SUI: How are my payments related to my 940 forms?

unemployment;unemploy;state;940;SUI; state unemployment tax

Any payments you make for State Unemployment Insurance (SUI) affect whether you qualify for a reduced rate on your Federal Unemployment Taxes (FUTA). Most employers must file a 940 form and pay FUTA at year-end, and most qualify for the reduced FUTA rate.

During the year, you pay an estimated amount for FUTA. Actual amounts for FUTA are calculated at the end of the year based on the current rate and whether or not your company qualifies for a FUTA discount. Actual FUTA calculations can only be made when you create 940 forms.

Do I qualify for the reduced rate?

Several factors affect whether you qualify for the reduced rate:

• Whether some of your company's wage types or employees are exempt from SUI taxes
• Whether you pay all your SUI taxes and in a timely manner

When you create your Form 940, we evaluate any SUI payments you've made throughout the year to determine whether you qualify for the discounted FUTA rate. The FUTA amount stated on your Form 940 may differ from what you expect.

We can only determine whether you qualified for the discounted rate if your SUI payments have been entered or filed correctly in our system. You cannot create or file a 940 form until all SUI payments have been entered.

For more information about 940 forms and FUTA, visit http://www.irs.gov.

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• Form 940: What is it?
• Form 940: Out-of-balance issues

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