Part 3: Determine Your Adjustments

If any line in Part 3 doesn’t apply, leave it blank.

9. If ALL of the Taxable FUTA Wages You Paid Were Excluded From State Unemployment Tax... Caution: Line 9 doesn’t apply to FUTA wages on which you paid no state unemployment tax only because the state assigned you a tax rate of 0%.

If all of the taxable FUTA wages you paid were excluded from state unemployment tax, multiply line 7 by 0.054 and enter the result on line 9.

line 7 x 0.054

line 9

If you weren’t required to pay state unemployment tax because all of the wages you paid were excluded from state unemployment tax, you must pay FUTA tax at the 6.0% (0.060) rate. For example, if your state unemployment tax law excludes wages paid to corporate officers or employees in specific occupations, and the only wages you paid were to corporate officers or employees in those specific occupations, you must pay FUTA tax on those wages at the full FUTA rate of 6.0% (0.060). When you figured the FUTA tax before adjustments on line 8, it was based on the maximum allowable credit (5.4%) for state unemployment tax payments. Because you didn’t pay state unemployment tax, you don’t have a credit and must figure this adjustment.

If line 9 applies to you, lines 10 and 11 don’t apply to you. Therefore, leave lines 10 and 11 blank. Don’t fill out the worksheet in these instructions. Complete Schedule A (Form 940) only if you’re a multi-state employer.

10. If SOME of the Taxable FUTA Wages You Paid Were Excluded From State Unemployment Tax, or You Paid Any State Unemployment Tax Late... You must fill out the worksheet, later, if:

• Some of the taxable FUTA wages you paid were excluded from state unemployment tax, or

• Any of your payments of state unemployment tax were late. The worksheet takes you step by step through the process of figuring your credit. At the end of the worksheet, you’ll find an example of how to use it. Don’t complete the worksheet if line 9 applied to you (see the instructions for

line 9, earlier).

Before you can properly fill out the worksheet, you will need to gather the following information.

• Taxable FUTA wages (Form 940, line 7).

• Taxable state unemployment wages (state and federal wage bases may differ).

• The experience rates assigned to you by the states where you paid wages.

• The amount of state unemployment taxes you paid on time. “On time” means that you paid the state unemployment taxes by the due date for filing Form 940.

• The amount of state unemployment taxes you paid late. “Late” means after the due date for filing Form 940.

Caution: Don’t include any penalties, interest, or unemployment taxes deducted from your employees’ pay in the amount of state unemployment taxes. Also, don’t include as state unemployment taxes any special administrative taxes or voluntary contributions you paid to get a lower assigned experience rate or any surcharges, excise taxes, or employment and training taxes. These items are generally listed as separate items on the state’s quarterly wage report.

For line 3 of the worksheet, the following apply.

• If any of the experience rates assigned to you were less than 5.4% for any part of the calendar year, you must list each assigned experience rate separately on the worksheet.

• If you were assigned six or more experience rates that were less than 5.4% for any part of the calendar year, you must use another sheet to figure the additional credits and then include those additional credits in your line 3 total.

After you complete the worksheet, enter the amount from line 7 of the worksheet on Form 940, line 10. Don’t attach the worksheet to your Form 940. Keep it with your records.

Instructions for Form 940 (2025) 11