A
Who can sign the employer’s Form 940? Name 2
The individual owning the business, if it is a sole proprietorship
• The president, vice president, or other principal corporate officer authorized to act, if the employer is a
corporation (including a limited liability company treated as a corporation)
• An authorized member, partner, or officer of an unincorporated association or partnership (including a
limited liability company treated as a partnership) having knowledge of the organization’s affairs
• The owner or principal officer authorized to act, if it is a single member limited liability company
treated as a disregarded entity
• A fiduciary if the employer is a trust or estate
Name three types of employment that are exempt from FUTA.
Work on a foreign ship outside the U.S.
• Work done by students for the school where they attend classes or for an organized camp
• Work performed as student nurses or hospital interns
• Life insurance agents who receive only commissions
• Newspaper deliverers under age 18 who deliver directly to customers
• Certain nonimmigrant aliens working under F, J, M or Q visas
• Work performed for a spouse or child
• Work performed by a child under age 21 for his or her parents
• Work performed by an inmate of a penal institution
• Work performed by an election worker who is paid less than $2,000 in 2022
• Work performed by alien agricultural workers under an H‑2A
visa
• Work performed by statutory nonemployees
What are the four methods that states use to determine an employer’s experience rate?
Reserve ratio
• Benefit ratio
• Benefit‑wage ratio
• Payroll stabilization
What is the FUTA tax rate in 2022?
6.0%
On what form must employers covered by FUTA report their liability?
Form 940
Who pays FUTA tax?
Employers only
Name three types of employee compensation that are exempt from FUTA.
Sick or disability pay paid more than six calendar months after the last month the employee worked
for an employer
• Sickness or injury payments made under a state workers’ compensation law or a law in the nature of a
workers’ compensation law
• Payments made under a deferred compensation plan, except elective deferrals to the plan
• Noncash payments to an employee for work done outside the employer’s trade or business
• Qualified moving expense reimbursements (This exclusion has been suspended for tax years 2018
through 2025. The suspension, however, does not apply to certain moves of American military personnel.
(see Sections 7.1‑2
and 3.3‑2))
• Death or disability retirement benefits
• Noncash payments to agricultural workers
• Reimbursements for, or provision of, deductible dependent care assistance
• Value of group‑term
life insurance coverage
• Value of deductible meals and lodging provided by the employer
• Wages owed to a deceased employee and paid to a beneficiary after the year of the employee’s death
• Tips not reported by an employee to an employer (generally if less than $20 a month)
What is the “normal” credit an employer can take against FUTA tax liability?
The normal credit against FUTA tax liability equals the amount of an employer’s required contributions
that are timely paid into a certified state unemployment insurance fund. It is also called the 90% credit because the amount of the credit is limited to 90% of the 6.0% FUTA tax rate.
What is a FUTA credit reduction state?
A FUTA credit reduction state is a state or territory that has a loan from the Federal Unemployment
Account that is taken out in one year and has not repaid the full amount of the loan by the end of the
following calendar year.
What is the FUTA wage base for 2022?
$7,000
What categories of employers are not subject to FUTA tax?
Name 1 category
Federal, state, and local government employers, including their political subdivisions
• Indian tribes
• Nonprofit religious, charitable, or educational organizations that are tax‑exempt
What is the due date for depositing FUTA taxes for the third quarter?
October 31
What is the due date for Form 940?
January 31
When is a Form 940 that has been mailed through the U.S. Postal Service considered filed?
A Form 940 that is mailed through the U.S. Postal Service is considered filed at the time it is postmarked
by the U.S. Postal Service.
What state uses the payroll stabilization method to determine an employer’s state unemployment
tax rate?
Alaska
What is the prime factor that employers can use in determining to which state an employee should
be “allocated” for unemployment insurance purposes?
Place where the work is localized
How does an employer amend an incorrect Form 940?
They do this by filing a new
Form 940 for the year being amended with the correct numbers. Box a in the upper right corner of page
1 indicating an amended return should be checked. The form should be accompanied by a statement as to why the amended return is necessary
All of the following methods are used to determine an employer’s state unemployment insurance
experience rate except:
Age ratio
If there is no reasonable cause, what are the penalties for not paying FUTA tax timely?
5% of any unpaid tax shown on the return, max 25%
Additional .5%any unpaid tax that is not shown on the return but for which the
IRS has issued a notice and demand, if the tax is not paid within 21 calendar days of the notice and
demand (10 business days if the amount is at least $100,000), up to a maximum of 25%
What method is used by the majority of states to determine an employer’s experience rate for its
contribution to state unemployment insurance?
Reserve ratio
What is the reserve ratio formula?
Reserve ratio =
Unemployment taxes paid—Benefits charged
Divided by Average Taxable Payroll
What are the four factors that employers can use in determining which state an employee who is working in two or more states should be “allocated” to for unemployment insurance purposes?
The four factors used by employers in allocating employees who work in more than one state for purposes
of unemployment insurance are:
• Are services “localized?”
• Does the employee have a “base of operations?”
• Is there a “place of direction or control?”
• What is the employee’s “state of residence?”
What must an employer do in relation to filing Form 940 when it goes out of business?
Name one task.
An employer that ceases doing business must file a Form 940 for the portion of the last calendar year it was
in business and check Box d in the upper right hand corner of page 1 indicating no future returns will be
filed. The employer must also attach a statement to the form including the following information:
• The location where required records will be kept
• Who is responsible for keeping the records
• The name and address of the purchaser
An employer’s FUTA taxable wages for the first quarter of 2022 amount to $35,000. What is the
employer’s FUTA tax liability for the quarter?
$210
For how many weeks can unemployment benefits generally be collected without an extension?
26 weeks