Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return

Last reviewed: 2025-10-26

Use the IRS Form 940: FUTA Tax Calculator Tax Form Calculator IRS Form 940: FUTA Tax Calculator as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 940 state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

Employers use Form 940 to report and pay annual federal unemployment taxes under the FUTA program. This tax provides funds for paying unemployment compensation to workers who have lost their jobs. Only the employer pays FUTA—no part is withheld from employee wages.

Key points for completing Form 940:

FUTA applies to the first $7,000 of wages paid to each employee annually.
The base tax rate is 6.0%, but most employers can claim up to 5.4% in credits for state unemployment contributions.
Employers in credit reduction states must pay additional tax; check the IRS annually updated list.
If total FUTA tax exceeds $500 in a quarter, deposit must be made through EFTPS; otherwise, pay with the return.

Employer's Annual Federal Unemployment (FUTA) Tax Return
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	Check here. Complete Schedule A (Form 940).
2	If you paid wages in a state that is subject to CREDIT REDUCTION		2	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
5	Total of payments made to each employee in excess of $	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 = 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, multiply line 7 by (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 $, you must deposit your tax. • If line 14 is $ 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.
Part 5: Report your FUTA tax liability by quarter only if line 12 is more than $. If not, go to Part 6.
16	Report 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.

When to File Form 940: The return is due by January 31 following the calendar year. If you’ve deposited all FUTA tax on time, you may file by February 10.

Last reviewed: 2025-10-26: If you believe this form requires an update, please contact us.

Helpful Tips for FUTA Compliance

Review quarterly payroll data to ensure accurate wage thresholds for each employee.
Track state unemployment contributions carefully—late payments may reduce your eligible credit.
If you operate in multiple states, ensure proper allocation of wage data on Schedule A (if applicable).
Use a reliable payroll system or tax software to auto‑generate FUTA deposit notifications based on thresholds.

For detailed assistance, see the official IRS instructions or try our Form 940 calculator to preview your estimated tax due and ensure accurate end‑of‑year reporting.

Frequently Asked Questions

Can I estimate the General Business Credit?

Start with Form 3800 and then reflect the credit here.

How much would a 401(k) contribution change my net?

Model it with the 401(k) Calculator then rerun this page with your pre-tax amount.

Considering an IRS Offer in Compromise?

Read through Form 656-B to understand eligibility and steps.

What does FICA include?

FICA includes Social Security and Medicare payroll taxes withheld from employee wages.

Is there a quick pay-frequency comparison?

Yes—switch frequency on this page; for employer filings see 941 vs 944.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.