Form 940 (2013): Employer’s Federal Unemployment
Tax Return
Form 940 for 2013 reports an employer’s federal unemployment tax liability under the Federal
Unemployment Tax Act and calculates allowable credits for contributions to state unemployment insurance. The 2013 tax year included 17 states that reduced their credits, affecting FUTA calculations for certain employers.
Proper compliance with unemployment tax obligations requires accurate wage records, correct credit calculations, and timely quarterly tax deposits in accordance with Internal Revenue Code rules administered by the Internal Revenue Service and the Treasury Department.
Verify Your Filing Requirement and Gather Essential
Documents
Determine whether your business must file Form 940 for 2013 based on IRS criteria published in the Federal Register and supported by Revenue Procedure 2013-39. You must file if you paid
$1,500 or more in wages during any calendar quarter in 2012 or 2013. You must also file if you had one or more employees for at least part of a day in any 20 or more different weeks during
2012 or 2013, including household employees reported on Schedule H.
Complete the Step-by-Step Filing Process
Step 1: Confirm Filing Obligations and Employer Classification
Review your payroll activity to confirm whether you meet the wage or employee-count test.
Employer responsibilities apply equally to sole proprietors, corporations, and partnerships.
Special rules apply to successor employers, agricultural labor employers filing Form 943, and employers of household employees, including home care service recipients.
Step 2: Compile Payroll and Wage Documentation
Gather quarterly payroll summaries, Forms W-2, and state unemployment insurance contribution statements for all four quarters of 2013. Confirm that FUTA-taxable wages reflect proper exclusions and that no improper wage deduction amounts were included. Accurate records are critical for calculating FUTA liability and supporting tax credits.
Step 3: Identify Credit Reduction States and Special Jurisdictions
Determine whether your business operated in any 2013 credit reduction states or special jurisdictions such as Puerto Rico or Indian tribal governments. Employers in these areas must reduce their allowable unemployment tax credit using Form 940, Schedule A, or Schedule R (for aggregated filers).
Step 4: Calculate FUTA Tax Liability
Apply the 2013 FUTA tax rate of 6.0 percent to the first $7,000 of wages paid to each employee.
This FUTA wage base is fixed by statute and applies uniformly to all employers for federal unemployment tax purposes.
Step 5: Apply State Unemployment Tax Credits
Subtract allowable tax credits for state unemployment insurance contributions from your gross
FUTA tax liability. The maximum credit is 5.4 percent, unless reduced by outstanding federal loans. Employers affected by credit reduction states must use the applicable reduction percentage listed for 2013.
Step 6: Complete Required Schedules and Attachments
Complete Form 940 Schedule A if you paid wages in more than one state or operated in a credit reduction state. Use Schedule R (Form 940) if filing as part of an aggregated group. Do not use
Form 940-EZ, as it was obsolete by 2013.
Step 7: Determine Quarterly Deposit Requirements
Review your cumulative FUTA liability each quarter to determine whether quarterly FUTA tax payments are required. If the liability exceeds $500 at the end of any quarter, you must make a deposit using the Federal EFTPS system. Amounts of $500 or less may be carried forward to the next quarter.
- Overlooking the 20-Week Employee Test: Employers sometimes fail to recognize that
- Confusing FUTA with Other Employment Tax Forms: FUTA tax reported on Form 940
- Using the Wrong FUTA Wage Base: Only the first $7,000 of wages paid to each
- Failing to Apply Credit Reductions Correctly: Employers operating in credit reduction
- Misapplying State Tax Credits: State unemployment tax credits cannot exceed the
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 8: Submit Form 940 and Retain Proof of Filing
Complete all required sections of Form 940, including employer identification information and state unemployment details. File electronically or by mail as instructed, and retain confirmation of payment or direct deposit transactions. Employers filing electronically may use approved digital signatures and document management systems that support secure cloud storage, workflow automation, and compliant signing processes.
Understand Common Filing Mistakes having employees for at least part of a day in 20 different weeks triggers a filing requirement, even if total wages were under $1,500. is separate from employment taxes reported on Form 944 or employment tax authorizations submitted using Form 8453-EMP. These obligations follow different rules and deposit schedules. employee in 2013 is subject to FUTA tax. Any wages above that amount are excluded from FUTA calculations. states must calculate reduced credits using Form 940 Schedule A. Failure to apply the correct reduction rate results in underreported FUTA liability. gross FUTA tax liability. Excess credits are not refundable and cannot be carried forward.
Key 2013 Filing and Payment Details
Form 940 for the 2013 tax year is due January 31, 2014. If all required quarterly tax deposits were made on time, the filing deadline would extend to February 10, 2014. All federal tax deposits must be made electronically through EFTPS or other Treasury Department–approved methods.
The 2013 credit reduction states were Arkansas, California, Connecticut, Delaware, Georgia,
Indiana, Kentucky, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Rhode
Island, South Carolina, the Virgin Islands, and Wisconsin. Credit reduction rates ranged from 0.3 percent to 1.5 percent, depending on outstanding federal unemployment loan balances.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
