2020 Department of the Treasury

Internal Revenue Service

Instructions for Form 940

Employer's Annual Federal Unemployment (FUTA) Tax Return
Section references are to the Internal Revenue Code liabilities of both the CPEO and its customers. A CPEO is
unless otherwise noted. generally treated for employment tax purposes as the
employer of any individual who performs services for a
Future Developments customer of the CPEO and is covered by a contract
described in section 7705(e)(2) between the CPEO and
For the latest information about developments related to the customer (CPEO contract), but only for wages and
Form 940 and its instructions, such as legislation enacted other compensation paid to the individual by the CPEO.
after they were published, go to IRS.gov/Form940. To become a CPEO, the organization must apply through
the IRS Online Registration System. For more information
What's New or to apply to become a CPEO, visit the IRS website at
IRS.gov/CPEO.
Credit reduction state. A state that hasn't repaid money
it borrowed from the federal government to pay For wages paid to a work site employee, a CPEO is
unemployment benefits is a “credit reduction state.” The eligible for the credit for state unemployment tax paid to a
Department of Labor determines these states. If an state unemployment fund, whether the CPEO or a
employer pays wages that are subject to the customer of the CPEO made the contribution. In addition,
unemployment tax laws of a credit reduction state, that a CPEO is allowed the additional credit if the CPEO is
employer must pay additional federal unemployment tax permitted, under state law, to collect and remit
when filing its Form 940. contributions to the state unemployment fund with respect
to a work site employee. For more information on the
For 2020, the U.S. Virgin Islands (USVI) is the only credit, see Credit for State Unemployment Tax Paid to a
credit reduction state. If you paid any wages that are State Unemployment Fund, later.
subject to the unemployment compensation laws of the
USVI, your credit against federal unemployment tax will CPEOs must generally file Form 940 and Schedule R
be reduced based on the credit reduction rate for the (Form 940), Allocation Schedule for Aggregate Form 940
USVI. Use Schedule A (Form 940) to figure the credit Filers, electronically. For more information about a
reduction. For more information, see the Schedule A CPEO’s requirement to file electronically, see Rev. Proc.
(Form 940) instructions or visit IRS.gov. 2017-14, 2017-3 I.R.B. 426, available at IRS.gov/irb/
2017-03_IRB#RP-2017-14.
Reminders Outsourcing payroll duties. Generally, as an employer,
Moving expense and bicycle commuting reimburse- you're responsible to ensure that tax returns are filed and
ments are subject to FUTA tax. The Tax Cuts and Jobs deposits and payments are made, even if you contract
Act (P.L. 115-97) suspends the exclusion for qualified with a third party to perform these acts. You remain
moving expense reimbursements from your employee's responsible if the third party fails to perform any required
income under section 132 and the deduction from the action. Before you choose to outsource any of your payroll
employee's income under section 217, as well as the and related tax duties (that is, withholding, reporting, and
exclusion for qualified bicycle commuting reimbursements paying over social security, Medicare, FUTA, and income
from your employee's income under section 132, taxes) to a third-party payer, such as a payroll service
beginning after 2017 and before 2026. Therefore, moving provider or reporting agent, go to IRS.gov/
expense and bicycle commuting reimbursements aren't OutsourcingPayrollDuties for helpful information on this
exempt from FUTA tax during this period. Don't include topic. If a CPEO pays wages and other compensation to
moving expense or bicycle commuting reimbursements an individual performing services for you, and the services
on Form 940, line 4. For more information about fringe are covered by a contract described in section 7705(e)(2)
benefits, see Pub. 15-B. between you and the CPEO (CPEO contract), then the
CPEO is generally treated for employment tax purposes
Certification program for professional employer or- as the employer, but only for wages and other
ganizations (PEOs). The Stephen Beck, Jr., Achieving a compensation paid to the individual by the CPEO.
Better Life Experience Act of 2014 required the IRS to However, with respect to certain employees covered by a
establish a voluntary certification program for PEOs. CPEO contract, you may also be treated as an employer
PEOs handle various payroll administration and tax of the employees and, consequently, may also be liable
reporting responsibilities for their business clients and are for federal employment taxes imposed on wages and
typically paid a fee based on payroll costs. To become other compensation paid by the CPEO to such
and remain certified under the certification program, employees. For more information on the different types of
certified professional employer organizations (CPEOs) third-party payer arrangements, see section 16 in Pub. 15.
must meet various requirements described in sections
3511 and 7705 and related published guidance. Aggregate Form 940 filers. Approved section 3504
Certification as a CPEO may affect the employment tax agents and CPEOs must complete Schedule R (Form

Sep 23, 2020 Cat. No. 13660I

940) when filing an aggregate Form 940. Aggregate • For EFTPS, go to EFTPS.gov, or call one of the
Forms 940 are filed by agents of home care service numbers provided under Federal tax deposits must be
recipients approved by the IRS under section 3504. To made by electronic funds transfer (EFT), earlier.
request approval to act as an agent for an employer, the Electronic funds withdrawal (EFW). If you file Form
agent files Form 2678 with the IRS unless you’re a state or 940 electronically, you can e-file and use EFW to pay the
local government agency acting as an agent under the balance due in a single step using tax preparation
special procedures provided in Rev. Proc. 2013-39, software or through a tax professional. However, don't use
2013-52 I.R.B. 830, available at IRS.gov/irb/ EFW to make federal tax deposits. For more information
2013-52_IRB#RP-2013-39. on paying your taxes using EFW, go to IRS.gov/EFW.
Aggregate Forms 940 are also filed by CPEOs Credit or debit card payments. You may pay your
approved by the IRS under section 7705. CPEOs file FUTA tax shown on line 14 using a credit or debit card.
Form 8973, Certified Professional Employer Organization/ Your payment will be processed by a payment processor
Customer Reporting Agreement, to notify the IRS that who will charge a processing fee. Don't use a credit or
they started or ended a service contract with a customer. debit card to pay taxes that are required to be deposited
CPEOs must generally file Form 940 and Schedule R (see When Must You Deposit Your FUTA Tax, later). For
electronically. For more information about a CPEO's more information on paying your taxes with a credit or
requirement to file electronically, see Rev. Proc. 2017-14, debit card, go to IRS.gov/PayByCard.
2017-3 I.R.B. 426, available at IRS.gov/irb/
2017-03_IRB#RP-2017-14. Online payment agreement. You may be eligible to
apply for an installment agreement online if you can't pay
If you change your business name, business ad- the full amount of tax you owe when you file your return.
dress, or responsible party. Notify the IRS immediately For more information, see What if you can't pay in full,
if you change your business name, business address, or later.
responsible party.
• Write to the IRS office where you file your returns (using Disregarded entities and qualified subchapter S sub-
the Without a payment address under Where Do You File, sidiaries (QSubs). Business entities that are
later) to notify the IRS of any business name change. See disregarded as separate from their owner, including
Pub. 1635 to see if you need to apply for a new employer QSubs, are required to withhold and pay employment
identification number (EIN). taxes and file employment tax returns using the name and
• Complete and mail Form 8822-B to notify the IRS of a EIN of the disregarded entity. For more information, see
business address or responsible party change. Don’t mail Disregarded entities, later.
Form 8822-B with your Form 940. For a definition of State unemployment information. When you
“responsible party,” see the Instructions for Form SS-4. registered as an employer with your state, the state
Federal tax deposits must be made by electronic assigned you a state reporting number. If you don't have a
funds transfer (EFT). You must use EFT to make all state unemployment account and state experience tax
federal tax deposits. Generally, an EFT is made using the rate, or if you have questions about your state account,
Electronic Federal Tax Payment System (EFTPS). If you you must contact your state unemployment agency. For a
don't want to use EFTPS, you can arrange for your tax list of state unemployment agencies, visit the U.S.
professional, financial institution, payroll service, or other Department of Labor's website at oui.doleta.gov/
trusted third party to make electronic deposits on your unemploy/agencies.asp.
behalf. Also, you may arrange for your financial institution Photographs of missing children. The IRS is a proud
to initiate a same-day wire payment on your behalf. partner with the National Center for Missing & Exploited
EFTPS is a free service provided by the Department of the Children® (NCMEC). Photographs of missing children
Treasury. Services provided by your tax professional, selected by the Center may appear in instructions on
financial institution, payroll service, or other third party pages that would otherwise be blank. You can help bring
may have a fee. these children home by looking at the photographs and
For more information on making federal tax deposits, calling 1-800-THE-LOST (1-800-843-5678) if you
see section 11 of Pub. 15. To get more information about recognize a child.
EFTPS or to enroll in EFTPS, go to EFTPS.gov, or call
800-555-4477, 800-733-4829 (TDD), or 800-244-4829 How Can You Get More Help?
(Spanish). Additional information about EFTPS is also If you want more information about this form, see Pub. 15,
available in Pub. 966. visit our website at IRS.gov, or call the Business and
Specialty Tax Line toll free at 800-829-4933 or
Electronic filing and payment. Businesses can enjoy 800-829-4059 (TDD/TTY for persons who are deaf, hard
the benefits of filing and paying their federal taxes of hearing, or have a speech disability), Monday–Friday
electronically. Whether you rely on a tax professional or from 7:00 a.m. to 7:00 p.m. local time (Alaska and Hawaii
handle your own taxes, the IRS offers you convenient follow Pacific time).
programs to make filing and paying easier. Spend less
time worrying about taxes and more time running your For a list of related employment tax topics, go to
business. Use e-file and EFTPS to your benefit. IRS.gov/EmploymentTaxes. You can order forms,
• For e-file, go to IRS.gov/EmploymentEfile for additional instructions, and publications at IRS.gov/OrderForms.
information. A fee may be charged to file electronically.

-2- Instructions for Form 940 (2020)

 FUTA taxes for your household employees on Form 940
General Instructions instead of filing Schedule H (Form 1040). If you choose to
include household employees on your Form 940, you
What's the Purpose of Form 940? must also file Form 941, Employer's QUARTERLY
Federal Tax Return; Form 943, Employer's Annual
These instructions give you some background information Federal Tax Return for Agricultural Employees; or Form
about Form 940. They tell you who must file the form, how 944, Employer's ANNUAL Federal Tax Return, to report
to fill it out line by line, and when and where to file it. social security, Medicare, and any withheld federal
Use Form 940 to report your annual Federal income taxes for your household employees. See Pub.
Unemployment Tax Act (FUTA) tax. Together with state 926 for more information.
unemployment tax systems, the FUTA tax provides funds
for paying unemployment compensation to workers who For Agricultural Employers . . .
have lost their jobs. Most employers pay both a federal File Form 940 if you answer “Yes” to either of these
and a state unemployment tax. Only employers pay FUTA questions.
tax. Don't collect or deduct FUTA tax from your • Did you pay cash wages of $20,000 or more to
employees' wages. farmworkers during any calendar quarter in 2019 or 2020?
The FUTA tax applies to the first $7,000 you pay to • Did you employ 10 or more farmworkers during some
each employee during a calendar year after subtracting part of the day (whether or not at the same time) during
any payments exempt from FUTA tax. any 20 or more different weeks in 2019 or 20 or more
different weeks in 2020?
Who Must File Form 940?
Count wages you paid to aliens who were admitted to
Except as noted below, if you answer “Yes” to either one the United States on a temporary basis to perform
of these questions, you must file Form 940. farmwork (workers with H-2A visas). However, wages
• Did you pay wages of $1,500 or more to employees in paid to “H-2A visa workers” aren't subject to FUTA tax.
any calendar quarter during 2019 or 2020? See Pub. 51 for more information.
• Did you have one or more employees for at least some
part of a day in any 20 or more different weeks in 2019 or For Indian Tribal Governments . . .
20 or more different weeks in 2020? Count all full-time, Services rendered by employees of a federally recognized
part-time, and temporary employees. However, if your Indian tribal government employer (including any
business is a partnership, don't count its partners. subdivision, subsidiary, or business enterprise wholly
If your business was sold or transferred during the year, owned by the tribe) are exempt from FUTA tax and no
each employer who answered “Yes” to at least one Form 940 is required. However, the tribe must have
question above must file Form 940. However, don't participated in the state unemployment system for the full
include any wages paid by the predecessor employer on year and be in compliance with applicable state
your Form 940 unless you’re a successor employer. For unemployment law. For more information, see section
details, see Successor employer under Type of Return, 3309(d).
later. For Tax-Exempt Organizations . . .
If you’re not liable for FUTA tax for 2020 because you Religious, educational, scientific, charitable, and other
made no payments to employees in 2020, check box c in organizations described in section 501(c)(3) and exempt
the top right corner of the form. Then go to Part 7, sign the from tax under section 501(a) aren't subject to FUTA tax
form, and file it with the IRS. and don't have to file Form 940.
If you won’t be liable for filing Form 940 in the future
because your business has closed or because you For State or Local Government Employers . . .
stopped paying wages, check box d in the top right corner Services rendered by employees of a state, or a political
of the form. For more information, see Final: Business subdivision or instrumentality of the state, are exempt
closed or stopped paying wages under Type of Return, from FUTA tax and no Form 940 is required.
later.
When Must You File Form 940?
For Employers of Household Employees . . .
The due date for filing Form 940 for 2020 is February 1,
If you’re a household employer, you must pay FUTA tax 2021. However, if you deposited all your FUTA tax when it
on wages that you paid to your household employees only was due, you may file Form 940 by February 10, 2021.
if you paid cash wages of $1,000 or more in any calendar
quarter in 2019 or 2020. If we receive Form 940 after the due date, we will treat
A household employee performs household work in a: Form 940 as filed on time if the envelope containing Form
• Private home, 940 is properly addressed, contains sufficient postage,
• Local college club, or and is postmarked by the U.S. Postal Service on or before
• Local chapter of a college fraternity or sorority. the due date, or sent by an IRS-designated private
delivery service (PDS) on or before the due date.
Generally, employers of household employees must file However, if you don't follow these guidelines, we will
Schedule H (Form 1040) instead of Form 940. generally consider Form 940 filed when it is actually
However, if you have other employees in addition to received. For more information about PDSs, see Where
household employees, you can choose to include the Do You File, later.

Instructions for Form 940 (2020) -3-

 If any due date for filing falls on a Saturday, Sunday, or PDSs can't deliver to P.O. boxes. You must use the
legal holiday, you may file your return on the next U.S. Postal Service to mail an item to a P.O. box address.
business day. Go to IRS.gov/PDS for the current list of PDSs. For the
IRS mailing address to use if you’re using a PDS, go to
Where Do You File? IRS.gov/PDSstreetAddresses. Select the mailing address
listed on the webpage that is in the same state as the
You’re encouraged to file Form 940 electronically. Go to
address to which you would mail returns filed without a
IRS.gov/EmploymentEfile for more information on
payment, as shown in the table that follows.
electronic filing. If you file a paper return, where you file
depends on whether you include a payment with Form
940. Mail your return to the address listed for your location
in the table that follows.

Mailing Addresses for Form 940

If you’re in . . . Without a payment . . . With a payment . . .

Connecticut, Delaware, District of Columbia, Georgia, Department of the Treasury Internal Revenue Service
Illinois, Indiana, Kentucky, Maine, Maryland, Internal Revenue Service P.O. Box 806531
Massachusetts, Michigan, New Hampshire, New Jersey, Kansas City, MO Cincinnati, OH 45280-6531
New York, North Carolina, Ohio, Pennsylvania, Rhode 64999-0046
Island, South Carolina, Tennessee, Vermont, Virginia,
West Virginia, Wisconsin

Alabama, Alaska, Arizona, Arkansas, California, Department of the Treasury Internal Revenue Service
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Internal Revenue Service P.O. Box 932000
Louisiana, Minnesota, Mississippi, Missouri, Montana, Ogden, UT 84201-0046 Louisville, KY 40293-2000
Nebraska, Nevada, New Mexico, North Dakota,
Oklahoma, Oregon, South Dakota, Texas, Utah,
Washington, Wyoming

Puerto Rico, U.S. Virgin Islands Internal Revenue Service Internal Revenue Service
P.O. Box 409101 P.O. Box 932000
Ogden, UT 84409 Louisville, KY 40293-2000

If the location of your legal residence, principal place of Internal Revenue Service Internal Revenue Service
business, office, or agency is not listed P.O. Box 409101 P.O. Box 932000
Ogden, UT 84409 Louisville, KY 40293-2000

EXCEPTION for tax-exempt organizations; federal, state, Department of the Treasury Internal Revenue Service
and local governments; and Indian tribal governments, Internal Revenue Service P.O. Box 932000
regardless of your location Ogden, UT 84201-0046 Louisville, KY 40293-2000

Your filing address may have changed from that state requires an employer to make to its unemployment
! used to file your employment tax return in prior fund for the payment of unemployment benefits. They
CAUTION years. don't include:
• Any payments deducted or deductible from your
Credit for State Unemployment Tax employees' pay;
• Penalties, interest, or special administrative taxes; and
Paid to a State Unemployment Fund • Voluntary amounts you paid to get a lower assigned
Generally, you get a credit for amounts you pay to a state state experience rate.
(including the District of Columbia, Puerto Rico, and the Additional credit. You may receive an additional credit
USVI) unemployment fund by February 1, 2021 (or if you have a state experience rate lower than 5.4%
February 10, 2021, if that is your Form 940 due date). (0.054). This applies even if your rate varies during the
Your FUTA tax will be higher if you don't pay the state year. This additional credit is the difference between your
unemployment tax timely. If you didn't pay all state actual state unemployment tax payments and the amount
unemployment tax by the due date of Form 940, see the you would have been required to pay at 5.4%. For wages
line 10 instructions. For wages paid to a work site paid to a work site employee, the CPEO is allowed the
employee, a CPEO is eligible for the credit whether the additional credit if the CPEO is allowed, under state law,
CPEO or a customer of the CPEO made the contribution to collect and remit contributions to the state
with respect to a work site employee. unemployment fund with respect to a work site employee.
State unemployment taxes are sometimes called
“contributions.” These contributions are payments that a

-4- Instructions for Form 940 (2020)

Special credit for successor employers. You may be (0.060) for 2020. Most employers receive a maximum
eligible for a credit based on the state unemployment credit of up to 5.4% (0.054) against this FUTA tax. Every
taxes paid by a predecessor. You may claim this credit if quarter, you must figure how much of the first $7,000 of
you’re a successor employer who acquired a business in each employee's annual wages you paid during that
2020 from a predecessor who wasn't an employer for quarter.
FUTA purposes and, therefore, wasn't required to file
Form 940 for 2020. See section 3302(e). You can include
Figure Your Tax Liability
amounts paid by the predecessor on the Before you can figure the amount to deposit, figure your
Worksheet—Line 10 as if you paid them. For details on FUTA tax liability for the quarter. To figure your tax liability,
successor employers, see Successor employer under add the first $7,000 of each employee's annual wages you
Type of Return, later. If the predecessor was required to paid during the quarter for FUTA wages paid and multiply
file Form 940, see the line 5 instructions. that amount by 0.006.

When Must You Deposit Your FUTA The tax rates are based on your receiving the
maximum credit against FUTA taxes. You’re entitled to the
Tax? maximum credit if you paid all state unemployment tax by
the due date of your Form 940 or if you weren't required to
Although Form 940 covers a calendar year, you may have pay state unemployment tax during the calendar year due
to deposit your FUTA tax before you file your return. If to your state experience rate.
your FUTA tax is more than $500 for the calendar year,
you must deposit at least one quarterly payment. Example. During the first quarter, you had three
employees: Mary Smith, George Jones, and Jane Moore.
You must determine when to deposit your tax based on You paid $11,000 to Mary, $2,000 to George, and $4,000
the amount of your quarterly tax liability. If your FUTA tax to Jane. None of the payments made were exempt from
is $500 or less in a quarter, carry it over to the next FUTA tax.
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 To figure your liability for the first quarter, add the first $7,000 of each
employee's wages subject to FUTA tax:
the last day of the month after the end of the quarter. If
$7,000 Mary’s wages subject to FUTA tax
your tax for the next quarter is $500 or less, you’re not 2,000 George's wages subject to FUTA tax
required to deposit your tax again until the cumulative + 4,000 Jane's wages subject to FUTA tax
amount is more than $500.
$13,000 Total wages subject to FUTA tax for the first quarter
Fourth quarter liabilities. If your FUTA tax for the fourth
quarter (plus any undeposited amounts from earlier $13,000 Total wages subject to FUTA tax for the first quarter
x 0.006 Tax rate (based on maximum credit of 5.4%)
quarters) is more than $500, deposit the entire amount by
February 1, 2021. If it is $500 or less, you can either $78 Your liability for the first quarter
deposit the amount or pay it with your Form 940 by
In this example, you don't have to make a deposit because your liability is
February 1, 2021. $500 or less for the first quarter. However, you must carry this liability over
In years when there are credit reduction states, to the second quarter.
you must include liabilities owed for credit reduction
with your fourth quarter deposit. If any wages subject to FUTA tax aren't subject to state
unemployment tax, you may be liable for FUTA tax at the
When To Deposit Your FUTA Tax maximum rate of 6.0%. For instance, in certain states,
wages paid to corporate officers, certain payments of sick
If your undeposited FUTA tax pay by unions, and certain fringe benefits are excluded
is more than $500 on . . .* Deposit your tax by . . . from state unemployment tax.
March 31 April 30 Example. Mary Smith and George Jones are
June 30 July 31 corporate officers whose wages are excluded from state
September 30 October 31 unemployment tax in your state. Jane Moore’s wages
December 31 January 31 aren't excluded from state unemployment tax. During the
*Also, see the instructions for line 16.
first quarter, you paid $11,000 to Mary, $2,000 to George,
and $4,000 to Jane.
If any deposit due date falls on a Saturday,
TIP Sunday, or legal holiday, you may deposit on the
next business day. See Timeliness of federal tax
deposits, later.

How Do You Figure Your FUTA Tax

Liability for Each Quarter?
You owe FUTA tax on the first $7,000 you pay to each
employee during the calendar year after subtracting any
payments exempt from FUTA tax. The FUTA tax is 6.0%

Instructions for Form 940 (2020) -5-

 $ 9,000 Total FUTA wages for Mary and George in first quarter than a Saturday, Sunday, or legal holiday. The term “legal
x 0.060 Tax rate holiday” for deposit purposes includes only those legal
$540 Your liability for the first quarter for Mary and George holidays in the District of Columbia. Legal holidays in the
District of Columbia are provided in section 11 of Pub. 15.
$4,000 Total FUTA wages subject to state unemployment tax
x 0.006 Tax rate (based on maximum credit of 5.4%) How Can You Avoid Penalties and
$24 Your liability for the first quarter for Jane Interest?
$540 Your liability for the first quarter for Mary and George You can avoid paying penalties and interest if you do all of
+ 24 Your liability for first quarter for Jane
the following.
$564 Your liability for the first quarter for Mary, George, and Jane • Deposit and pay your tax when it is due.
In this example, you must deposit $564 by April 30 because your liability • File your fully completed Form 940 accurately and on
for the first quarter is more than $500. time.
• Attach Schedule R (Form 940) if required.
• Ensure your tax payments are honored by your financial
How Must You Deposit Your FUTA institution.

Tax? Penalties and interest are charged on taxes paid late

and returns filed late at a rate set by law. See sections 11
You Must Deposit Your FUTA Tax Using EFT and 12 of Pub. 15 for details.
You must use EFT to make all federal tax deposits. Use Form 843 to request abatement of assessed
Generally, an EFT is made using EFTPS. If you don't want penalties or interest. Don't request abatement of
to use EFTPS, you can arrange for your tax professional, assessed penalties or interest on Form 940.
financial institution, payroll service, or other trusted third
If you receive a notice about a penalty after you file this
party to make electronic deposits on your behalf. Also,
return, reply to the notice with an explanation and we will
you may arrange for your financial institution to initiate a
determine if you meet reasonable-cause criteria. Don't
same-day wire payment on your behalf. EFTPS is a free
attach an explanation when you file your return.
service provided by the Department of the Treasury.
Services provided by your tax professional, financial Can You Amend a Return?
institution, payroll service, or other third party may have a
fee. You use the 2020 Form 940 to amend a return that you
For more information on making federal tax deposits, previously filed for 2020. If you’re amending a return for a
see Pub. 966. To get more information about EFTPS or to previous year, use that previous year's Form 940.
enroll in EFTPS, go to EFTPS.gov, or call one of the Follow the steps below to amend your return.
following numbers. • Use a paper return to amend a Form 940 filed under an
• 800-555-4477 (toll free) electronic filing program.
• 800-244-4829 (Spanish) • Check the amended return box in the top right corner of
• 800-733-4829 (TDD) Form 940, page 1, box a.
If your business is new, the IRS will automatically • Fill in all the amounts that should have been on the
pre-enroll you in EFTPS when you apply for an EIN. original form.
Follow the instructions on your EIN package to activate • Sign the form.
your enrollment. • Attach an explanation of why you’re amending your
return. For example, tell us if you’re filing to claim credit for
For an EFTPS deposit to be on time, you must
tax paid to your state unemployment fund after the due
! submit the deposit by 8 p.m. Eastern time the day
date of Form 940.
before the date the deposit is due.
• File the amended return using the Without a payment
CAUTION

Same-day wire payment option. If you fail to submit a address (even if a payment is included) under Where Do
deposit transaction on EFTPS by 8 p.m. Eastern time the You File, earlier.
day before the date a deposit is due, you can still make • If you file an amended return for an aggregate Form
your deposit on time by using the Federal Tax Collection 940, be sure to attach Schedule R (Form 940). Complete
Service (FTCS) to make a same-day wire payment. To Schedule R (Form 940) only for employers who have
use the same-day wire payment method, you will need to adjustments on the amended Form 940.
make arrangements with your financial institution ahead of
time. Please check with your financial institution regarding Completing Your Form 940
availability, deadlines, and costs. Your financial institution
may charge you a fee for payments made this way. To Follow These Guidelines To Correctly Fill Out
learn more about the information you will need to give the Form
your financial institution to make a same-day wire Make entries on Form 940 as follows to enable accurate
payment, go to IRS.gov/SameDayWire. scanning and processing.
Timeliness of federal tax deposits. If a deposit is • Make sure your business name and EIN are on every
required to be made on a day that isn't a business day, the page of the form and any attachments.
deposit is considered timely if it is made by the close of • If you type or use a computer to fill out your form, use a
the next business day. A business day is any day other 12-point Courier font, if possible. Portable Document

-6- Instructions for Form 940 (2020)

Format (PDF) forms on IRS.gov have fillable fields with Always be sure the EIN on the form you file
acceptable font specifications. TIP exactly matches the EIN that the IRS assigned to
• Don't enter dollar signs and decimal points. Commas your business. Don't use a social security number
are optional. Enter dollars to the left of the preprinted (SSN) or individual taxpayer identification number (ITIN)
decimal point and cents to the right of it. on forms that ask for an EIN. Filing a Form 940 with an
• You may choose to round your amounts to the nearest incorrect EIN or using the EIN of another's business may
dollar, instead of reporting cents on this form. If you result in penalties and delays in processing your return.
choose to round, you must round all entries. To round,
drop the amounts under 50 cents and increase the Tell Us if You Change Your Business Name,
amounts from 50 to 99 cents to the next dollar. For Business Address, or Responsible Party
example, $1.49 becomes $1.00 and $2.50 becomes
$3.00. If you use two or more amounts to figure an entry Notify the IRS immediately if you change your business
on the form, use cents to figure the answer and round the name, business address, or responsible party.
answer only. Name change. Write to the IRS office where you filed
• If you have a line with the value of zero, leave it blank. your return (using the Without a payment address under
Where Do You File, earlier) to notify the IRS of any name
Employer Identification Number change. See Pub. 1635 to see if you also need to apply
(EIN), Name, Trade Name, and for a new EIN.
Address Address or responsible party change. Complete and
mail Form 8822-B to notify the IRS of an address or
Enter Your Business Information at the Top of responsible party change. Don’t mail Form 8822-B with
the Form your Form 940. For a definition of "responsible party," see
the Instructions for Form SS-4.
Enter your EIN, name, and address in the spaces
provided. You must enter your name and EIN here and on Type of Return
page 2. Enter the business (legal) name that you used
when you applied for your EIN on Form SS-4. For Review the box at the top of the form. If any line applies to
example, if you’re a sole proprietor, enter “Ronald Smith” you, check the appropriate box to tell us which type of
on the Name line and “Ron's Cycles” on the Trade Name return you’re filing. You may check more than one box.
line. Leave the Trade Name line blank if it is the same as Amended. If this is an amended return that you’re filing to
your Name. correct a return that you previously filed, check box a.
If you pay a tax preparer to fill out Form 940, make sure Successor employer. Check box b if you're a successor
the preparer shows your business name exactly as it employer and:
appeared when you applied for your EIN. • You’re reporting wages paid before you acquired the
Employer identification number (EIN). To make sure business by a predecessor who was required to file a
that businesses comply with federal tax laws, the IRS Form 940 because the predecessor was an employer for
monitors tax filings and payments by using a numerical FUTA tax purposes, or
system to identify taxpayers. A unique nine-digit EIN is • You’re claiming a special credit for state unemployment
assigned to all corporations, partnerships, and some sole tax paid before you acquired the business by a
proprietors. Businesses needing an EIN must apply for a predecessor who wasn't required to file a Form 940
number and use it throughout the life of the business on all because the predecessor wasn't an employer for FUTA
tax returns, payments, and reports. tax purposes.
A successor employer is an employer who:
Your business should have only one EIN. If you have
more than one and aren't sure which one to use, write to
• Acquires substantially all the property used in a trade or
business of another person (predecessor) or used in a
the IRS office where you file your returns (using the
separate unit of a trade or business of a predecessor; and
Without a payment address under Where Do You File,
earlier) or call the IRS at 800-829-4933 (toll free). If you're
• Immediately after the acquisition, employs one or more
people who were employed by the predecessor.
outside the United States, call 267-941-1000 (toll call).
If you don't have an EIN, you may apply for one by No payments to employees in 2020. If you’re not liable
visiting IRS.gov/EIN. You may also apply for an EIN by for FUTA tax for 2020 because you made no payments to
faxing or mailing Form SS-4 or SS-4PR to the IRS. If the employees in 2020, check box c. Then go to Part 7, sign
principal business was created or organized outside of the the form, and file it with the IRS.
United States or U.S. territories, you may also apply for an Final: Business closed or stopped paying wages. If
EIN by calling 267-941-1099 (toll call). If you haven’t this is a final return because you went out of business or
received your EIN by the due date of Form 940, write stopped paying wages and you won't be liable for filing
“Applied For” and the date you applied in the space Form 940 in the future, check box d. Complete all
shown for the number. applicable lines on the form, sign it in Part 7, and file it with
If you’re filing your tax return electronically, a valid the IRS. Also attach a statement to your return showing
EIN is required at the time the return is filed. If a the name of the person keeping the payroll records and
!
CAUTION valid EIN isn't provided, the return won't be
the address where those records will be kept.
accepted. This may result in penalties.

Instructions for Form 940 (2020) -7-

Disregarded entities. A disregarded entity is required to Schedule A (Form 940). See the instructions for line 9
file Form 940 using its name and EIN, not the name and before completing the Schedule A (Form 940).
EIN of its owner. An entity that has a single owner and is Part 2: Determine Your FUTA Tax
disregarded as separate from its owner for federal income
tax purposes is treated as a separate entity for purposes Before Adjustments
of payment and reporting federal employment taxes. If the
entity doesn't currently have an EIN, it must apply for one If any line in Part 2 doesn't apply, leave it blank.
using one of the methods under Employer identification
number (EIN), earlier. Disregarded entities include
3. Total Payments to All Employees
single-owner limited liability companies (LLCs) that Report the total payments you made during the calendar
haven't elected to be taxed as a corporation for federal year on line 3. Include payments for the services of all
income tax purposes, QSubs, and certain foreign entities employees, even if the payments aren't taxable for FUTA.
treated as disregarded entities for U.S. income tax Your method of payment doesn't determine whether
purposes. Although a disregarded entity is treated as a payments are wages. You may have paid wages hourly,
separate entity for employment tax purposes, it isn't daily, weekly, monthly, or yearly. You may have paid
subject to FUTA tax if it is owned by a tax-exempt wages for piecework or as a percentage of profits. Include
organization under section 501(c)(3) and isn't required to the following.
file Form 940. For more information, see Disregarded • Compensation, such as the following.
entities and qualified subchapter S subsidiaries in the —Salaries, wages, commissions, fees, bonuses,
Introduction section of Pub. 15. vacation allowances, and amounts you paid to
full-time, part-time, or temporary employees.
Specific Instructions • Fringe benefits, such as the following.
—Sick pay (including third-party sick pay if liability is
Part 1: Tell Us About Your Return transferred to the employer). For details on sick pay,
see Pub. 15-A, Employer's Supplemental Tax Guide.
1. If You Were Required To Pay Your State —The value of goods, lodging, food, clothing, and
Unemployment Tax In . . . non-cash fringe benefits.
—Section 125 (cafeteria) plan benefits.
You must complete line 1a or line 1b even if you • Retirement/Pension, such as the following.
! weren’t required to pay any state unemployment —Employer contributions to a 401(k) plan, payments
CAUTION tax because your state unemployment tax rate(s)
to an Archer MSA, payments under adoption
was zero. You may leave lines 1a and 1b blank only if all assistance programs, and contributions to SIMPLE
of the wages you paid to all employees in all states were retirement accounts (including elective salary
excluded from state unemployment tax. If you leave lines reduction contributions).
1a and 1b blank, and line 7 is more than zero, you must —Amounts deferred under a non-qualified deferred
complete line 9 because all of the taxable FUTA wages compensation plan.
you paid were excluded from state unemployment tax. • Other payments, such as the following.
Identify the state(s) where you were required to pay state —Tips of $20 or more in a month that your employees
unemployment taxes. reported to you.
1a. One state only. Enter the two-letter U.S. Postal —Payments made by a predecessor employer to the
Service abbreviation for the state where you were employees of a business you acquired.
required to pay your state unemployment tax on line 1a. —Payments to nonemployees who are treated as your
For a list of state abbreviations, see the Schedule A (Form employees by the state unemployment tax agency.
940) instructions or visit the website for the U.S. Postal Wages may be subject to FUTA tax even if they
Service at USPS.com. are excluded from your state's unemployment tax.
!
1b. More than one state (you’re a multi-state employ- CAUTION

er). Check the box on line 1b. Then fill out Schedule A For details on wages and other compensation, see
(Form 940) and attach it to your Form 940. section 5 of Pub. 15-A.
2. If You Paid Wages in a State That Is Subject
to Credit Reduction Example
A state that hasn't repaid money it borrowed from the
federal government to pay unemployment benefits is You had three employees. You paid $44,000 to Joan
called a “credit reduction state.” The U.S. Department of Rose, $8,000 to Sara Blue, and $16,000 to John Green.
Labor determines which states are credit reduction states. $44,000 Amount paid to Joan
If you paid wages that are subject to the unemployment 8,000 Amount paid to Sara
tax laws of a credit reduction state, you may have to pay + 16,000 Amount paid to John
more FUTA tax when filing your Form 940. $68,000 Total payments to employees. You would enter this
amount on line 3.
For tax year 2020, the USVI is the only credit reduction
state. If you paid wages subject to the unemployment tax
laws of the USVI, check the box on line 2 and fill out

-8- Instructions for Form 940 (2020)

4. Payments Exempt From FUTA Tax
Example
If you enter an amount on line 4, check the appropriate
box or boxes on lines 4a through 4e to show the types of
You had three employees. You paid $44,000 to Joan
payments exempt from FUTA tax. You only report a
Rose, including $2,000 in health insurance benefits. You
payment as exempt from FUTA tax on line 4 if you
paid $8,000 to Sara Blue, including $500 in retirement
included the payment on line 3.
benefits. You paid $16,000 to John Green, including
Some payments are exempt from FUTA tax because $2,000 in health and retirement benefits.
the payments aren't included in the definition of wages or $ 2,000 Health insurance benefits for Joan
the services aren't included in the definition of 500 Retirement benefits for Sara
employment. Payments exempt from FUTA tax may + 2,000 Health and retirement benefits for John
include the following. $4,500 Total payments exempt from FUTA tax. You would enter
• Fringe benefits, such as the following. this amount on line 4 and check boxes 4a and 4c.
—The value of certain meals and lodging.
—Contributions to accident or health plans for 5. Total of Payments Made to Each Employee in
employees, including certain employer payments to a Excess of $7,000
health savings account or an Archer MSA. Only the first $7,000 you paid to each employee in a
—Payments for benefits excluded under section 125 calendar year, after subtracting any payments exempt
(cafeteria) plans. from FUTA tax, is subject to FUTA tax. This $7,000 is
• Group-term life insurance. For information about called the FUTA wage base.
group-term life insurance and other payments for fringe
benefits that may be exempt from FUTA tax, see Pub. Enter on line 5 the total of the payments over the FUTA
15-B. wage base you paid to each employee during 2020 after
• Retirement/Pension, such as employer contributions subtracting any payments exempt from FUTA tax
to a qualified plan, including a SIMPLE retirement account shown on line 4.
(other than elective salary reduction contributions) and a
401(k) plan.
• Dependent care, such as payments (up to $5,000 per Following Our Example
employee, $2,500 if married filing separately) for a
You had three employees. You paid $44,000 to Joan Rose, $8,000 to
qualifying person's care that allows your employees to
Sara Blue, and $16,000 to John Green, including a total of $4,500 in
work and that would be excludable by the employee under payments exempt from FUTA tax for all three employees. To
section 129. determine the total payments made to each employee in excess of
• Other payments, such as the following. the FUTA wage base, the payments exempt from FUTA tax and the
—All non-cash payments and certain cash payments FUTA wage base must be subtracted from total payments. These
for agricultural labor, and all payments to “H-2A” visa amounts are shown in parentheses.
workers. See For Agricultural Employers, earlier, or Employees Joan Sara John
see Pub. 51. Total payments to employees $44,000 $8,000 $16,000
—Payments made under a workers' compensation law Payments exempt from FUTA tax (2,000) (500) (2,000)
because of a work-related injury or sickness. See FUTA wage base (7,000) (7,000) (7,000)
section 6 of Pub. 15-A. $35,000 $ 500 $ 7,000
—Payments for domestic services if you didn't pay Total of payments made to each employee in excess of $42,500
cash wages of $1,000 or more (for all domestic the FUTA wage base. You would enter this amount on
employees) in any calendar quarter in 2019 or 2020, line 5.
or if you file Schedule H (Form 1040). See For
Employers of Household Employees, earlier, or Pub.
926. If you’re a successor employer . . . When you figure
—Payments for services provided to you by your the payments made to each employee in excess of the
parent, spouse, or child under the age of 21. See FUTA wage base, you may include the payments that the
section 3 of Pub. 15. predecessor made to the employees who continue to
—Payments for certain fishing activities. See Pub. work for you only if the predecessor was an employer for
334, Tax Guide for Small Business. FUTA tax purposes resulting in the predecessor being
—Payments to certain statutory employees. See required to file Form 940.
section 1 of Pub. 15-A.
—Payments to nonemployees who are treated as your
employees by the state unemployment tax agency.

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 15 in Pub. 15.

Instructions for Form 940 (2020) -9-

 line 7
Example for Successor Employers x 0.054
line 9
During the calendar year, the predecessor employer paid $5,000 to Susan
Jones. You acquired the predecessor's business. After the acquisition, you
employed Susan and paid Susan an additional $3,000 in wages. None of
the amounts paid to Susan were payments exempt from FUTA tax.
If you weren't required to pay state unemployment tax
$5,000 Wages paid by predecessor employer because all of the wages you paid were excluded from
+ 3,000 Wages paid by you state unemployment tax, you must pay FUTA tax at the
$8,000 Total payments to Susan. You would include this amount on 6.0% (0.060) rate. For example, if your state
line 3. unemployment tax law excludes wages paid to corporate
officers or employees in specific occupations, and the
$8,000 Total payments to Susan
– 7,000 FUTA wage base
only wages you paid were to corporate officers or
employees in those specific occupations, you must pay
$1,000 Payments made to Susan in excess of the FUTA wage base
FUTA tax on those wages at the full FUTA rate of 6.0%
$1,000 Payments made to Susan in excess of the FUTA wage base (0.060). When you figured the FUTA tax before
+ 5,000 Taxable FUTA wages paid by predecessor employer adjustments on line 8, it was based on the maximum
$6,000 You would include this amount on line 5. allowable credit (5.4%) for state unemployment tax
payments. Because you didn't pay state unemployment
6. Subtotal tax, you don't have a credit and must figure this
To figure your subtotal, add the amounts on lines 4 and 5 adjustment.
and enter the result on line 6. If line 9 applies to you, lines 10 and 11 don't apply to
you. Therefore, leave lines 10 and 11 blank. Don't fill out
line 4 the worksheet in these instructions. Complete Schedule A
+ line 5 (Form 940) only if you’re a multi-state employer.
line 6
10. If SOME of the Taxable FUTA Wages You
Paid Were Excluded From State Unemployment
7. Total Taxable FUTA Wages Tax, or You Paid Any State Unemployment Tax
To figure your total taxable FUTA wages, subtract line 6 Late . . .
from line 3 and enter the result on line 7. You must fill out the worksheet on the next page if:
• Some of the taxable FUTA wages you paid were
line 3 excluded from state unemployment tax, or
− line 6
• Any of your payments of state unemployment tax were
line 7
late.
The worksheet takes you step by step through the
process of figuring your credit. At the end of the worksheet
8. FUTA Tax Before Adjustments you'll find an example of how to use it. Don't complete the
To figure your total FUTA tax before adjustments, multiply worksheet if line 9 applied to you (see the instructions for
line 7 by 0.006 and then enter the result on line 8. line 9, earlier).
Before you can properly fill out the worksheet, you
line 7
will need to gather the following information.
x 0.006
• Taxable FUTA wages (Form 940, line 7).
line 8
• Taxable state unemployment wages (state and federal
wage bases may differ).
• The experience rates assigned to you by the states
Part 3: Determine Your Adjustments where you paid wages.
• The amount of state unemployment taxes you paid on
If any line in Part 3 doesn't apply, leave it blank. time. (On time means that you paid the state
9. If ALL of the Taxable FUTA Wages You Paid unemployment taxes by the due date for filing Form 940.)
Were Excluded From State Unemployment
• The amount of state unemployment taxes you paid late.
(Late means after the due date for filing Form 940.)
Tax . . .
Don't include any penalties, interest, or
Line 9 doesn't apply to FUTA wages on which you unemployment taxes deducted from your
! paid no state unemployment tax only because the
!
CAUTION employees' pay in the amount of state
CAUTION state assigned you a tax rate of 0%. unemployment taxes. Also, don't include as state
If all of the taxable FUTA wages you paid were excluded unemployment taxes any special administrative taxes or
from state unemployment tax, multiply line 7 by 0.054 and voluntary contributions you paid to get a lower assigned
enter the result on line 9. 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.)

-10- Instructions for Form 940 (2020)

For line 3 of the worksheet: must use another sheet to figure the additional credits and
• If any of the experience rates assigned to you were less then include those additional credits in your line 3 total.
than 5.4% for any part of the calendar year, you must list After you complete the worksheet, enter the amount
each assigned experience rate separately on the from line 7 of the worksheet on Form 940, line 10. Don't
worksheet. attach the worksheet to your Form 940. Keep it with
• If you were assigned six or more experience rates that your records.
were less than 5.4% for any part of the calendar year, you

Instructions for Form 940 (2020) -11-

Worksheet—Line 10 Keep for Your Records
Before you begin: Read the Example on the next page before completing this worksheet.
Use this worksheet to figure your credit if:
Some of the wages you paid were excluded from state unemployment tax, OR
You paid any state unemployment tax late.
For this worksheet, don't round your figures.
Before you can properly fill out this worksheet, you must gather this information:
■ Taxable FUTA wages (Form 940, line 7).
■ Taxable state unemployment wages.
■ 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.)
Include any state unemployment taxes you paid on nonemployees who were treated as employees by your state unemployment agency.
■ The amount of state unemployment taxes you paid late. (Late means after the due date for filing Form 940.)
1. Maximum allowable credit — Enter Form 940, line 7 . x 0.054 on line 1 1. .
(Form 940, line 7 x 0.054 = line 1).

2. Credit for timely state unemployment tax payments — How much did you pay on time? 2. .

STOP
• If line 2 is equal to or more than line 1, STOP here. You’ve completed the worksheet. Leave Form 940, line 10, blank.
• If line 2 is less than line 1, continue this worksheet.
3. Additional credit — Were ALL of your assigned experience rates 5.4% or more?
• If yes, enter zero on line 3. Then go to line 4 of this worksheet.
• If no, fill out the computations below. List ONLY THOSE STATES for which your assigned experience rate for any part of the
calendar year was less than 5.4%.
State Computation rate Taxable state Additional Credit
The difference between 5.4% unemployment wages at
(0.054) and your assigned assigned experience rate
experience rate (0.054 – .XXX
(assigned experience rate) =
computation rate)
1. . x . = .

2. . x . = .

3. . x . = .

4. . x . = .

5. . x . = .

If you need more lines, use another sheet and include those Total .
additional credits in the total.
Enter the total on line 3.
3. .

4. Subtotal (line 2 + line 3 = line 4) 4. .

STOP
• If line 4 is equal to or more than line 1, STOP here. You’ve completed the worksheet. Leave Form 940, line 10, blank.
• If line 4 is less than line 1, continue this worksheet.
5. Credit for paying state unemployment taxes late:
5a. What is your remaining allowable credit? (line 1 – line 4 = line 5a) 5a. .

5b. How much state unemployment tax did you pay late? 5b. .

5c. Which is smaller, line 5a or line 5b? Enter the smaller number here. 5c. .

5d. Your allowable credit for paying state unemployment taxes late (line 5c x 0.900 = line 5d) 5d. .

6. Your FUTA credit (line 4 + line 5d = line 6) 6. .

STOP
• If line 6 is equal to or more than line 1, STOP here. You’ve completed the worksheet. Leave Form 940, line 10, blank.
• If line 6 is less than line 1, continue this worksheet.
7. Your adjustment (line 1 – line 6 = line 7) Enter line 7 from this worksheet on 7. .
Form 940, line 10.

Don't attach this worksheet to your Form 940. Keep it for your records.

-12- Instructions for Form 940 (2020)

 11. If Credit Reduction Applies . . .
Example for Using the Worksheet
If you paid FUTA taxable wages that were also subject to
Jill Brown and Tom White are corporate officers whose wages are state unemployment taxes in any states that are subject to
excluded from state unemployment tax in your state. Jack Davis’s wages credit reduction, enter the total amount from Schedule A
aren't excluded from state unemployment tax. During 2020, you paid (Form 940) on Form 940, line 11. However, if you entered
$44,000 to Jill, $22,000 to Tom, and $16,000 to Jack. Your state's wage
an amount on line 9 because all the FUTA taxable wages
base is $8,000. You paid some state unemployment tax on time, some
late, and some remains unpaid.
you paid were excluded from state unemployment tax,
skip line 11 and go to line 12.
Here are the records:

Total taxable FUTA wages (Form 940, line 7) . . . . . . . $21,000.00

Part 4: Determine Your FUTA Tax and
Taxable state unemployment wages . . . . . . . . . . . . $ 8,000.00 Balance Due or Overpayment
Experience rate for 2020 . . . . . . . . . . . . . . . . . . . 0.041 (4.1%)
State unemployment tax paid on time . . . . . . . . . . . . $100.00 If any line in Part 4 doesn't apply, leave it blank.
State unemployment tax paid late . . . . . . . . . . . . . . $78.00
State unemployment tax not paid . . . . . . . . . . . . . . $150.00 12. Total FUTA Tax After Adjustments
Add the amounts shown on lines 8, 9, 10, and 11, and
enter the result on line 12.
1. Maximum allowable credit
$21,000.00 (Form 940, line 7)
line 8
x 0.054 (maximum credit rate)
line 9
$1,134.00 1. $1,134.00
line 10
+ line 11
2. Credit for timely state unemployment tax 2. $100.00
payments line 12
3. Additional credit
0.054 (maximum credit rate) $8,000
– 0.041 (your experience rate) x 0.013
If line 9 is greater than zero, lines 10 and 11 must
! be zero because they don't apply.
0.013 (your computation rate) $104.00 3. $104.00
CAUTION

4. Subtotal (line 2 + line 3)

$100.00
13. FUTA Tax Deposited for the Year
+ 104.00 Enter the amount of FUTA tax that you deposited for the
$204.00 4. $204.00 year, including any overpayment that you applied from a
prior year.
5. Credit for paying state unemployment taxes late
5a. Remaining allowable credit: (line 1 – line 4) 14. Balance Due
$1,134.00 If line 13 is less than line 12, enter the difference on
– 204.00 line 14.
$930.00 5a. $930.00
line 12
5b. State unemployment tax paid late 5b. $78.00
– line 13
5c. Which is smaller? Line 5a or line 5b? 5c. $78.00
line 14
5d. Allowable credit (for paying
late)
$78.00 If line 14 is:
x 0.900
• More than $500, you must deposit your tax. See When
$70.20 5d. $70.20 Must You Deposit Your FUTA Tax, earlier.
6. Your FUTA credit (line 4 + line 5d) • $500 or less, you can deposit your tax, pay your tax
with a credit card or debit card, pay your tax by EFW if
$204.00
+ 70.20
filing electronically, or pay your tax by check or money
order with your return. For more information on electronic
$274.20 6. $274.20
payment options, go to IRS.gov/Payments.
7. Your adjustment (line 1 – line 6) • Less than $1, you don't have to pay it.
$1,134.00 If you don't deposit as required and pay any
– 274.20
! balance due with Form 940, you may be subject to
$859.80 7. $859.80 CAUTION a penalty.
* You would enter line 7 from this worksheet
on Form 940, line 10.
If you pay by EFT, credit card, or debit card, file your
return using the Without a payment address under Where
Do You File, earlier. Don't file Form 940-V, Payment
Voucher.

Instructions for Form 940 (2020) -13-

What if you can't pay in full? If you can't pay the full To figure your FUTA tax liability for the fourth quarter,
amount of tax you owe, you can apply for an installment complete Form 940 through line 12. Then copy the
agreement online. You can apply for an installment amount from line 12 onto line 17. Lastly, subtract the sum
agreement online if: of lines 16a through 16c from line 17 and enter the result
• You can't pay the full amount shown on line 14, on line 16d.
• The total amount you owe is $25,000 or less, and
• You can pay the liability in full in 24 months. Example
To apply using the Online Payment Agreement You paid wages on March 28 and your FUTA tax on those wages was
$200. You weren't required to make a deposit for the 1st quarter
Application, go to IRS.gov/OPA. because your accumulated FUTA tax was $500 or less. You paid
Under an installment agreement, you can pay what you additional wages on June 28 and your FUTA tax on those wages was
owe in monthly installments. There are certain conditions $400. Because your accumulated FUTA tax for the 1st and 2nd
you must meet to enter into and maintain an installment quarters exceeded $500, you were required to make a deposit of
agreement, such as paying the liability within 24 months, $600 by July 31.
and making all required deposits and timely filing tax
You would enter $200 on line 16a because your liability for the 1st
returns during the length of the agreement.
quarter is $200. You would also enter $400 on line 16b to show your
If your installment agreement is accepted, you will be 2nd quarter liability.
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. In years when there are credit reduction states,
15. Overpayment TIP you must include liabilities owed for credit
reduction with your fourth quarter deposit. You
If line 13 is more than line 12, enter the difference on may deposit the anticipated extra liability throughout the
line 15. year, but it isn't due until the due date for the deposit for
the fourth quarter, and the associated liability should be
line 13 recorded as being incurred in the fourth quarter.
– line 12
line 15 17. Total Tax Liability for the Year
Your total tax liability for the year must equal line 12. Copy
the amount from line 12 onto line 17.
If you deposited more than the FUTA tax due for the
year, you may choose to have us either: Part 6: May We Speak With Your
• Apply the refund to your next return, or Third-Party Designee?
• Send you a refund.
Check the appropriate box on line 15 to tell us which If you want to allow an employee, your paid tax preparer,
option you select. Check only one box on line 15. If you or another person to discuss your Form 940 with the IRS,
don’t check either box or if you check both boxes, we will check the “Yes” box. Then enter the name and phone
generally apply the overpayment to your next return. number of the person you choose as your designee. Be
Regardless of any box you check or don’t check, we may sure to give us the specific name of a person—not the
apply your overpayment to any past due tax account that name of the firm that prepared your tax return.
is shown in our records under your EIN. Have your designee select a five-digit personal
If line 15 is less than $1, we will send you a refund or identification number (PIN) that he or she must use as
apply it to your next return only if you ask for it in writing. identification when talking to the IRS about your form.
Part 5: Report Your FUTA Tax By checking “Yes,” you authorize us to talk to your
designee about any questions that we may have while we
Liability by Quarter Only if Line 12 Is process your return. Your authorization applies only to this
More Than $500 form, for this year; it doesn't apply to other forms or other
tax years.
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. You’re authorizing your designee to:
• Give us any information that is missing from your return,
16. Report the Amount of Your FUTA Tax • Ask us for information about processing your return,
Liability for Each Quarter and
Enter the amount of your FUTA tax liability for each • Respond to certain IRS notices that you have shared
quarter on lines 16a–d. Don't enter the amount you with your designee about math errors and in preparing
deposited. If you had no liability for a quarter, leave the your return. We won't send notices to your designee.
line blank.
You’re not authorizing your designee to:
16a. 1st quarter (January 1 to March 31) • Receive any refund check,
16b. 2nd quarter (April 1 to June 30) • Bind you to anything (including additional tax liability),
16c. 3rd quarter (July 1 to September 30) or
16d. 4th quarter (October 1 to December 31) • Otherwise represent you before the IRS.
-14- Instructions for Form 940 (2020)
 The authorization will automatically expire 1 year after the firm's name and the EIN of the firm. You can apply for
the due date for filing your Form 940 (regardless of a PTIN online or by filing Form W-12. For more
extensions). If you or your designee want to end the information about applying for a PTIN online, go to
authorization before it expires, write to the IRS office for IRS.gov/PTIN. You can't use your PTIN in place of the EIN
your location using the Without a payment address under of the tax preparation firm.
Where Do You File, earlier. Generally, don't complete the Paid Preparer Use Only
If you want to expand your designee's authorization or section if you’re filing the return as a reporting agent and
if you want us to send your designee copies of your have a valid Form 8655 on file with the IRS. However, a
notices, see Pub. 947. reporting agent must complete this section if the reporting
agent offered legal advice, for example, by advising the
Part 7: Sign Here (Approved Roles) client on determining whether its workers are employees
or independent contractors for federal tax purposes.
You MUST Fill Out Both Pages of This Form and
SIGN It Privacy Act and Paperwork Reduction Act Notice.
Failure to sign will delay the processing of your return. We ask for the information on Form 940 to carry out the
On page 2 in Part 7, sign and print your name and title. Internal Revenue laws of the United States. We need it to
Then enter the date and the best daytime telephone figure and collect the right amount of tax. Subtitle C,
number, including area code, where we can reach you if Employment Taxes, of the Internal Revenue Code
we have any questions. imposes unemployment tax under the Federal
Unemployment Tax Act. Form 940 is used to determine
Who Must Sign Form 940? the amount of the taxes that you owe. Section 6011
requires you to provide the requested information if the tax
The following persons are authorized to sign the return for
is applicable to you. Section 6109 requires you to provide
each type of business entity.
your identification number. If you fail to provide this
• Sole proprietorship—The individual who owns the information in a timely manner, or provide false or
business.
fraudulent information, you may be subject to penalties.
• Partnership (including a limited liability company
(LLC) treated as a partnership) or unincorporated You’re not required to provide the information
organization—A responsible and duly authorized requested on a form that is subject to the Paperwork
partner, member, or officer having knowledge of its affairs. Reduction Act unless the form displays a valid OMB
• Corporation (including an LLC treated as a control number. Books or records relating to a form or its
corporation)—The president, vice president, or other instructions must be retained as long as their contents
principal officer duly authorized to sign. may become material in the administration of any Internal
• Single-member LLC treated as a disregarded entity Revenue law.
for federal income tax purposes—The owner of the
LLC or a principal officer duly authorized to sign. Generally, tax returns and return information are
• Trust or estate—The fiduciary. confidential, as required by section 6103. However,
section 6103 allows or requires the IRS to disclose or give
Form 940 may also be signed by a duly authorized
the information shown on your tax return to others as
agent of the taxpayer if a valid power of attorney or
described in the Code. For example, we may disclose
reporting agent authorization (Form 8655) has been filed.
your tax information to the Department of Justice for civil
Alternative signature method. Corporate officers or and criminal litigation, and to cities, states, the District of
duly authorized agents may sign Form 940 by rubber Columbia, and U.S. commonwealths and possessions to
stamp, mechanical device, or computer software administer their tax laws. We may also disclose this
program. For details and required documentation, see information to other countries under a tax treaty, to federal
Rev. Proc. 2005-39, 2005-28 I.R.B. 82, available at and state agencies to enforce federal nontax criminal
IRS.gov/irb/2005-28_IRB#RP-2005-39. laws, or to federal law enforcement and intelligence
Paid preparers. A paid preparer must sign Form 940 agencies to combat terrorism.
and provide the information in the Paid Preparer Use Only If you have comments concerning the accuracy of
section of Part 7 if the preparer was paid to prepare Form these time estimates or suggestions for making these
940 and isn't an employee of the filing entity. Paid forms simpler, we would be happy to hear from you. You
preparers must sign paper returns with a manual can send us comments from IRS.gov/FormComments. Or
signature. The preparer must give you a copy of the return you can send your comments to Internal Revenue
in addition to the copy to be filed with the IRS. Service, Tax Forms and Publications Division, 1111
If you’re a paid preparer, enter your Preparer Tax Constitution Ave. NW, IR-6526, Washington, DC 20224.
Identification Number (PTIN) in the space provided. Don't send Form 940 to this address. Instead, see Where
Include your complete address. If you work for a firm, write Do You File, earlier.

Instructions for Form 940 (2020) -15-

Estimated Average Times

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:
Form Recordkeeping Preparing, copying, assembling, and sending
the form to the IRS
Schedule A (Form 940) 16 hr., 1 min. 15 min.
Worksheet (Form 940) 1 hr., 41 min. 21 min.

-16- Instructions for Form 940 (2020)