TaxBandits Knowledge Base

What is Part 2 in Form 940 represent?

In part 2 of Form 940, you'll calculate your FUTA tax before adjustment. You must enter the following in order to finish the section:

• The total amount paid to all staff (Line 3)
• The amount of payments exempt from FUTA tax (fringe benefits, group-term life insurance premiums, retirement/pension payments, and dependent care payments) (Line 4)
• The total amount paid to each of your employees is greater than $7,000 (Line 5).
• Lines 4 and 5 should be added to get the subtotal on Line 6, which should then be subtracted from Line 3 to get the total taxable FUTA wages on Line 7.
• To determine your FUTA tax before adjustments on Line 8, multiply the amount on Line 7 by 0.006.