Form 940 is a tax form used in the United States to report an employer's annual Federal Unemployment Tax Act (FUTA) tax. This tax is used to fund the unemployment compensation program administered by the federal government. While most employers are required to file this form, certain criteria determine who needs to file Form 940. Here's a breakdown of who typically needs to file Form 940:
1. Employers subject to FUTA Tax: If you're an employer and paid wages of $1,500 or more to employees during any calendar quarter (or you had one or more employees for at least some part of a day during any 20 weeks in the current or prior year), you are subject to FUTA tax. As a result, you need to file Form 940.
2. Agricultural Employers: If you're an agricultural employer and had a payroll of $20,000 or more in any calendar quarter or had at least ten employees for some part of a day during any 20 weeks of the current or prior year, you must file Form 940.
3. Household Employers: If you're a household employer and paid cash wages of $1,000 or more to household employees in any calendar quarter of either the current or prior year, you need to file Form 940.
4. Employers Part of a Successor or Predecessor Employer: If you acquired all or part of a business from another employer and continue to employ individuals who worked for the previous owner, or if you sold your business and the new owner retained your employees, you may be required to file Form 940.
5. Nonprofit Organizations: Nonprofit organizations, generally exempt from income tax, still need to file Form 940 if they paid wages of $1,500 or more to employees during any calendar quarter of the current or prior year.
It's important to note that certain exceptions and special circumstances may apply depending on the specific situation. As tax regulations can change, it's always advisable to consult the official IRS guidelines or seek professional advice to ensure accurate filing and compliance with tax requirements.