form 940 and provide the information in the Paid Preparer Use Only section of Part 7 if the preparer was paid to prepare Form 940 and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give you a copy of the return in addition to the copy to be filed with IRS.
If you are a paid preparer, enter your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, write the firm's name and the EIN of your firm. You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal. For more information about applying for a PTIN online, visit the IRS website at www.irs.gov/ptin. You cannot use your PTIN in place of the EIN of the tax preparation firm.
Generally, do not complete the Paid Preparer Use Only section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, by advising the client on determining whether its workers are employees or independent contractors for Federal tax purposes.