860717
Schedule R (Form 940) (Rev. 12-2017)
Section references are to the Internal Revenue Code unless otherwise
noted.
Future Developments
For the latest information about developments related to Schedule R and
its instructions, such as legislation enacted after they were published, go
to www.irs.gov/Form940.
What’s New
A certified professional employer organization (CPEO) must attach
Schedule R to its aggregate Form 940, Employer’s Annual Federal
Unemployment (FUTA) Tax Return.
General Instructions
Purpose of Schedule R
Use Schedule R to allocate the aggregate information reported on Form
940 to each client. For purposes of Schedule R, the term “client” means
(a) a home care service recipient identified on the Form 2678, Employer/
Payer Appointment of Agent; (b) a customer who enters into a contract
that meets the requirements under section 7705(e)(2); or (c) a client who
enters into a service agreement described under Regulations section
31.3504-2(b)(2) with a CPEO. If you have more than 15 clients, complete
as many continuation sheets as necessary. Attach Schedule R, including
any continuation sheets, to your aggregate Form 940.
Who Must File?
You must complete Schedule R if you file an aggregate Form 940.
Aggregate Forms 940 are filed by agents of home care service recipients
approved by the IRS under section 3504 and by CPEOs. To request
approval to act as an agent for a home care service recipient, you must
file Form 2678 with the IRS, unless you are a state or local government
agency acting as agent under the special procedures provided in Rev.
Proc. 2013-39. Form 2678 must be previously filed and approved by the
IRS before filing Schedule R. To become a CPEO, you must apply
through the IRS Online Registration System. Visit www.irs.gov/CPEO for
more information.
When Must You File?
If you’re an aggregate Form 940 filer, file Schedule R with your
aggregate Form 940 every year when your Form 940 is due. Agents may
file Form 940 and Schedule R electronically or by paper submission.
CPEOs generally must file Form 940 and Schedule R electronically. For
more information about a CPEO’s requirement to file electronically, see
Rev. Proc. 2017-14, 2017-3 I.R.B. 426, available at
www.irs.gov/irb/2017-03_IRB/ar14.html.
Specific Instructions
Completing Schedule R
Enter Your Business Information
Carefully enter your employer identification number (EIN) and the name
of your business at the top of the schedule. Make sure they exactly
match the EIN and name shown on the attached Form 940. Check one
of the “Type of filer” boxes to tell us if you’re a section 3504 agent or a
CPEO.
Calendar Year
Enter the calendar year for which you are filing your Form 940. Make
sure that the year entered on the top of Schedule R matches the year on
the attached Form 940.
Client and Employee Information
On Schedule R, including any continuation sheets, you must report the
following for each client.
Note: When entering amounts over 999.99 on Schedule R, don’t enter
commas.
Column a. Your client’s EIN.
Column b. The state abbreviation of the client’s location.
Column c (CPEO Use Only). Type of wages, tips, and other
compensation. Enter a code to report the type of wages, tips, and other
compensation paid to the individual(s) performing services for the client.
If you paid more than one type of wages, tips, or other compensation,
you must use more than one line to report for that client and enter the
applicable code for each line. The following four codes are the only
entries that can be made in column c.
• A: Wages, tips, and other compensation paid under section 3511(a).
• B: Wages, tips, and other compensation paid under section 3511(c).
• C: Wages, tips, and other compensation not reported under Code A
or Code B paid as a payor under a service agreement described in
Regulations section 31.3504-2(b)(2).
• D: Wages, tips, and other compensation paid as an agent under
Regulations section 31.3504-1.
Column d. Total taxable FUTA wages allocated to the listed client EIN
from Form 940, line 7.
Column e. Total adjustments to FUTA tax allocated to the listed client
EIN from Form 940, line 9 or 10.
Column f. Credit reduction amount allocated to the listed client EIN from
Form 940, line 11.
Column g. Total FUTA tax after adjustments allocated to the listed client
EIN from Form 940, line 12.
Column h. Total FUTA tax deposits from Form 940, line 13, plus any
other payments allocated to the listed client EIN.
You must also report the same information for your employees on
Schedule R, line 18.
Compare the total of each column on Schedule R, line 19 (including
your information from Schedule R, line 18) to the amounts reported on
the aggregate Form 940. For each column total, the relevant line from
Form 940 is noted in the column heading.
If the totals on Schedule R, line 19, don’t match the totals on Form
940, there is an error that must be corrected before submitting Form 940
and Schedule R.
Paperwork Reduction Act Notice. We ask for the information on
Schedule R to carry out the Internal Revenue laws of the United States.
You are required to give us this information. We need it to ensure that
you are complying with these laws and to allow us to figure and collect
the right amount of tax.
You’re not required to provide the information requested on a form
that is subject to the Paperwork Reduction Act unless the form displays
a valid OMB control number. Books or records relating to a form or its
instructions must be retained as long as their contents may become
material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section
6103.
The time needed to complete and file Schedule R will vary depending
on individual circumstances. The estimated average time is:
Recordkeeping . . . . . . . . . . . . . . . 11 hr.
Learning about the law or the form . . . . . . . . 18 min.
Preparing, copying, and assembling the form . . . . . 29 min.
If you have comments concerning the accuracy of these time
estimates or suggestions for making Schedule R simpler, we would be
happy to hear from you. You can send us comments from
www.irs.gov/FormComments. Or you can send your comments to
Internal Revenue Service, Tax Forms and Publications Division, 1111
Constitution Ave., NW, IR-6526, Washington, DC 20224. Don’t send
Schedule R to this address. Instead, see Where Do You File? in the
Instructions for Form 940.
