Form 940 (2011): Employer’s Federal Unemployment
Tax Return
Form 940 for 2011 reports employer liability under the Federal Unemployment Tax Act and supports federal unemployment compensation programs administered through state workforce agencies. The Internal Revenue Service uses this annual filing requirement to reconcile payroll taxes, fund unemployment benefits, and ensure compliance with Department of Labor and
Department of the Treasury regulations.
The 2011 940 form reflects a mid-year FUTA rate change and continued State Reduction Rate adjustments, which affected employers with operations in certain jurisdictions. Employers should review official instructions for Form 940 available on IRS.gov before completing submissions.
Understanding 2011 FUTA Tax Rate Changes
The federal unemployment tax rate changed during 2011, requiring employers to calculate liability using two separate periods. Wages paid from January 1 through June 30, 2011, were taxed at 6.2 percent, while salaries paid from July 1 through December 31, 2011, were taxed at
6.0 percent. Employers eligible for the full state unemployment insurance credit reduced these rates to 0.8 percent and 0.6 percent, respectively.
These calculations directly affect the Taxable Wage Base, which remains capped at the first
$7,000 paid to each employee for the calendar year. This process ensures accurate coordination between FUTA and SUTA systems.
Step-by-Step Completion Guide
Step 1: Verify Your Employer Identification Number and Business Details
Enter your employer identification number exactly as assigned by the Internal Revenue Service, along with your legal business name and address. EIN mismatches commonly cause processing delays, compliance issues, and correspondence from IRS channels requesting clarification.
If your organization is a U.S. corporation filing Form 1120 or related variants such as Form
1120-C, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC, ensure consistency across all tax forms and attachments.
Step 2: Calculate Total FUTA Taxable Wages
Report total wages paid to individuals during the calendar year 2011, including only the first
$7,000 per employee subject to FUTA. Exclude wages above the statutory wage base and carefully review employment contracts, especially for foreign operations or remote employment arrangements.
Payroll records, Social Security numbers, and employee earnings documentation should align with reports filed with the Social Security Administration and be reflected in SSA/IRS Reporter data.
Step 3: Apply the Correct FUTA Rates by Period
Apply the appropriate FUTA tax rate to wages paid in each period by multiplying first-half wages by 0.008 and second-half wages by 0.006. These figures reflect the maximum allowable credit for employers fully compliant with state unemployment insurance. Following the official instructions for Form 940 helps prevent calculation errors that may trigger IRS reviews or additional submissions.
Step 4: Identify Credit Reduction State Exposure
Determine whether your business paid wages in any credit reduction states during 2011, including Arkansas, Connecticut, Georgia, Indiana, and other designated jurisdictions.
Employers operating in these states must account for additional FUTA liability due to outstanding federal unemployment loans.
Credit reduction determinations rely on Department of Labor data and directly impact federal tax due amounts.
Step 5: Complete Schedule A (Form 940) When Required
If your business operated in more than one state or in any credit reduction state, complete
Schedule A (Form 940) and attach it to the return. Enter FUTA taxable wages by state, apply the applicable reduction rate, and transfer totals to the main form as instructed. Schedule A must be included with the 2011 940 form to meet IRS specifications and avoid rejection during processing.
Step 6: Calculate State Unemployment Insurance Credits
Report state unemployment taxes paid by the Form 940 filing deadline to claim the full federal credit. Late SUTA payments reduce allowable credits and require additional calculations using worksheets provided in Employment Tax Publications and Publication 15B. Timely coordination with state workforce agencies supports accurate credit claims and reduces compliance risk.
Step 7: Report Quarterly Tax Liability Accurately
Complete Part 5 only if the total FUTA tax exceeds five hundred dollars for the year. Report quarterly tax liability amounts rather than deposits, following the format specified in the form sections. Confusing liability with payments remains a common source of errors flagged during
IRS review processes.
Step 8: Confirm Electronic Deposit and Payment Records
Verify that all required deposits were made electronically using EFTPS, as paper submissions were no longer accepted in 2011. Retain confirmation records for tracking, status verification, and audit support. If a balance remains due, prepare Form 940-V and submit payment in accordance with IRS payment guidance. Payment platforms may include approved processors and IRS-compatible software solutions.
Step 9: Reconcile Total Tax and Determine Outcome
Compare the total tax due with deposits made to determine whether additional payment is required or an overpayment exists. Employers may request a refund or apply credits forward by completing the appropriate fields. Accurate reconciliation reduces stress, prevents processing cracks, and supports clean tax compliance records.
- Incorrect rate application: Applying a single FUTA rate for the entire year instead of
- Omitting Schedule A: Employers in credit-reduction states frequently fail to attach
- Reporting deposits instead of liability: Part 5 requires liability figures, not payment
- Late SUTA payments: Delayed state unemployment tax payments reduce allowable
- Using outdated payment references: Relying on obsolete Form 8109 documentation
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Sign, Validate, and Submit the Return
Sign and date the return as the authorized representative and include a daytime phone number for IRS contact. Unsigned forms are rejected, even if submitted on time. Employers may file using approved e-filing software, PDF formats, or tools supporting eSignature functionality, provided the submission meets IRS standards.
Additional Filing and Recordkeeping Tips
Maintain copies of essential documents, including payroll summaries, Social Security filings,
Schedule A worksheets, and EFTPS confirmations. Retain records according to IRS and
Department of Labor regulations to support future audits or questions. When questions arise, consult IRS.gov, Employment Tax Forms guidance, IMRS Hot Issues, or official IRS forums for clarification rather than relying on informal sources.
Common Mistakes to Avoid using two rates results in inaccurate liability and may require amended submissions.
Schedule A, which is required to calculate the additional tax due. amounts, and mixing the two creates reporting inconsistencies.
FUTA credits and increase federal tax due. instead of EFTPS confirmations can lead to unresolved payment discrepancies.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
