Form 940 - Annual Unemployment Tax Return

Form 940 is an annual federal unemployment tax return that is required to be filed by all employers. The deadline for filing the return is the last day of the first month after a year end. In other words, January 31.

Federal unemployment tax (FUTA) is one of the payroll tax items that are paid by the employer. Federal unemployment taxes are paid on the first $7,000 in employee wages. salaries in excess of $7,000 are not subject to unemployment taxes.

Although the 940 is an annual tax return, employers must make quarterly payments if their unemployment taxes exceed $500.00 in any quarter. Notable exceptions from federal unemployment tax returns are children (under the age of 18) of sole proprietors and employees of tax-exempt organizations.

For the 2006 tax year and following, please note that Form 940EZ is no longer in use.

For more information on federal and state unemployment taxes, please visit our page on unemployment taxes.

All federal forms mentioned on this page can be downloaded from the IRS website.

Payroll, payroll taxes and workers compensation are facts of life for businesses with employees. While employees may be absolutely critical to the success of your business, they consume valuable resources that increase your cost of doing business. Make a mistake in calculating payroll withholding taxes and/or paying payroll taxes and you have angry employees and the IRS to deal with.

As you proceed with your business planning, you would be wise to consider purchasing a payroll software program to help process your payroll. Take a look at our payroll software program page to get an idea what types of features and reporting capabilities are important before you buy.