Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return

Annual return for federal unemployment (FUTA) tax, which employers pay on the first $7,000 of each employee's wages. Reports the tax and credits for state unemployment contributions.

2025 version

Source: Internal Revenue Service (IRS)

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Instructions for filling out Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return

This template is used for official filing and documentation. Below are detailed instructions for completing, requirement details, and submission rules.

Who needs to fill out this document?

This form is designed for use by legal entities, individuals, or authorized representatives in the following cases:

Employers who paid $1,500 or more in wages in any quarter.
Payroll teams closing the calendar year.
Household employers and agricultural employers meeting FUTA thresholds.

What you will need before starting

Before filling out the interactive form, prepare the following details and documents:

1. Employer detailsEIN, name, address and state(s) where you paid unemployment tax.

2. Total payments to employeesAll wages paid in the year and exempt payments.

3. State unemployment contributionsSUTA amounts paid, to claim the FUTA credit.

4. FUTA depositsQuarterly FUTA tax deposits made during the year.

Step-by-step filling process

Identify your state: Enter the state code; multi-state employers complete Schedule A.
Calculate taxable wages: Report total payments, subtract exempt payments and wages above $7,000 per employee.
Apply adjustments: Account for state credits and any credit reduction states.
File by January 31: If all FUTA tax was deposited on time, you have until February 10.

Frequently Asked Questions (FAQ)

What is the FUTA rate?

6.0% on the first $7,000 per employee, reduced to an effective 0.6% if you paid state unemployment tax on time, except in credit reduction states.

Do employees pay FUTA?

No. FUTA is paid only by the employer and is not withheld from wages.

Do I deposit FUTA quarterly?

Only if your accumulated liability is more than $500; otherwise carry it to the next quarter.

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