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IRS 940 Template

The IRS 940 form is a crucial document used by employers to report annual Federal Unemployment Tax Act (FUTA) taxes. This form helps the Internal Revenue Service track unemployment tax contributions, ensuring compliance with federal regulations. Understanding how to complete and file the IRS 940 form is essential for businesses to meet their tax obligations and support workforce stability.

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IRS 940 Template

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The IRS 940 form plays a crucial role in the landscape of payroll taxes for employers across the United States. This annual form is used to report and pay federal unemployment taxes (FUTA), which fund unemployment benefits for workers who lose their jobs. Employers must file this form if they paid $1,500 or more in wages in any calendar quarter or had at least one employee for any part of a day in 20 or more weeks during the year. Understanding the nuances of the IRS 940 form is essential for compliance, as it requires accurate reporting of wages and taxes owed. The form also allows employers to claim any credits for state unemployment taxes paid, which can significantly reduce their overall tax liability. Filing the IRS 940 on time is critical to avoid penalties and interest, making it an important task for business owners and payroll professionals alike. Additionally, the form must be submitted by January 31 of the following year, ensuring that employers stay on top of their tax obligations. Familiarity with the IRS 940 form not only aids in proper tax management but also supports the overall financial health of a business.

Key takeaways

Understanding the IRS 940 form is essential for employers who need to report their annual Federal Unemployment Tax Act (FUTA) tax. Here are key takeaways to consider:

Purpose of the Form: The IRS 940 form is used to report and pay federal unemployment taxes.
Filing Deadline: Employers must file the form by January 31 of the following year to avoid penalties.
Eligibility: Only employers who pay wages to employees are required to fill out this form.
Tax Rate: The standard FUTA tax rate is 6.0% on the first $7,000 of each employee's wages.
State Credits: Employers may receive a credit of up to 5.4% for state unemployment taxes paid, reducing their effective rate.
Record Keeping: Maintain accurate payroll records to ensure the correct amount of tax is reported.
Electronic Filing: The IRS encourages electronic filing, which can simplify the process and reduce errors.
Amendments: If mistakes are made, employers can file an amended form to correct any errors.
Consultation: Seeking assistance from a tax professional can provide clarity and ensure compliance with regulations.

By keeping these points in mind, employers can navigate the filing process with greater confidence and accuracy.

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Documents used along the form

The IRS 940 form is used by employers to report annual Federal Unemployment Tax Act (FUTA) taxes. It is essential to understand that this form is often accompanied by several other documents that support the information reported. Below is a list of commonly used forms and documents that may be required alongside the IRS 940 form.

IRS 941 Form: This form is used to report income taxes, Social Security tax, and Medicare tax withheld from employee wages. Employers must file it quarterly, making it a critical document for payroll reporting.
Trailer Bill of Sale: The Trailer Bill of Sale form serves as a legal record proving ownership transfer from the seller to the buyer, and it is essential for trailer registration and titling in the buyer's name. For more information, visit Formaid Org.
IRS W-2 Form: Employers use this form to report wages paid to employees and the taxes withheld. Each employee receives a W-2 at the end of the year, which they use to file their personal income tax returns.
IRS 1099 Form: This form is used to report income other than wages, salaries, and tips. It is typically issued to independent contractors and freelancers, ensuring that all income is reported for tax purposes.
State Unemployment Tax Forms: Each state has its own unemployment tax forms that employers must file. These forms report state unemployment taxes and are necessary for compliance with state regulations.

Understanding these forms and documents is crucial for maintaining compliance with tax regulations. Employers should ensure they have all necessary documentation prepared and submitted in a timely manner to avoid penalties and ensure accurate reporting.

Dos and Don'ts

When completing the IRS 940 form, it's important to follow certain guidelines to ensure accuracy and compliance. Here are some things you should and shouldn't do:

Do double-check your business information for accuracy, including your Employer Identification Number (EIN).
Do report all taxable wages correctly to avoid discrepancies.
Do keep a copy of the completed form for your records.
Do file the form on time to avoid penalties.
Don't leave any required fields blank; incomplete forms can lead to delays.
Don't forget to sign and date the form before submission.

By adhering to these guidelines, you can help ensure that your IRS 940 form is processed smoothly and efficiently.

Common mistakes

When filling out the IRS 940 form, many individuals and businesses encounter common mistakes that can lead to complications. One frequent error is failing to report all wages accurately. This form is used to report annual Federal Unemployment Tax Act (FUTA) taxes, which are based on employee wages. If wages are underreported, it can result in incorrect tax calculations and potential penalties.

Another mistake is neglecting to include all required information. The IRS 940 form requires specific details, including the employer's identification number (EIN), total taxable wages, and the amount of FUTA tax owed. Omitting any of this information can lead to delays in processing or rejection of the form.

Some filers incorrectly calculate their FUTA tax liability. The tax rate is typically 6.0% on the first $7,000 of wages paid to each employee. Miscalculating this amount can lead to either overpayment or underpayment, which may result in interest and penalties.

In addition, many people overlook the importance of checking for mathematical errors. Simple addition or subtraction mistakes can significantly alter the amounts reported on the form. It is advisable to double-check all calculations to ensure accuracy before submission.

Another common issue arises from not signing or dating the form. The IRS requires that the form be signed by the appropriate person, typically the business owner or an authorized representative. Failure to sign can result in the form being considered invalid.

Some individuals also make the mistake of not keeping copies of submitted forms. Retaining copies is essential for record-keeping and can be useful in the event of an audit or if questions arise regarding the submitted information.

Additionally, filing the form late can lead to penalties. The IRS has specific deadlines for submitting the 940 form. Missing these deadlines can result in fines, so it is crucial to be aware of the filing schedule.

Lastly, many filers do not take advantage of electronic filing options. The IRS encourages electronic submission, which can streamline the process and reduce the likelihood of errors. Utilizing online resources can help ensure that the form is completed accurately and submitted on time.

File Characteristics

Fact Name	Description
Purpose	The IRS Form 940 is used to report annual Federal Unemployment Tax Act (FUTA) taxes.
Filing Requirement	Employers must file Form 940 if they paid $1,500 or more in wages in any calendar quarter.
Due Date	The form is due on January 31 of the following year, but employers can file by February 10 if they deposited all FUTA taxes on time.
State-Specific Forms	Employers may also need to file state unemployment tax forms, which vary by state.
Governing Laws	State unemployment tax laws govern the state-specific forms. Each state has its own regulations.
Penalties	Failure to file Form 940 on time can result in penalties and interest on unpaid taxes.
Record Keeping	Employers should keep records of all wages paid and taxes collected for at least four years.
Electronic Filing	Form 940 can be filed electronically, which may expedite processing and reduce errors.

Form Sample

	Form 940for 2020: Employer’s Annual Federal Unemployment (FUTA) Tax Return	850113
		OMB No. 1545-0028
	Department of the Treasury — Internal Revenue Service	OMB No. 1545-0028

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

Type of Return

(Check all that apply.)

a. Amended

b. Successor employer

c. No payments to employees in 2020

d. Final: Business closed or stopped paying wages

Go to www.irs.gov/Form940 for instructions and the latest information.

Read the separate instructions before you complete this form. Please type or print within the boxes.

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 .	1a
1b	If you had to pay state unemployment tax in more than one state, you are a multi-state
	employer	1b
2	If you paid wages in a state that is subject to CREDIT REDUCTION	2
2		2

Check here.

Complete Schedule A (Form 940).

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							.	3				.
4	Payments exempt from FUTA tax				4		.

	Check all that apply: 4a			Fringe benefits	4c	Retirement/Pension		4e		Other
		4b		Group-term life insurance	4d	Dependent care
		4b		Group-term life insurance	4d	Dependent care
5	Total of payments made to each employee in excess of
5	Total of payments made to each employee in excess of						.
	$7,000				5		.
6	Subtotal (line 4 + line 5 = line 6)							.	6				.

7	Total taxable FUTA wages (line 3 – line 6 = line 7). See instructions							.	7				.

8	FUTA tax before adjustments (line 7 x 0.006 = line 8)							.	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,
9													.
	multiply line 7 by 0.054		(line 7 × 0.054 = line 9). Go to line 12					.	9				.
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 .							.	10				.

11	If credit reduction applies, enter the total from Schedule A (Form 940)							.	11				.

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)							.	12				.

13	FUTA tax deposited for the year, including any overpayment applied from a prior year							.	13				.
14	Balance 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.
	• 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						.	14				.

15	Overpayment. If line 13 is more than line 12, enter the excess on line 15 and check a box below								15				.
		You MUST complete both pages of this form and SIGN it.				Check one:		Apply to next return.			Send a refund.



												Next N

For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher.								Cat. No. 11234O			Form	940 (2020)

850212

Name (not your trade name)

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) . . .	. .	.	.	.	.	.	16b
16c	3rd quarter (July 1 – September 30) .	. .	.	.	.	.	.	16c
16d	4th quarter (October 1 – December 31)	. .	.	.	.	.	.	16d

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)

Address

City

Check if you are self-employed

	PTIN

	Date	/	/
	EIN
	EIN
	Phone
	Phone
State	ZIP code
State	ZIP code

Page 2

Form 940 (2020)

Form 940-V, Payment Voucher

Purpose of Form

Complete Form 940-V if you’re making a payment with Form 940. 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 2020 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. 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 when making any payment with F! Form 940. However, if you pay an amount with CAUTION 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 visiting the IRS website at 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 “2020” 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.
	Detach Here and Mail With Your Payment and Form 940.
Form 940-V		Payment Voucher		OMB No. 1545-0028
Form 940-V		Payment Voucher


Department of the Treasury		Don’t staple or attach this voucher to your payment.		2020
Internal Revenue Service		Don’t staple or attach this voucher to your payment.		2020
1 Enter your employer identification number (EIN).		2	Dollars		Cents
		Enter the amount of your payment.
		Make your check or money order payable to “United States Treasury”

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.

Form 940 (2020)

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Chapter 23, Federal Unemployment Tax Act, of Subtitle C, Employment Taxes, of the Internal Revenue Code imposes a tax on employers with respect to employees. This form is used to determine the amount of the tax that you owe. Section 6011 requires you to provide the requested information if you are liable for FUTA tax under section 3301. Section 6109 requires you to provide your identification number. If you fail to provide this information in a timely manner or provide a false or fraudulent form, you may be subject to penalties.

You’re not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books and records relating to a form or instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law.

Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or requires the IRS to disclose or give the information shown on your tax return to others as described in the Code. For example, we may disclose

your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions to administer their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping	9 hr., 19 min.
Learning about the law or the form . .	1 hr., 23 min.
Preparing, copying, assembling, and
sending the form to the IRS	1 hr., 36 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making Form 940 simpler, we would be happy to hear from you. You can send us comments from www.irs.gov/FormComments. Or you can send your comments to Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW,

IR-6526, Washington, DC 20224. Don’t send Form 940 to this address. Instead, see Where Do You File? in the Instructions for Form 940.