Instructions for Schedule A (Form 940) for 2018:
860412
Multi-State Employer and Credit Reduction Information
Specific Instructions: Completing Schedule A
Step 1. Place an “X” in the box of every state (including the
District of Columbia, Puerto Rico, and the U.S. Virgin
Islands) in which you had to pay state unemployment taxes
this year, even if the state's credit reduction rate is zero.
Note: Make sure that you have applied for a state reporting
number for your business. If you don't have an unemployment
account in a state in which you paid wages, contact the state
unemployment agency to receive one. For a list of state
unemployment agencies, visit the U.S. Department of Labor's
website at https://oui.doleta.gov/unemploy/agencies.asp.
The table below provides the two-letter postal abbreviations
used on Schedule A.
State
Postal
Abbreviation
Alabama
AL
Alaska AK
Arizona AZ
Arkansas AR
California CA
Colorado CO
Connecticut CT
Delaware DE
District of Columbia DC
Florida FL
Georgia GA
Hawaii HI
Idaho ID
Illinois IL
Indiana IN
Iowa IA
Kansas KS
Kentucky KY
Louisiana LA
Maine ME
Maryland MD
Massachusetts MA
Michigan MI
Minnesota MN
Mississippi MS
Missouri MO
State
Postal
Abbreviation
Montana MT
Nebraska NE
Nevada NV
New Hampshire NH
New Jersey NJ
New Mexico NM
New York NY
North Carolina NC
North Dakota ND
Ohio OH
Oklahoma OK
Oregon OR
Pennsylvania PA
Rhode Island RI
South Carolina SC
South Dakota SD
Tennessee TN
Texas TX
Utah UT
Vermont VT
Virginia VA
Washington WA
West Virginia WV
Wisconsin WI
Wyoming WY
Puerto Rico PR
U.S. Virgin Islands VI
Step 2. You're subject to credit reduction if you paid FUTA
taxable wages that were also subject to state
unemployment taxes in any state listed that has a credit
reduction rate greater than zero.
If you paid FUTA taxable wages that were also subject to state
unemployment taxes in any state that is subject to credit
reduction, find the line for each state.
In the FUTA Taxable Wages box, enter the total FUTA taxable
wages that you paid in that state. (The FUTA wage base for all
states is $7,000.) However, don't include in the FUTA Taxable
Wages box wages that were excluded from state unemployment
tax. For example, if you paid $5,000 in FUTA taxable wages in a
credit reduction state but $1,000 of those wages were excluded
from state unemployment tax, report $4,000 in the FUTA
Taxable Wages box for that state.
Note: Don't enter your state unemployment wages in the FUTA
Taxable Wages box.
Then multiply the total FUTA taxable wages by the reduction
rate.
Enter your total in the Credit Reduction box at the end of the
line.
Step 3. Total credit reduction
To calculate the total credit reduction, add up all of the Credit
Reduction boxes and enter the amount in the Total Credit
Reduction box.
Then enter the total credit reduction on Form 940, line 11.
Example 1
You paid $20,000 in wages to each of three employees in State
A. State A is subject to credit reduction at a rate of 0.003 (.3%).
Because you paid wages in a state that is subject to credit
reduction, you must complete Schedule A and file it with
Form 940.
Total payments to all employees in State A . . . . . . $60,000
Payments exempt from FUTA tax
(see the Instructions for Form 940) . . . . . . . . . . $0
Total payments made to each employee in
excess of $7,000 (3 x ($20,000 - $7,000)) . . . . . . . $39,000
Total FUTA taxable wages you paid in State A entered in
the FUTA Taxable Wages box ($60,000 - $0 - $39,000) . . . $21,000
Credit reduction rate for State A . . . . . . . . . 0.003
Total credit reduction for State A ($21,000 x 0.003) . . . . . $63
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CAUTION
Don't include in the FUTA Taxable Wages box wages
in excess of the $7,000 wage base for each employee
subject to state unemployment insurance in the credit
reduction state. The credit reduction applies only
to FUTA taxable wages that were also subject to state
unemployment tax.
In this case, you would write $63.00 in the Total Credit
Reduction box and then enter that amount on Form 940, line 11.
Example 2
You paid $48,000 ($4,000 a month) in wages to Mary Smith and
no payments were exempt from FUTA tax. Mary worked in State
B (not subject to credit reduction) in January and then
transferred to State C (subject to credit reduction) on February
1. Because you paid wages in more than one state, you must
complete Schedule A and file it with Form 940.
The total payments in State B that aren't exempt from FUTA tax
are $4,000. Since this payment to Mary doesn't exceed the
$7,000 FUTA wage base, the total FUTA taxable wages paid in
State B are $4,000.
The total payments in State C that aren't exempt from FUTA tax
are $44,000. However, $4,000 of FUTA taxable wages was paid
in State B with respect to Mary. Therefore, the total FUTA
taxable wages with respect to Mary in State C are $3,000
($7,000 (FUTA wage base) - $4,000 (total FUTA taxable wages
paid in State B)). Enter $3,000 in the FUTA Taxable Wages box,
multiply it by the Reduction Rate, and then enter the result in the
Credit Reduction box.
Attach Schedule A to Form 940 when you file your return.
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