What is the purpose of 940 Schedule A?
582 views |Last modified 1/17/2024 2:23:44 AM EST | Added by TaxBandits Team

Employers who are required by the IRS to pay state unemployment tax in more than one state or who paid wages in any state and are subject to a credit reduction use Schedule A (Form 940). When filing Form 940, Schedule A must be included.

For some states, a credit reduction is necessary for sufficient funds for unemployment insurance benefits. If these funds aren't readily available, the state will have to borrow money from the federal government. States that do not repay their federal loans after two years may be designated credit reduction states.

The Form 940 credit reduction rate for 2023 is as follows:

• California (CA) : 0.6% (up from 0.3% in 2022)
• Connecticut (CT) : No credit reduction indicated for 2023 (remained at 0.3% in 2022)
• Illinois (IL) : No credit reduction indicated for 2023 (remained at 0.3% in 2022)
• New York (NY) : 0.6% (up from 0.3% in 2022)
• U.S. Virgin Islands (VI) : 3.9% (up from 3.6% in 2022)