The IRS 940 form is an annual report that employers use to report their Federal Unemployment Tax Act (FUTA) liability. This form helps the IRS track unemployment taxes owed by businesses and ensures compliance with federal regulations. Understanding how to complete and file this form is essential for employers to avoid penalties and maintain good standing with the IRS.
The IRS 940 form plays a crucial role in the landscape of payroll taxes, specifically focusing on the Federal Unemployment Tax Act (FUTA). Employers must file this annual form to report their contributions to unemployment insurance, which provides essential support to workers who find themselves unemployed. The form captures vital information, including the total wages paid to employees and the amount of FUTA tax owed. Additionally, it allows employers to claim any credits for state unemployment taxes paid, which can significantly reduce their federal tax liability. Understanding the nuances of the IRS 940 form is essential for businesses, as it not only ensures compliance with federal regulations but also helps in effectively managing payroll expenses. Accurate completion of this form is necessary to avoid penalties and maintain good standing with the IRS. Thus, grasping its requirements and implications can lead to better financial planning and a smoother operational process for employers across the country.
Form 940 for 2025: Employer’s Annual Federal Unemployment (FUTA) Tax Return
850125
Department of the Treasury — Internal Revenue Service
OMB No. 1545-0029
Employer identification number
—
(EIN)
Name (not your trade name)
Trade name (if any)
Address
Number
Street
Suite or room number
City
State
ZIP code
Foreign country name
Foreign province/county
Foreign postal code
Read the separate instructions before you complete this form. Please type or print within the boxes.
Type of Return (Check all that apply.)
a. Amended
b. Successor employer
c. No payments to employees in 2025
d. Final: Business closed or stopped paying wages
Aggregate Return Filers Only
Type of filer (check one): Section 3504 Agent
Certified Professional Employer Organization (CPEO)
Other Third Party
Part 1: Tell us about your return. If any line does NOT apply, leave it blank. See instructions before completing Part 1.
1a
If you had to pay state unemployment tax in one state only, enter the state abbreviation .
1b
If you had to pay state unemployment tax in more than one state, you are a multi-state
employer
2
If you paid wages in a state that is subject to CREDIT REDUCTION
Check here.
Complete Schedule A (Form 940).
Part 2: Determine your FUTA tax before adjustments. If any line does NOT apply, leave it blank.
3
Total payments to all employees
4
Payments exempt from FUTA tax
Check all that apply: 4a
Fringe benefits
4c
4b
Group-term life insurance
4d
5 Total of payments made to each employee in excess of
$7,000 . . . . . . . . . . . . . . . . 5
6 Subtotal (line 4 + line 5 = line 6) . . . . . . . . . .
. . . . . . . . .. .
Retirement/Pension 4e Dependent care
.
. . . . . . . . . .
Other
6
7 Total taxable FUTA wages (line 3 – line 6 = line 7). See instructions . . . . . . . . .
8 FUTA tax before adjustments (line 7 x 0.006 = line 8) . . . . . . . . . . . . .
7
8
Part 3: Determine your adjustments. If any line does NOT apply, leave it blank.
9
If ALL of the taxable FUTA wages you paid were excluded from state unemployment tax,
multiply line 7 by 0.054 (line 7 × 0.054 = line 9). Go to line 12
10
If SOME of the taxable FUTA wages you paid were excluded from state unemployment tax,
OR you paid ANY state unemployment tax late (after the due date for filing Form 940),
complete the worksheet in the instructions. Enter the amount from line 7 of the worksheet . .
11
If credit reduction applies, enter the total from Schedule A (Form 940)
Part 4: Determine your FUTA tax and balance due or overpayment. If any line does NOT apply, leave it blank.
12
Total FUTA tax after adjustments (lines 8 + 9 + 10 + 11 = line 12)
13
FUTA tax deposited for the year, including any overpayment applied from a prior year .
14Balance due. If line 12 is more than line 13, enter the excess on line 14.
• If line 14 is more than $500, you must deposit your tax.
14
• If line 14 is $500 or less, you may pay with this return. See instructions . . . .
. . .
15a
Overpayment. If line 13 is more than line 12, enter the difference
15b
Check one:
Apply to
Send a
next return.
refund.
15c
Routing number
15d Type:
Checking
Savings
15e
Account number
You MUST complete both pages of this form and SIGN it.
For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. www.irs.gov/Form940 Cat. No. 11234O
Form 940 (2025) Created 6/2/25
850212
Employer identification number (EIN)
–
Part 5: Report your FUTA tax liability by quarter only if line 12 is more than $500. If not, go to Part 6.
16Report the amount of your FUTA tax liability for each quarter; do NOT enter the amount you deposited. If you had no liability for
a quarter, leave the line blank.
16a 1st quarter (January 1 – March 31) . . . . . . . . . 16a.
16b
2nd quarter (April 1 – June 30)
16c
3rd quarter (July 1 – September 30)
16d
4th quarter (October 1 – December 31)
17 Total tax liability for the year (lines 16a + 16b + 16c + 16d = line 17)
17
Total must equal line 12.
Part 6: May we speak with your third-party designee?
Do you want to allow an employee, a paid tax preparer, or another person to discuss this return with the IRS? See the instructions for details.
Yes. Designee’s name and phone number
Select a 5-digit personal identification number (PIN) to use when talking to the IRS.
No.
Part 7: Sign here. You MUST complete both pages of this form and SIGN it.
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete, and that no part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments made to employees. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign your name here
Date
/ /
Print your name here
Print your title here
Best daytime phone
Paid Preparer Use Only
Preparer’s name
Preparer’s signature
Firm’s name (or yours if self-employed)
Check if you are self-employed
PTIN
/
EIN
Phone
Page 2
Form 940 (2025)
Form 940-V, Payment Voucher
Purpose of Form
Complete Form 940-V if you’re paying your balance due on Form 940 by check or money order. We will use the completed voucher to credit your payment more promptly and accurately, and to improve our service to you.
Making Payments With Form 940
To avoid a penalty, make your payment with your 2025 Form 940 only if your FUTA tax for the fourth quarter (plus any undeposited amounts from earlier quarters) is $500 or less. If your total FUTA tax after adjustments (Form 940, line 12) is more than $500, you must make deposits by electronic funds transfer (EFT). An EFT can be made using the Electronic Federal Tax Payment System (EFTPS), IRS Direct Pay, or your IRS business tax account. Don’t use Form 940-V to make federal tax deposits. You can also pay your balance due by EFT instead of sending Form 940-V. If you pay your balance due by EFT, file your return using the Without a payment address under Where Do You File? in the Instructions for Form 940; don’t file Form 940-V. For more information about EFTPS or to enroll in EFTPS, go to www.eftps.gov. For more information about IRS Direct Pay, go to www.irs.gov/DirectPay. For more information about making an EFT through your IRS business tax account, go to www.irs.gov/BusinessAccount. See When Must You Deposit Your FUTA Tax? in the Instructions for Form 940. Also see sections 11 and 14 of Pub. 15 for more information about deposits.
Use Form 940-V if you’re paying your balance ▲! due on Form 940 by check or money order. CAUTION However, if you pay an amount with Form 940
that should’ve been deposited, you may be subject to a penalty. See Deposit Penalties in section 11 of Pub. 15.
Specific Instructions
Box 1—Employer identification number (EIN). If you don’t have an EIN, you may apply for one online by going to www.irs.gov/EIN. You may also apply for an EIN by faxing or mailing Form SS-4 to the IRS. If you haven’t received your EIN by the due date of Form 940, write “Applied For” and the date you applied in this
entry space.
Box 2—Amount paid. Enter the amount paid with Form 940.
Box 3—Name and address. Enter your name and address as shown on Form 940.
•Enclose your check or money order made payable to “United States Treasury.” Be sure to enter your EIN, “Form 940,” and “2025” on your check or money order. Don’t send cash. Don’t staple Form 940-V or your payment to Form 940 (or to each other).
•Detach Form 940-V and send it with your payment and Form 940 to the address provided in the Instructions for Form 940.
Note: You must also complete the entity information above Part 1 on Form 940.
Detach Here and Mail With Your Payment and Form 940.
Form 940-V
Department of the Treasury
Internal Revenue Service
1Enter your employer identification number (EIN).
Payment Voucher
Don’t staple or attach this voucher to your payment.
2Enter the amount of your payment.
Make your check or money order payable to “United States Treasury.”
2025
Dollars
Cents
3Enter your business name (individual name if sole proprietor). Enter your address.
Enter your city, state, and ZIP code; or your city, foreign country name, foreign province/county, and foreign postal code.
Completing the IRS 940 form is an important task for employers who need to report their annual Federal Unemployment Tax Act (FUTA) liability. Once you have gathered the necessary information, you can proceed with filling out the form accurately to ensure compliance with federal regulations.
The IRS 940 form, also known as the Employer's Annual Federal Unemployment (FUTA) Tax Return, is a document used by employers to report and pay unemployment taxes to the federal government. This form is essential for businesses that have employees and are liable for unemployment taxes.
Employers who pay wages of $1,500 or more in any calendar quarter, or who have at least one employee for any part of a day in 20 or more weeks during the current or previous calendar year must file Form 940. This applies to most businesses, including corporations and partnerships.
Form 940 is due annually by January 31 of the following year. If you deposited all FUTA taxes when due, you have until February 10 to file the form. Timely filing is crucial to avoid penalties and interest.
You can file Form 940 electronically using the IRS e-file system or submit a paper form by mail. If you choose to file by mail, ensure that you send it to the correct address specified in the form's instructions based on your business location.
Form 940 requires various pieces of information, including:
Failing to file Form 940 can result in penalties and interest on unpaid taxes. The IRS may impose a penalty of 5% of the unpaid tax for each month the return is late, up to a maximum of 25%. It is crucial to file on time to avoid these consequences.
Yes, if you need to correct errors or make changes after filing, you can amend Form 940 by completing Form 940-X, the Amended Employer's Annual Federal Unemployment (FUTA) Tax Return. This form allows you to report changes and recalculate your tax liability.
If you have no FUTA tax liability for the year, you are still required to file Form 940. Indicate that there is no tax due on the form to comply with IRS regulations.
For additional information, visit the IRS website or refer to the instructions provided with Form 940. These resources offer detailed guidance on completing the form and understanding your obligations.
Yes, many states have their own unemployment tax forms and requirements. Employers should check with their state’s unemployment office to ensure compliance with state laws and regulations regarding unemployment taxes.
Filing the IRS Form 940 can be a straightforward process, but many individuals make common mistakes that can lead to complications. One frequent error is failing to include all required information. Each section of the form must be completed accurately to avoid delays or penalties.
Another mistake involves miscalculating the tax liability. It's essential to double-check calculations to ensure the amounts reported are correct. Errors in math can result in underpayment or overpayment, both of which can create issues with the IRS.
Many filers also overlook the importance of using the correct year’s form. The IRS updates forms periodically, and using an outdated version can lead to complications. Always ensure that you are using the form for the appropriate tax year.
Some people forget to sign and date their Form 940. A missing signature can delay processing and may result in the form being returned. It’s a simple step that should not be overlooked.
Additionally, individuals often neglect to keep a copy of their submitted form. Having a record of what was filed is crucial for future reference and can assist in resolving any disputes that may arise.
Another common mistake is misidentifying the employer identification number (EIN). This number must be accurate and match the IRS records. An incorrect EIN can lead to processing delays.
Many filers also fail to check for consistency between Form 940 and other related forms, such as Form 941. Inconsistencies can trigger audits or additional inquiries from the IRS.
People sometimes submit their forms late, which can incur penalties. It is important to be aware of the filing deadlines and to submit the form on time to avoid unnecessary fees.
Some individuals do not take advantage of electronic filing options. E-filing can streamline the process and reduce the likelihood of errors. It’s a convenient option that many overlook.
Finally, many filers do not seek help when needed. If there are uncertainties about how to complete the form, consulting a tax professional can provide clarity and ensure that the form is filled out correctly.
The IRS Form 940 is used by employers to report their annual Federal Unemployment Tax Act (FUTA) tax. This form is essential for ensuring compliance with federal unemployment tax obligations. However, it is often accompanied by several other forms and documents that help provide a complete picture of an employer's payroll tax responsibilities. Below is a list of some commonly used forms that may be filed alongside the IRS 940.
Understanding these forms and their purposes helps employers navigate their tax obligations effectively. Each document plays a vital role in ensuring that employers remain compliant with federal and state tax laws, ultimately contributing to the smooth operation of their business.
The IRS Form 941 is similar to Form 940 in that both are used by employers to report payroll taxes. Form 941 is filed quarterly, while Form 940 is an annual report. Employers use Form 941 to report income taxes withheld from employee wages, as well as Social Security and Medicare taxes. Both forms are essential for ensuring compliance with federal tax obligations, though they serve different reporting periods.
Form 944 is another document that shares similarities with Form 940. It is designed for smaller employers who have a lower annual payroll tax liability. Like Form 940, Form 944 is used to report federal income tax withheld and Social Security and Medicare taxes. However, Form 944 is filed annually, similar to Form 940, making it a simpler option for qualifying employers.
Form 945 is also relevant, as it is used to report federal income tax withheld from nonpayroll payments, such as pensions and annuities. While Form 940 focuses on unemployment taxes, Form 945 is concerned with different types of income. Both forms require accurate reporting to ensure compliance with IRS regulations, but they apply to different types of payments.
The IRS Form W-2 is another important document that relates to Form 940. Employers must issue Form W-2 to employees to report wages, tips, and other compensation, along with the taxes withheld. While Form 940 summarizes unemployment tax obligations, Form W-2 provides detailed information about individual employee earnings and tax withholdings.
Form W-3 serves as a summary of all W-2 forms issued by an employer. It is filed annually with the Social Security Administration. Like Form 940, it is an essential document for ensuring accurate reporting and compliance. Form W-3 consolidates information reported on multiple W-2s, making it easier to track total wages and tax withholdings for the year.
Form 1099-MISC is similar in that it is used to report various types of income other than wages, salaries, and tips. While Form 940 focuses on unemployment taxes, Form 1099-MISC reports payments made to independent contractors and other non-employees. Both forms require accurate reporting to meet federal tax obligations, but they apply to different types of income sources.
Form 1096 acts as a summary of all 1099 forms submitted by an employer. It is filed annually with the IRS. Similar to Form 940, which summarizes unemployment taxes, Form 1096 consolidates information from multiple 1099 forms, ensuring that the IRS has a complete record of non-employee income reported by the employer.
Form 1120 is relevant for corporations, as it is used to report corporate income tax. While Form 940 is specific to unemployment taxes for employers, Form 1120 focuses on the overall income and deductions of a corporation. Both forms are essential for compliance with federal tax laws, but they serve different types of entities and tax obligations.
Form 1065 is used by partnerships to report income, deductions, and credits. Like Form 940, it is an annual filing requirement, but it applies to partnerships rather than employers. Both forms are critical for ensuring that the respective entities comply with federal tax regulations, though they cater to different business structures.
Finally, Form 990 is used by tax-exempt organizations to report financial information to the IRS. Similar to Form 940, it serves an annual reporting function. Both forms require detailed financial information, but Form 990 focuses on non-profit organizations, while Form 940 pertains specifically to unemployment tax for employers.
When filling out the IRS 940 form, it’s essential to approach the task with care. This form is crucial for reporting your annual Federal Unemployment Tax Act (FUTA) tax. Here are five important dos and don'ts to consider:
By following these guidelines, you can minimize errors and ensure compliance with IRS regulations. Taking the time to understand the requirements will help you navigate the process more smoothly.
The IRS 940 form, also known as the Employer's Annual Federal Unemployment (FUTA) Tax Return, is an important document for employers. However, several misconceptions surround this form. Here are ten common misunderstandings:
This is not true. Any business that pays wages to employees and is subject to FUTA tax must file the form, regardless of size.
While it primarily deals with federal unemployment tax, it also provides information about state unemployment tax contributions.
Filing is mandatory for eligible employers. Failure to file can result in penalties.
Not all wages are taxable under FUTA. For instance, wages paid to certain family members or for specific types of work may be exempt.
Actually, the IRS 940 form is filed annually, while the IRS 941 form is filed quarterly.
This is incorrect. If an error is discovered, employers can file an amended return to correct any mistakes.
Employers must also consider state unemployment taxes and other payroll taxes, which are separate from FUTA.
Even businesses that use independent contractors may need to file if they have employees on payroll.
While it requires attention to detail, many resources are available to help employers complete it accurately.
This is a misconception. Employers must still file and pay FUTA tax, even if they are paying state unemployment taxes.
Understanding these misconceptions can help employers navigate their responsibilities more effectively and ensure compliance with federal regulations.
Filling out and using the IRS 940 form is an important task for employers. This form is primarily used to report annual Federal Unemployment Tax Act (FUTA) taxes. Here are some key takeaways to consider:
Free IRS 940 Template in PDF