1997 Tax Help Archives  

Form 940 / Form 940-EZ - Employer's Annual
Federal Unemployment Tax Returns

This is archived information that pertains only to the 1997 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

An employer, other than household or agricultural, may have to file the federal unemployment tax return, Form 940 or FormEZ for 1997 if either of the following situations apply:

  1. You paid $1,500 or more in wages during any calendar quarter in 1996 or 1997; or
  2. You had at least one employee work for some part of a day in any twenty or more different weeks in 1996 or 1997.

Count all regular, temporary, and part time employees for wages paid. Household employees will generally file Schedule H (Form 1040) if you paid cash wages of $1,000 or more in any calendar quarter of 1996 or 1997 for household work in your private home. However, Form 940 or 940EZ must be filed if you paid cash wages of $1,000 or more in any calendar quarter in 1996 or 1997 for household work in a local college club or a local chapter of a college fraternity or sorority.

Agricultural employers will have to file Form 940 or 940-EZ for farm workers if:

  1. You paid cash wages of $20,000 or more in any calendar quarter in 1996 or 1997; or
  2. You had 10 or more farm workers during some part of a day for at least one day during any 20 different weeks in 1996 or 1997. Bona fide residents of Puerto Rico should see Topic 903.

Include wages paid to aliens (also known as workers with H-2 (A) visas) admitted on a temporary basis to the U.S. to perform farm work, to see if you meet either test. These wages to H2 (A) visa holders are not subject to the Federal Unemployment Tax.

The gross federal unemployment tax rate for 1997 is 6.2% and is figured on the first $7,000 of wages you paid each employee in 1997. If you paid all of the state unemployment tax timely on the same wages, you are allowed a state credit of up to 5.4%. The federal tax rate after the credit is .8%.

If you do not pay the state unemployment tax timely, your credit for the late payment(s) is limited to 90% of the amount you would have been allowed, if paid on time. Employers in some states do not get the full credit because of special rules in the federal law. If there are any such states in 1997, the states and the amount by which the employer's credits must be reduced will be listed in Part I of Form 940. Be sure to check and see if your state is listed. If so, follow the instructions on the form to make the necessary computations in Part I.

You may be able to file Form 940-EZ, a simplified Federal unemployment tax return, if you meet four tests:

  1. You made state unemployment contributions to only one state,
  2. You paid all your state contributions by January 31, 1998,
  3. None of the wages you paid were paid in a credit reduction state; and
  4. All of your Federal unemployment tax wages were also taxable for your state's unemployment tax.

The due date for the 1997 Form 940 or 940-EZ is February 2, 1998. However, if you deposited all taxes when due, you have an additional ten days to file. For more information, order Publication 15, Employer's Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide. Forms and publications can be ordered by calling 1-800-829-3676. For information on deposit rules, refer to Topic 759.

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