940

Employer's Annual Federal Unemployment (FUTA) Tax Return

Agency
IRS
Revision
2025
Fillable fields
97
Pages
3
Official source
IRS form page
Checked
October 14, 2026
Fill 940 online
Page 1 of form 940

Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return (2025)

Form 940 is the yearly return employers use to report their Federal Unemployment Tax Act (FUTA) tax. FUTA tax helps fund unemployment compensation for workers who lose their jobs. Employers pay it, and they should not collect it from employees' wages.

This page is the 2025 form, for wages paid in calendar year 2025. Unlike Form 941, which reports withheld income tax and Social Security and Medicare taxes each quarter, Form 940 covers FUTA tax only and is filed once a year.

Most of the work is working out how much of each employee's pay is subject to the tax and how much credit you get for state unemployment tax you paid. Deposits during the year are due when the liability passes a threshold, and the return reconciles them.

Page 1 of the 2025 Form 940 with its title area and Part 1 questions

What's on Form 940

Part 1: Tell us about your return

The state or states where you paid unemployment tax, and whether any wages were subject to a credit reduction state.

Part 2: Determine your FUTA tax before adjustments

Lines 3 to 8: total payments, exempt payments, payments above the $7,000 wage base, and the tax figure.

Part 3: Determine your adjustments

Lines 9 to 11, including the worksheet for state unemployment payments that were late or excluded.

Part 4: Determine your FUTA tax and balance due or overpayment

Lines 12 to 15: total FUTA tax after adjustments, deposits, and balance due or overpayment.

Part 5: Quarterly liability

Lines 16 and 17. Required only if line 12 is more than $500.

Parts 6 and 7

Authorize a third-party designee to talk to the IRS, and sign. Both pages must be completed and signed.

How to fill out Form 940

  1. 1

    Identify the business

    Enter your EIN, name, trade name and address at the top of page 1.

    The top of page 1 of Form 940 with EIN, name, trade name and address
  2. 2

    Part 1

    Enter the state where you paid state unemployment tax. Check the credit reduction box if any wages were subject to a credit reduction state's law, and complete Schedule A (Form 940).

    Part 1 of Form 940 with a state entered and the credit reduction box checked
  3. 3

    Part 2

    Total what you paid all employees, subtract payments exempt from FUTA tax and the amount above $7,000 per employee, and compute the tax from the result.

    Part 2 of Form 940 with sample payment totals and the $7,000 per employee limit
  4. 4

    Part 3

    Compute the credit for state unemployment tax paid on time. Use the line 10 worksheet if you paid late or if some payments were excluded.

    Part 3 of Form 940 with a sample adjustment entered on line 9
  5. 5

    Part 4

    Total the FUTA tax, subtract your deposits, and enter the balance due or overpayment. If line 14 is $500 or less, you can pay it with the return.

    Part 4 of Form 940 with line 14 of $500 or less paid with the return
  6. 6

    Part 5

    Complete the quarterly liability only if the total FUTA tax is above $500.

    Part 5 of Form 940 completed for total FUTA tax above $500
  7. 7

    Parts 6 and 7

    Name a designee if you want one, then sign and date. Paid preparers complete their own block.

    Parts 6 and 7 of Form 940 with a named designee and the signature and date

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Deadlines, where to send it and common mistakes

Due date for 2025

February 2, 2026, or February 10, 2026 if you deposited all FUTA tax when due.

Rate and wage base

The FUTA rate is 6.0% on the first $7,000 paid to each employee in a calendar year. Most employers get a credit of up to 5.4%, so the effective rate is typically 0.6%.

Deposits

If your FUTA tax is more than $500 for the year, you must deposit at least one quarterly payment, due by the last day of the month after the quarter ends. Liabilities of $500 or less carry forward until the total exceeds $500. Deposits are made by electronic funds transfer.

Where to send it

E-filing through Modernized e-File is encouraged. A paper return goes to an address that depends on your state and whether you include a payment. Amended returns can be filed electronically.

Penalties

Late deposits, late returns and unpaid tax bring penalties and interest. Ask for penalty relief on Form 843, not on Form 940.

Common mistakes

Collecting FUTA tax from employee wages, forgetting Schedule A for credit reduction states, and omitting Schedule R when it is required.

Related forms

Who needs to file Form 940?

  • Employers over the wage or weeks test

    You file if you paid wages of $1,500 or more in any calendar quarter of 2024 or 2025, or had one or more employees for some part of a day in 20 or more different weeks in 2024 or 2025.

  • Household employers

    They generally report on Schedule H (Form 1040), but must pay FUTA tax if cash wages were $1,000 or more in any quarter.

  • Agricultural employers

    You file if cash wages were $20,000 or more in any quarter, or you employed 10 or more farmworkers in 20 or more weeks.

  • Exempt employers

    State, local and Indian tribal government employers do not file Form 940. 501(c)(3) organizations are generally not subject to FUTA tax, with some exceptions.

The 2025 instructions give these tests.

Official sources and the blank

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Questions about Form 940

Who pays FUTA tax?

The employer pays it. The IRS says employers should not collect it from employees' wages.

How much is FUTA tax?

The rate is 6.0% on the first $7,000 each employee earns in a year. With the usual credit of up to 5.4%, the effective rate is typically 0.6%.

Do I need to deposit FUTA tax during the year?

If your FUTA tax is more than $500 for the year, yes, at least one quarterly deposit. Smaller amounts carry forward until they total more than $500.

What is a credit reduction state?

A state whose unemployment law reduces the credit employers get, which can raise your FUTA tax. You use Schedule A (Form 940) to figure the reduction.

Is Form 940 the same as Form 941?

No. Form 941 is quarterly for withheld income tax and Social Security and Medicare. Form 940 is yearly and covers FUTA tax only.

Can I file Form 940 electronically?

Yes. The IRS encourages e-filing through Modernized e-File and allows some amended returns to be filed electronically.