Form 940 Returns

Security

IRS Form 940 is used to report annual Federal Unemployment Tax Act (FUTA) tax. FUTA tax, along with state unemployment taxes, is used to pay unemployment compensation to workers who have lost their jobs.

Expand this link to see prerequisites for using ActivityHD to produce Form 940.

Setup

Ideally the following items should be in place before you attempt to produce a Form 940 return the first time:

Export employer. Review the name and address fields for the export employer you will use with Form 940. It is likely that the export employer you use for Form 941 will also be appropriate for Form 940.
Tax deposits. To calculate Line 13 of Form 940, "FUTA tax deposited for the year", it is necessary to record tax deposits for unemployment payments (unless you pay all taxes due when you submit Form 940). The following steps outline how to set up to automatically record tax deposits for Form 940 reporting:
1. In Payroll, create an AP control which uses a built-in state tax deposit type (e.g., CASUTA).
2. Add the AP control created in step 1 to the appropriate PRCode (e.g., "Tax.CASUTA").
3. Post the check lines associated with the PRCode you created in step 2 (e.g., Tax.CASUTA) to AP invoices.
4. Merge and pay the AP invoices.
5. Create the tax deposit by merging the AP payment.
  Note
  If the SUTA payments for the quarter have already been recorded in GL, override the bank account in the Payments dialog and change it to the SUTA liability account. This causes the payment to simply reverse the AP invoice which was created.
6. Mark the tax deposit as "Paid".
FUTA wages. Your PRCode for tracking FUTA taxes (commonly "Tax.FUTA" or "Tax.FUI") must be assigned to the "Unemployment" check line group and have a tax entity of "USA".

Tip

If you previously used parameters for the FUTA rate (e.g., "Tax:FUTA:Percent") and maximum FUTA wages (e.g., "Tax:FUTA:Max"), consider deleting these parameters and using the equivalent built-in calculator functions. These functions are automatically updated for you each year, freeing you from annual upkeep of the parameters.
SUTA wages. If you are a multi-state employer, Form 940 Schedule A is also a filing requirement. Schedule A is used to identify the states in which you paid state unemployment during the reporting year. ActivityHD determines which state checkboxes to mark on Schedule A based on whether there are check lines in the reporting year with a PRCode that belongs to the "Unemployment" group and with a particular state's tax entity.

Tip

AccountingWare recommends you use the built-in parameter for the SUTA experience rate, "Tax:SUTA:Percent". This parameter is required for calculating Line 10 of Form 940 ("If SOME of the taxable FUTA wages you paid were excluded from state unemployment tax, OR you paid ANY state unemployment tax late"). If you previously used "Type:Tax:SUTAxxPercent", AccountingWare recommends that you transition to the built-in Tax:SUTA:Percent parameter instead.
FUTA wages by state. Schedule A also requires multi-state employers to report FUTA wages by state for states with a credit reduction rate greater than zero. Note: FUTA wages are not the same as SUTA wages which can have a different cutoff threshold than FUTA wages.

Credit reductions only apply when a state has fallen into arrears with the federal government with respect to unemployment payments. Since this is unpredictable from year to year, you should be prepared to collect this information. California, for instance, had a credit reduction for several years running.

The following formula is used to calculate SUTA wages:

state-specific FUTA wages = total result of check lines in group "Compensation" qualified by state tax entity up to the FUTA max for each employee for the year

The formula requires the following components:
- Group "Compensation" qualified by tax entity.
  Take one of the following actions depending on your organization's circumstances:
  - If all employees are in one state, add the state's tax entity (e.g., USA.TX) to all the segment items in group "Compensation".
  - If the state code is already part of your compensation PRCodes (e.g., Pay.Reg.TX), mark the state pieces with the corresponding tax entity.
  - If employees are in multiple states, you should create state-specific Pay PRCodes. (You can postpone this step if you are confident that your state will not have a state credit reduction.)
- FUTA max. The FUTA max ($7,000 in 2023) is built in to ActivityHD. You should consider deleting any segment item parameters which contain this value (e.g., Type:Tax:FUTAMax).
- For each employee. Only the first $7,000 of each employee's compensation for the year is added to the total.
Tracking total FUTA wages by state requires a new PRCode for each state where you pay unemployment.

Generate a 940 return

In the Navigation pane, highlight the Payroll/Human Resources > Government > Form 940 Returns folder.
Click . The Generate Form 940 Return wizard starts.
On the Options tab in the Reporting Year field, select the year to generate the Form 940 for.
In the Employer field, select the export employer to generate the 940 file for.
In the Type of Return section, mark the checkbox for any special circumstance that applies to the return. You can mark multiple checkboxes. For a typical return, none of the checkboxes would be marked. Valid options are:
- Amended. Mark this checkbox if this return represents a correction to a previously filed return.
- Successor employer. Mark this checkbox if you are a successor employer An employer who acquires substantially all the property used in a trade or business of another person (predecessor) or used in a separate unit of a trade or business of a predecessor; and immediately after the acquisition employs one or more people who were employed by the predecessor. [https://www.irs.gov/pub/irs-pdf/i940.pdf] and are either (1) reporting wages paid before you acquired the business from a predecessor who was required to file a Form 940 because they were an employer for FUTA purposes, or (2) claiming a special credit for state unemployment tax paid before you acquired the business by a predecessor who wasn't required to file a Form 940 because they were not an employer for FUTA purposes.
- Final: Business closed or stopped paying wages. Mark this checkbox if this is a final return because you went out of business or stopped paying wages and will not be liable for filing Form 940 in the future.
In the Payments exempt from FUTA tax include section, mark the checkbox for each kind of payment to exempt from FUTA tax. Your options are:
- Fringe benefits
- Group-term life insurance
- Retirement/pension
- Dependent care
- Other
In the Prior overpayment field, enter the amount of any overpayment from a prior year to apply to this filing year's tax.
In the Overpayment section, select what the IRS should do with any excess tax payments. Your options are:
- Apply to next return
- Send a refund
If you want to Allow a third party to discuss this return with the IRS, mark the checkbox in the Third Party Designee section. The authorization is effective for one year from the 940 return due date and allows the designee to provide missing information from your return, call the IRS about your return, and respond to IRS notices that you have shared with the third party designee. If you mark the checkbox, the remaining fields in the section are enabled.
1. Enter the Name of the third party designee.
2. Enter the third party designee's Phone number.
3. Enter the third party designee's personal identification number (PIN). The PIN is a five-digit number chosen by the designee.
Click Next >>. ActivityHD prompts you to confirm that you want to generate Form 940.
Click Yes. ActivityHD informs you when the process is complete and reports its results.
Click Next >>. ActivityHD shows the return that was created.

At this point, you can double-click the return in the right pane to drill down to the Form 940 Return window or you can print the return.
When you finish viewing or working with the return, click Finish.

Maintain a 940 return

Until a 940 return is flagged as "Submitted", you can still make limited changes to the return record. The return status is updated to "Submitted" when the return is printed.

In the Navigation pane, highlight the Payroll/Human Resources > Government > Form 940 Returns folder.
In the HD view, locate and double-click the return you want to make changes to. The return record opens in the Form 940 Return window.
Click .

Perform only the steps below which are necessary to update the return record.

In the Type of Return section, mark the checkbox for any special circumstance that applies to the return; clear the checkbox for any circumstance that does not apply. You can mark multiple checkboxes. For a typical return, none of the checkboxes would be marked. Valid options are:
- Amended. Ensure the checkbox is marked if this return represents a correction to a previously filed return.
- Successor employer. Ensure this checkbox is marked if you are a successor employer An employer who acquires substantially all the property used in a trade or business of another person (predecessor) or used in a separate unit of a trade or business of a predecessor; and immediately after the acquisition employs one or more people who were employed by the predecessor. [https://www.irs.gov/pub/irs-pdf/i940.pdf] and are either (1) reporting wages paid before you acquired the business from a predecessor who was required to file a Form 940 because they were an employer for FUTA purposes, or (2) claiming a special credit for state unemployment tax paid before you acquired the business by a predecessor who was not required to file a Form 940 because they were not an employer for FUTA purposes.
- No payments to employees. Ensure this checkbox is marked if you are not liable for FUTA tax because you did not pay any employees during the filing year.
- Final: Business closed. Ensure this checkbox is marked if this is a final return because you went out of business or stopped paying wages and will not be liable for filing Form 940 in the future.
In the Employer field, select the export employer record to associate with the return. The default employer is the employer designated when the 940 return was generated.
If your trade name is the same as the value in the Name field, leave the Trade Name field blank. If you are a sole proprietor, enter your trade name in this field.
In the Part 2: FUTA tax before adjustments section, ensure that the checkbox for each type of payment that is exempt from FUTA tax is marked. Valid options are:

Fringe Benefits
Group-term life
Retirement/Pension
Dependent care
Other

In the Overpayment from a prior year field, enter the amount of any overpayment for a prior year.
If there is a non-zero amount in the Overpayment from a prior year field, the Overpayment Option field is enabled. Select how to handle the overpayment amount. Your options are:
- Apply to Next Return
- Send a Refund
If the Allow a third party to discuss this return with the IRS checkbox is marked and you need to revoke authorization, clear the checkbox. If the checkbox is clear and you need to authorize a third party, mark the checkbox and then enter information in the Third Party Designee section.
If the Allow a third party to discuss this return with the IRS checkbox is marked, the fields in the Third Party Designee section are enabled.
1. Enter the Name of the third party designee.
2. Enter the third party designee's Phone number.
3. Enter the third party designee's personal identification number (PIN). The PIN is a five-digit number chosen by the designee.
In the Part 7: Signature section, provide the Name, Title, and Phone of the responsible party.
When you finish, save your changes.

Print a 940 return

The print process prints Form 940 and its Schedule A. A PDF of the output is attached to the 940 return record.

In the Navigation pane, highlight the Payroll/Human Resources > Government > Form 940 Returns folder.
In the HD view, highlight the 940 return to print, then right-click and select Print from the shortcut menu. The Print Form 940 Returns wizard starts and verifies that the return is valid to print.
Click Next >>.
On the Output tab in the Design field, select the report design to use to print the 940 returns. The default design is the built-in design for the current reporting year. Report designs are named "20xx Form 940 (built-in)", where xx is the last two digits of the reporting year.

Note

Because the "Form 940 (built-in)" report design uses built-in images, "Data" access to the Images folder is required to use it.
In the toolbar, click the icon for the type of output you want:
- - Provides access to two preview options.
  - Preview - Click the icon or click the drop-down arrow and select Preview from the drop-down menu to view the 940 returns in the Crystal Reports viewer.
  - Preview to PDF - Click the drop-down arrow next to the icon and select Preview to PDF to view the 940 returns in the PDF reader.
- - Opens the Print dialog so that you can select and configure a printer and then print a paper copy of the returns.
- - Opens the Report Email Options dialog so that you can address and compose an email that the returns will be attached to.
- - Opens the Export Report dialog so that you can save the returns to a file. File types include Crystal Reports (.rpt), PDF (.pdf), Microsoft Excel (.xls), Microsoft Word (.doc), rich text (.rtf), and XML (.xml).
When you finish previewing, printing, and/or exporting returns, click Next >>.
The Submit Date field defaults to the current date. If today is not the actual submission date, enter the submission date.
If you do not want to attach the Form 940 to its record, clear the Create Attachments checkbox.
To flag the return(s) as "Printed" and "Submitted", click Finish.

Data extensions

The following data extension is available for the report:

USA 940 returns

Reprint a 940 return

Use the Reprint Form 940 Returns wizard when you need to print 940 returns after they have been flagged as "Submitted".

The reprint process prints Form 940 and its Schedule A.

In the Navigation pane, highlight the Payroll/Human Resources > Government > Form 940 Returns folder.
In the HD view, highlight the 940 return to reprint, then right-click and select Reprint from the shortcut menu. The Reprint Form 940 Returns wizard starts and verifies that the return is valid to reprint.
Click Next >>.
On the Output tab in the Design field, select the report design to use to reprint the 940 returns. The default design is the built-in design for the current reporting year. Report designs are named "20xx Form 940 (built-in)", where xx is the last two digits of the reporting year.

Note

Because the "Form 940 (built-in)" report design uses built-in images, "Data" access to the Images folder is required to use it.
In the toolbar, click the icon for the type of output you want:
- - Provides access to two preview options.
  - Preview - Click the icon or click the drop-down arrow and select Preview from the drop-down menu to view the returns in the Crystal Reports viewer.
  - Preview to PDF - Click the drop-down arrow next to the icon and select Preview to PDF to view the returns in the PDF reader.
- - Opens the Print dialog so that you can select and configure a printer and then print a paper copy of the returns.
- - Opens the Report Email Options dialog so that you can address and compose an email that the returns will be attached to.
- - Opens the Export Report dialog so that you can save the returns to a file. File types include Crystal Reports (.rpt), PDF (.pdf), Microsoft Excel (.xls), Microsoft Word (.doc), rich text (.rtf), and XML (.xml).
When you finish previewing, printing, and/or exporting returns, click Finish.

Data extensions

The following data extension is available for the report:

USA 940 returns

Manually clear the "Submitted" flag on a 940 return

Form 940 Return Record ID

Reporting Year

The tax year represented on the return.

Submitted

If the checkbox is cleared, the return has not yet been printed and submitted. Most non-calculated fields can be edited until the form is printed and is flagged as "Submitted".

If the checkbox is marked, the return has been printed and submitted and the form cannot be edited. However, if you need to make changes to the 940 return, you can clear the Submitted checkbox, make your changes, and print the 940 return again.

[Submitted Date]

If the Submitted checkbox is marked, the date the return was printed and submitted.

[Submitted Username]

If the Submitted checkbox is marked, the username of the person who printed and submitted the return.

Type of Return

The checkboxes in this section represent special cases vis-à-vis the 940 return; multiple checkboxes can be marked. For a typical return, none of these checkboxes would be marked. The checkboxes can be marked or cleared if the return has not been printed and submitted.

Amended

If this checkbox is marked, the return represents a correction to a previously filed return.

Successor employer

If this checkbox is marked, you are stating that you are a successor employer

An employer who acquires substantially all the property used in a trade or business of another person (predecessor) or used in a separate unit of a trade or business of a predecessor; and immediately after the acquisition employs one or more people who were employed by the predecessor. [https://www.irs.gov/pub/irs-pdf/i940.pdf] and are either (1) reporting wages paid before you acquired the business from a predecessor who was required to file a Form 940 because they were an employer for FUTA purposes, or (2) claiming a special credit for state unemployment tax paid before you acquired the business by a predecessor who was not required to file a Form 940 because they were not an employer for FUTA purposes.

No payments to employees

If this checkbox is marked, you are indicating that you are not liable for FUTA tax because you did not pay any employees during the filing year.

Final: Business closed

If this checkbox is marked, you are indicating that this is a final return because you went out of business or stopped paying wages and will not be liable for filing Form 940 in the future.

Form 940 Return tab

Employer Information

This section contains identifying information and address information for the employer cited on the 940 return.

EIN

The employer's Employer Identification Number (EIN). The EIN is a unique nine-digit number assigned to your organization by the IRS. The EIN is stored on the "USA" tax entity.

Employer

The employer code associated with the designated export employer record. The employer code can be changed if the return has not been printed and submitted.

Name

The legal business name used to apply for your EIN. This information comes from the designated export employer record.

Trade Name

The field should be blank if the business name in the Name field and the trade name are the same. For sole proprietors, the Name field should contain your legal name (e.g., John Doe) and this field should contain the name you do business as (e.g., John's John Remodeling). The trade name can be entered or changed if the return has not been printed and submitted.

Location Address

The physical location where you do business. This information comes from the designated export employer record.

Delivery Address

The address or post office box where your organization accepts deliveries. This information comes from the designated export employer record.

City/State/Zip

The city, state, and Zip Code of the location address. This information comes from the designated export employer record.

Province

If the location address is in Canada, the province where the address is located. This information comes from the designated export employer record.

Postal Code

If the location address is not in the USA, the postal code where the address is located. This information comes from the designated export employer record.

Country

If the location address is not in the USA, the country code where the address is located. This information comes from the designated export employer record.

Part 1: State unemployment

Part 1 contains information about the states where you are required to pay state unemployment taxes.

Unemployment in one state only

If you are required to pay state unemployment taxes for only one state, this field contains the two-letter postal abbreviation of that state. If you are a multi-state employer, the field is blank. ActivityHD looks at the check lines in the reporting year with a PRCode that belongs to the "Unemployment" group. If these check lines are all associated with a single state tax entity, the state tax entity's postal abbreviation is inserted here.

Multi-state employer

The checkbox is marked if you are required to pay state unemployment taxes for more than one state. ActivityHD looks at the check lines in the reporting year with a PRCode that belongs to the "Unemployment" group. If it finds that check lines are associated with multiple state tax entities, the checkbox is marked.

Wages in a state subject to CREDIT REDUCTION

The checkbox is marked if at least one of the states in which you are required to pay state unemployment taxes is a credit reduction state. A credit reduction state is a state that has not repaid money borrowed from the federal government to pay unemployment benefits. (In 2022, the US Virgin Islands, California, Connecticut, Illinois, and New York were credit reduction states.)

Part 2: FUTA tax before adjustments

Part 2 calculates the amount of FUTA tax before adjustments.

Total payments to all employees

The total payments made to employees during the calendar year, even if the payments are not subject to FUTA tax. Payments include compensation, fringe benefits, retirement/pension payments, and other payments such as tips, payments made by a predecessor employer, and payments to non-employees who are treated as employees by the state unemployment tax agency.

Payments exempt from FUTA tax

Total payments not subject to FUTA tax. Exempt payments include some fringe benefits, group term life insurance, some retirement/pension payments, payments for dependent care, and other payments such as non-cash payments, certain cash payments for agricultural labor, all payments to H-2A visa workers, workers' compensation payments, payments for domestic services which amount to less than $1,000 per quarter, payments for services provided by your immediate family, payments for some fishing activities, payments to certain statutory employees, and payments to non-employees who are treated as employees by the state unemployment tax agency.

[Exempt payment types]

The checkboxes marked in this section indicate the types of exempt payments which are included in the Payments exempt from FUTA tax total. Valid payment types are:

Fringe Benefits
Group-term life
Retirement/Pension
Dependent care
Other

The checkboxes can be marked or cleared if the return has not been printed and submitted.

Total excess payments

The total of payments made to employees, after subtracting payments exempt from FUTA tax, in excess of the FUTA wage base. In 2023, the FUTA wage base was $7,000.

Subtotal

Total payments exempt from FUTA tax plus total payments in excess of the FUTA wage base.

Total taxable FUTA wages

Total payments to all employees minus the subtotal above.

FUTA tax before adjustments

The calculated FUTA tax before adjustments. This is the total taxable FUTA wages times the FUTA tax rate (6% in 2023).

Part 3: Adjustments

Part 3 determines any adjustments to FUTA wages.

All FUTA wages excluded from SUTA

If all taxable FUTA wages were excluded from state unemployment tax, this line shows the product of total taxable FUTA wages times 0.054 (factor as of 2023).

If you did not have to pay state unemployment tax because all of the wages you paid were excluded from state unemployment tax, this line shows the product of total taxable FUTA wages time 0.060 (factor as of 2023).

If there is a value on this line, the next two lines are blank.

From line 7 of the worksheet

If some of the taxable FUTA wages paid were excluded from state unemployment tax, or if you paid any state unemployment tax late, this line shows the amount of the adjustment to FUTA tax. This is the value which is shown on line 7 of the Line 10 worksheet.

If all the FUTA taxable wages paid were excluded from state unemployment tax, this line is blank.

From Schedule A

If you had FUTA taxable wages which were also subject to state unemployment taxes in states that are subject to credit reduction, this line shows the amount from line 11 of Schedule A.

If all the FUTA taxable wages paid were excluded from state unemployment tax, this line is blank.

Part 4: FUTA tax

Part 4 shows the computation of FUTA tax.

Total FUTA tax after adjustments

FUTA tax before adjustments plus FUTA wages excluded from SUTA plus adjustment from line 7 of the worksheet plus line 11 from Schedule A. The adjustment from line 7 of the worksheet and the value from line 11 from Schedule A are zero, thus blank, if FUTA wages excluded from SUTA is non-zero.

FUTA tax deposited for the year

The FUTA tax deposited for the reporting year.

Overpayment from a prior year

The amount of any overpayment from a prior year that was earmarked for application on the next return. The overpayment amount can be changed until the return is printed and submitted.

Balance Due

If total FUTA tax after adjustments is greater than FUTA tax deposited for the year plus overpayment from a prior year, this line shows the balance due. The balance due is the total FUTA tax after adjustments less FUTA tax deposited for the year less overpayment from a prior year; otherwise, this field is blank.

Overpayment

If total FUTA tax after adjustments is less than FUTA tax deposited for the year plus overpayment from a prior year, this line shows the amount of overpayment. The overpayment amount is the FUTA tax deposited for the year plus overpayment from a prior year minus total FUTA tax after adjustments; otherwise, this field is blank.

Overpayment Option

The option selected in the Generate Form 940 Return process for handling excess payments of FUTA tax. Valid options are:

Apply to Next Return
Send a Refund

Part 5: FUTA liability by quarter

If the total amount of FUTA tax after adjustments is greater than $500, Part 5 shows the quarterly breakdown of FUTA tax liability and the total FUTA tax liability; otherwise, these fields are blank when total FUTA tax after adjustments is less than $500.

1st quarter

FUTA tax liability for the quarter from January 1 to March 31 of the reporting year.

2nd quarter

FUTA tax liability for the quarter from April 1 to June 30 of the reporting year.

3rd quarter

FUTA tax liability for the quarter from July 1 to September 30 of the reporting year.

4th quarter

FUTA tax liability for the quarter from October 1 to December 31 of the reporting year. The fourth quarter tax liability is figured by taking the sum of the first, second, and third quarters and subtracting that number from the total FUTA tax after adjustments.

Total tax liability

The sum of the tax liability for the four quarters listed above. This number must match the total FUTA tax after adjustments which prints on Line 12 of Form 940.

Part 6: Third-party designee

If a third party is authorized to discuss the Form 940 return with the IRS, this section contains contact and security information for the designee.

Allow a third party to discuss this return with the IRS

If the checkbox is marked, indicates that a third party designee is authorized to discuss your return with the IRS. The checkbox can be marked or cleared if the return has not been printed and submitted. The authorization is effective for one year from the 940 return due date and allows the designee to provide missing information from your return, call the IRS about your return, and respond to IRS notices that you have shared with the third party designee.

Name

If the Allow a third party to discuss this return with the IRS checkbox is marked, the name of the third party designee.

Phone

If the Allow a third party to discuss this return with the IRS checkbox is marked, the phone of the third party designee.

If the Allow a third party to discuss this return with the IRS checkbox is marked, the PIN of the third party designee. The PIN is a five-digit number chosen by the designee.

Part 7: Signature

The signature block for the Form 940 return.

The person authorized to sign a return depends on the type of business entity. See the table below for a list of business entity types and the respective authorized signer roles.

Business entity type	Authorized signer role
Sole proprietorship	Business owner
Partnership, including an LLC treated as a partnership or an unincorporated organization	Responsible and duly authorized partner, member, or officer with knowledge of the partnership's business affairs
Corporation, including an LLC treated as a corporation	President, vice president, or other principal officer who is duly authorized to sign
Single-member LLC treated as a disregarded entity for federal income tax purposes	Owner of the LLC or a principal officer duly authorized to sign
Trust or estate	Fiduciary

Name

The name of the authorized signer.

Title

The title of the authorized signer.

Phone

The phone number, including area code, of the authorized signer.

Schedule A tab

Schedule A table

The table lists the states in which you were required to pay state unemployment tax and the amount of FUTA taxable wages. For any state where you owed state unemployment tax that is also a credit reduction state, the table shows the credit reduction rate and the credit reduction amount.

State

The two-character state abbreviation of the state where you were required to pay state unemployment tax.

FUTA Taxable Wages

The amount of FUTA taxable wages paid to employees in the state listed on this row of the table.

Reduction Rate

If the state on this row is a credit reduction state, the credit reduction rate for the state.

Credit Reduction

If the state on this row is a credit reduction state, the amount of the employer's credit reduction for the state.

Total Credit Reduction

The sum of the credit reduction amounts for all states listed in the Schedule A table.

Worksheet tab

Maximum allowable credit

Taxable FUTA wages times the maximum adjustment rate. This product yields the maximum credit the employer is allowed against FUTA taxes.

Taxable FUTA Wages

The taxable FUTA wages for the employer.

Maximum Adjustment Rate

The maximum allowable credit, 5.4% in 2023, for state unemployment tax payments.

Credit for timely state unemployment tax payments

The amount of state unemployment tax payments made on time.

Timely payments are calculated from the total of tax deposits where (1) the deposit is one of the built-in state unemployment types (xxSUTA), (2) the liability date is in the tax year, (3) the deposit date is on or before the Form 940 due date (January 31 of the following year), and (4) the deposit is flagged as "Paid".

Additional credit table

The table lists the states in which you were required to pay state unemployment tax, your assigned experience rate for each state, and taxable SUTA wages for each state. If your experience rate in a state is less than the maximum adjustment rate, a computation rate is shown and the additional credit amount calculated.

State

A state in which you were required to pay state unemployment tax.

Experience rate

The experience rate assigned to your organization for the corresponding state. This rate is maintained on the built-in tax parameter Type:Tax:SUTAxxPercent for each state (xx) where you pay unemployment tax.

Computation rate

The difference between 0.054 (the maximum adjustment rate in 2023) and the assigned experience rate for the corresponding state. If the experience rate is greater than 0.054, the cell is blank.

Taxable SUTA wages

The taxable SUTA wages for the corresponding state at the assigned experience rate.

This value is needed when the total amount of SUTA paid on time is less than the maximum credit (as of 2023, FUTA wages x .054).

Additional Credit

Taxable SUTA wages for the corresponding state times the state's computation rate.

Subtotal

The credit for timely state unemployment tax payments plus the total additional credit amount for all states with an additional credit amount.

Credit for paying state unemployment taxes late

This section of the worksheet computes the reduced credit for organizations which paid SUTA taxes late.

What is your remaining allowable credit?

The maximum allowable credit minus the credit subtotal.

How much state unemployment tax did you pay late?

The amount of state unemployment tax paid late.

Late payments are calculated from the total of tax deposits where (1) the deposit is one of the built-in state unemployment types (xxSUTA), (2) the liability date is in the tax year, (3) the deposit date is after the Form 940 due date (January 31 of the following year), and (4) the deposit is flagged as "Paid".

Which is smaller, line 5a or 5b?

The smaller of the remaining allowable credit and the amount of SUTA paid late.

Your allowable credit for paying state unemployment taxes late

The smaller of the remaining allowable credit and the amount of SUTA paid late times the late rate.

Late Rate

The factor used to determine the credit for paying SUTA taxes late. As of 2022, the factor was 0.900.

Your FUTA credit

The credit subtotal plus the allowable credit for paying SUTA late.

Your adjustment

The maximum allowable credit minus the FUTA credit.

Check Lines tab

This tab contains a set of subtabs which show the check lines which contribute to various parts of this Form 940 calculation. Checks shown on the subtab must have a check date in the reporting year and must be merged.

USA Unemployment subtab

The Check Lines pane shows the Check Lines HD view filtered to show all records with a PRCode for federal unemployment tax; namely, Tax.FUTA. The total source in this pane should match "Total taxable FUTA wages".

State Unemployment subtab

The Check Lines pane shows the Check Lines HD view filtered to show all records with a PRCode for state unemployment tax; typically, Tax.XXSUTA, where XX is a two-character state abbreviation. If the total source in this pane is zero, Form 940 assumes that all FUTA wages are excluded from SUTA. Totals by state are shown in the "Taxable SUTA wages" column on the Worksheet tab.

Compensation subtab

The Check Lines pane shows the Check Lines HD view filtered to show all records with a compensation-type PRCode. The total result should match "Total payments to all employees".

PreUnemployment subtab

The Check Lines pane shows the Check Lines HD view filtered to show all records with a PRCode which contributes to pre-unemployment compensation. The total result should match "Payments exempt from FUTA tax".

State Compensation subtab

The Check Lines pane shows the Check Lines HD view filtered to show all records with a PRCode for state compensation; i.e., check lines in the Compensation group which are assigned to a US state tax entity. The first $7,000 (as of 2023) of each employee's compensation is used to calculate FUTA taxable wages by state on Schedule A.

Tax Deposits tab

Tax deposits shown on the FUTA and SUTA subtabs must have a liability date in the reporting year and must be marked "Paid".

FUTA subtab

The Tax Deposits pane shows the Tax Deposits HD view filtered to show all FUTA tax deposits associated with the 940 return; i.e., tax deposits with deposit type "USAFUTA". The total amount should match "FUTA tax deposited for the year".

SUTA subtab

The Tax Deposits pane shows the Tax Deposits HD view filtered to show all SUTA tax deposits associated with the 940 return; i.e., tax deposits with state deposit types of XXSUTA, where XX is the two-character state abbreviation. These tax deposits are used to calculate state unemployment paid on time and paid late on the Line 10 worksheet. Deposits dated on or before January 31 of the year following the reporting year are considered paid on time. Deposits dated after January 31 are late.

Attachments tab

The Attachments tab is visible if any record for a given entity has an attachment. If the Attachments tab is not visible, this implies that no record of the entity type has an attachment on it; however, once an attachment is added to any record of the entity type, the Attachments tab will become available.

Attachments

The list box shows the files which are attached to the current record. Highlight a file name to preview the file in the adjacent pane. Double-click a file name to open the file in its native editor.

Preview pane

If a file name is highlighted in the Attachments list box, this pane shows a preview of the file contents. Some file types cannot be previewed but can be double-clicked to open in their native editor.

Other tab

Memo tab

To include additional information about this record not collected elsewhere, enter it in this text box. This area supports common keyboard shortcuts such as Ctrl+C to copy and Ctrl+V to paste.

Timestamps tab

This tab shows the user who created this record and the date and time of creation as well as the user, date, and time of the latest modification to the record.

Common accesses available on Form 940 returns

Access	A user with this access can...
Change	Use the mass change action on Form 940 returns.
Custom Fields	Create and edit custom fields for Form 940 returns.
Data	Have read-only access to Form 940 returns from anywhere in the software (e.g., field validations, filters, date expressions).
Delete	Delete Form 940 returns.
Edit	Edit Form 940 return records.
Export	Export Form 940 return records from ActivityHD.
Read	Have read-only access to Form 940 return records.
Report	Run reports with Form 940 return information.
Report Designs	Create and edit report designs with Form 940 return information. This access enables the Report Designs button on the Output tab of report dialogs.
Shared Answers	Create and edit action profiles and report profiles related to Form 940 returns.
Shared Filters	Create and edit shared filters on Form 940 returns.
Visible	View the Form 940 Returns folder in the Navigation pane.

Special accesses available on Form 940 returns

Access	A user with this access can...
Generate	Generate 940 returns.
Print	Print 940 returns.
Reprint	Reprint 940 returns.

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