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Introduction to Form 940

This help topic explains the use of IRS Form 940.

Usage

Form 940 is used by employers to report annual federal unemployment tax. The tax is not a payroll withholding deduction from employee wages. The tax is imposed on the employer. See below for more information.

Form Access

The Annual Federal Unemployment Tax ( FUTA ) tax return can be accessed from the main menu by clicking Employees | 940 (FUTA – Fed Unemployment Tax Return).

Step-by-Step

Select the year you wish to create the return for and click OK.  If there is data already calculated for the year in question, the user is prompted if they wish to overwrite or use the existing data.

Field and Button Definitions

The Form 940 Details window has five tabs that closely follow the IRS instructions for the Form 940.

Part 1

 State Information
Part 2 FUTA Tax
Part 3 Adjustments
Part 4 Balance Due
Part 5 Quarterly Liability

Additional Notes about Form 940

Form 940 Filing Requirements: Employers who were not household employers or agricultural employers must file Form 940 if they paid a combined total of $1,500 or more in wages to all of their  employees in any calendar quarter; or had one or more employees for some part of a day in any 20 different weeks during the year. Count all regular, temporary, and part-time employees. A partnership should not count its partners as employees. Note: Agricultural employers must file  Form 940 if they paid a combined total of $20,000 or more to farm workers during any calendar quarter; or had 10 or more farm workers during some part of a day for at least 1 day during any 20 different weeks during the year. Note: Household employers use Schedule H of Form 1040 to instead of Form 940 to report and pay FUTA taxes for their household employees.

  • Form 940 Filing Deadline: Form 940 is due by January 31, of the following calendar year.
  • Form 940 Extensions: If all tax is deposited when due, deadline is extended 10 days. There is no additional extension for filing Form 940.

Form 940 Penalties

  • Form 940 late filing penalty of 5% of tax per month up to 25%.
  • Form 940 late payment penalty of 0.5% of tax per month up to 25%.