Form 940 (2012): Employer’s Federal Unemployment
Tax Return
Form 940 for tax year 2012 is used to report employer liability under the Federal Unemployment
Tax Act. Employers report FUTA wages and calculate tax owed to the Department of the
Treasury through the Internal Revenue Service, including any adjustments for Credit Reduction
States with outstanding federal loans.
Understanding FUTA Filing Requirements for 2012
Employers must file IRS Form 940 if they paid $1,500 or more in wages during any calendar quarter in 2011 or 2012, or employed one or more workers for part of a day in at least 20 weeks during those years. Most employers subject to employment taxes, including Social Security and
Medicare taxes, must report FUTA separately on Form 941.
Agricultural employers, household employers, and certain employers in U.S. territories such as the Virgin Islands may follow modified filing thresholds or reporting instructions based on
Internal Revenue Service guidance and Department of Labor rules.
Step-by-Step Filing Checklist
Step 1: Confirm FUTA Coverage and Filing Obligation
Determine whether your business qualifies as a covered employer under FUTA rules for 2012 by reviewing wage payments and employee counts. If questions arise, consult IRS form instructions or a qualified tax professional to reduce the risk of filing errors.
Step 2: Gather Quarterly Wage and Tax Records
Collect payroll totals from all four Forms 941 filed for 2012, including wages subject to Social
Security and Medicare tax. Confirm that totals reconcile with state unemployment filings and internal payroll systems.
Step 3: Reconcile Payroll With Annual Reporting Documents
Verify that total wages match Form W-2 and Form W-3SS, if applicable. Forms 1099-MISC,
1099-Q, and 1099-H are not used to calculate FUTA wages, but reviewing them supports accurate worker classification.
Step 4: Calculate Total Wages Subject to FUTA Tax
Calculate taxable FUTA wage for each employee, applying the annual wage base limit of $7,000 for 2012. Follow IRS instructions to include only wages subject to FUTA.
Step 5: Identify 2012 Credit Reduction States
Determine whether your business paid wages in any Credit Reduction States during 2012. A credit reduction applies when a state has outstanding federal unemployment loans, thereby increasing employer FUTA liability.
Step 6: Apply the FUTA Tax Rate and Allowable Credits
Apply the gross FUTA tax rate of 6.0 percent and reduce it by the allowable credits for state unemployment taxes. Adjust the credit rate as required for credit-reduction states, in accordance with the guidance in Announcement 2012-25.
Step 7: Complete Part 2 of Form 940
Enter total payments, taxable wages, and exclusions in Part 2 using the proper column heading instructions. Accurate data entry helps prevent processing delays and correction notices.
Step 8: Report Adjustments on Lines 9 Through 11
Report exempt wages, late state tax payments, and credit reduction amounts on Lines 9 through 11. Complete Schedule A if wages were paid in multiple states during the year.
Step 9: Calculate Total FUTA Tax Liability
Add Lines 8 through 11 to determine Line 12, which represents total FUTA tax after adjustments. This amount reflects your final annual liability before deposits.
Step 10: Verify Deposit Threshold and Payment Method
Subtract deposits reported on Line 13 from Line 12 to determine the balance due on Line 14. If the balance exceeds $500, payment must be made electronically, typically via direct deposit through EFTPS.
Step 11: Review Quarterly Deposit Compliance
Confirm that all FUTA deposit was submitted according to the quarterly filing schedule once the cumulative liability exceeded $500. Accurate deposit tracking helps reduce exposure during IRS audits.
- Incorrect FUTA calculations: Misapplying the wage base or credit reduction rates can
- Missing credit reduction adjustments: Failing to complete Schedule A when required
- Deposit timing errors: Employers sometimes overlook the cumulative $500 threshold,
- Incomplete documentation: Missing schedules, unsigned returns, or poorly managed
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 12: Sign, Store, and File the Return
If you are filing electronically, sign and date Form 940 using an authorized digital signature.
Retain a complete PDF file copy using Adobe Acrobat or a secure cloud-based solution that supports document management, cloud storage, and workflow automation.
Filing Method, Tools, and Record Retention
Employers may file Form 940 electronically to improve the user experience and streamline the signing process. Electronic filing systems often integrate secure search button features, automated validation, and organized record retention.
Maintain payroll tax records for at least four years, including deposits and supporting documents. Records may be stored digitally or in physical offices, such as business locations on
Cuyamaca St. or operations in San Diego or El Cajon.
Common Filing Mistakes to Avoid lead to underreported tax and penalties assessed by the Internal Revenue Service. results in incorrect Line 11 entries and understated tax liability. leading them to confuse quarterly deposits with annual filing requirements. records increase audit risk and processing delays.
2012-Specific Form 940 Notes
For 2012, the FUTA wage base remained $7,000 per employee with no inflation adjustment.
Multiple states were subject to credit reduction, and affected employers were required to report those adjustments on Line 11 after completing Schedule A.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
