Form 940 Meaning | Where and Where to File 940?

What is Form 940?

Form 940 is the official “Employer’s Annual Federal Unemployment Tax Return (FUTA),” which employers use in the United States to pay and report unemployment taxes to the federal government. The Federal Unemployment Tax Act requires employers to pay taxes to fund state workforce agencies that provide unemployment benefits for workers who lose their jobs.

Key Points About Form 940:

Purpose:

The main purpose of Form 940 is for you to pay and report FUTA taxes. FUTA tax revenues help to fund federal oversight of state unemployment insurance plans.

Who Must File:

Employers that paid wages exceeding $1,500 in any calendar quarter of the current or previous years.
The employer had at least one employee working any part of the day for 20 different weeks during the current year or in previous years.

Tax Rate and Wage Base:

The FUTA tax is 6.0% of the first $7,000 in wages for each employee. Employers can claim a credit of up to 5.4% of state unemployment taxes, which lowers the effective FUTA rate to 0.6 %.
The wage base is $7,000 for FUTA tax purposes. Once an employee has earned $7,000 during a calendar year, no FUTA tax is assessed on their wages.

Filing Deadline:

Form 940 must be submitted by the 31st of January following the year. For example, if you paid wages in 2023, the Form 940 is due on January 31, 2024. If all taxes are paid on time, the deadline can be extended until February 10.

How to File:

Employers may file Form 940 electronically using the IRS electronic filing system or by mailing a paper copy to the IRS.

Penalties:

Employers may be penalized for late filing or late payment and for failing to provide accurate or complete information.

The Form 940 is a compliance requirement that employers must meet in order to contribute to the Unemployment Insurance System.

Where to File 940?

Form 940 may be submitted electronically via the IRS eFile system or mailed to the IRS address that corresponds with the employer’s location. The IRS encourages electronic filing for quicker processing and confirmation. Paper forms should be sent to the address specified on the form instructions.

When is Form 940 Due?

The annual Form 940 must be submitted by January 31 of the following year. If all FUTA tax payments were made on time throughout the year, the deadline for filing Form 940 is extended until February 10.

What is Form 940 Used for?

Employers use Form 940 to pay and report the Federal Unemployment Tax Act. This tax funds state unemployment programs that provide benefits for workers who lose their jobs. The form calculates the FUTA tax owed based on the wages paid to the employees and any applicable credit for state unemployment taxes.