IRS Issues Form 940 for Tax Year 2014

Author: Rena Pirsos, XpertHR Legal Editor

December 11, 2014

The IRS has issued the 2014 Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return; Schedule A (Form 940), Multi-State Employer and Credit Reduction Information;Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers; and the Instructions for Form 940.

An employer must file Form 940 to report its annual Federal Unemployment Tax Act (FUTA) tax if it paid wages of $1,500 or more to employees in any calendar quarter during 2013 or 2014, or had one or more employees for at least some part of a day in any 20 or more different weeks in 2013 or 2014. All full-time, part-time and temporary employees must be counted; partners in a partnership are not counted.

The 2014 FUTA tax rate is 6%. This rate applies to the first $7,000 an employer pays to each employee during a calendar year, after subtracting any payments that are exempt from the tax. FUTA tax deposits must be made by electronic funds transfer, preferably using the Electronic Federal Tax Payment System (EFTPS). Employers may pay their FUTA tax shown on line 14 of Form 940 using a major credit or debit card (but these cards may not be used to pay FUTA tax deposits).

The due date for filing Form 940 is February 2, 2015. Employers that deposited all their FUTA tax when it was due do not have to file the form until February 10.

Credit Reduction States

Schedule A (Form 940) lists the 2014 credit reduction states, as determined by the Department of Labor (seven states in all). An employer that paid any wages subject to the unemployment compensation laws of a credit reduction state will have its credit against FUTA tax reduced based on the credit reduction rate for that state. The employer must use Schedule A to figure its credit reduction amount.

Aggregate Form 940 Filers

Agents of home care service recipients approved by the IRS under Internal Revenue Code § 3504 must complete Schedule R (Form 940) when filing an aggregate Form 940. To request approval to act as an agent for an employer, an agent must file Form 2678, Employer/Payer Appointment of Agent, with the IRS (except for certain state or local government agencies).