E-file IRS Form 940, Federal Unemployment Tax Act
Federal Form 940 is used to report annual Federal Unemployment Tax Act (FUTA) tax. FUTA tax, along with state unemployment tax systems, provides funds for paying unemployment compensation to workers who’ve lost their jobs. Employers are the only entities to pay FUTA tax, and most employers pay both federal and state unemployment tax. FUTA taxes, however, should not be collected or deducted from employees’ wages. This FUTA tax applies to the first $7,000 employers pay to each employee during the calendar year, minus any payments exempt from FUTA tax.
Who Must File or E-file IRS Form 940?
Most employers are required to file form 940 each year. This includes employers who paid wages of $1,500 or more to employees in any calendar quarter during 2021 or 2022. It also includes employers who had one or more employees for at least some part of a day in any 20 or more different weeks in 2021 and/or 2022, including full-time, part-time, and temporary employees. Even if the business was sold, if the conditions apply, the employer must file a 940 form.
Exemptions to File or E-file IRS Form 940
Certain employers of agricultural workers, Indian Tribal Government workers, and household, tax-exempt organization, and state or local government employees are exempt from filing a federal Form 940. For instance, household employers only need to report if they paid cash wages of $1000 or more in any calendar quarter of 2021 or 2022. Agricultural employees only need to e-file Form 940 if they paid cash wages of $20,000 or more to farmworkers during any quarter of 2021 or 2022 or if they employ 10+ farmworkers during any 20 or more weeks in 2021 or 2022. Federally recognized Indian tribal government employers, tax-exempt organization employers, and state and local government employers are exempt from e-filing IRS Form 940.
How to E-file IRS Form 940?
You can either paper file a 940 tax form or you can e-file it. To e-file IRS Form 940, you’ll need to use an IRS-authorized e-file provider for the 940 tax form. Luckily, ExpressIRSForms, your favorite IRS-authorized e-file provider, now supports e-filing for IRS Form 940! Simply log into your ExpressIRSForms account and select the 940 Form option. Enter in the information required to e-file IRS Form 940 then continue to review your completed form. Pay our one-time transmittal fee and e-file directly with the IRS. It’s that simple to e-file IRS Form 940!
Information Needed to E-file IRS Form 940?
The following information is needed to file FUTA tax on a federal 940 Form:-
- Employer data (name, EIN, address, signature)
- Type of return-State unemployment tax information (if applicable)-FUTA tax before adjustments
- FUTA tax before adjustments
- FUTA tax adjustments
- Total FUTA tax and balance due
- FUTA tax liability by quarter (if applicable)
- Paid preparer data, if applicable (name, firm name, EIN, PTIN, address, signature)
When to File or E-file IRS Form 940?
The deadline to file a federal Form 940 for 2023 is January 31, 2024. If, however, you have deposited all of your FUTA tax when the form 940 is due, you may file or e-file IRS Form 940 by February 10, 2024. If you paper file and the IRS receives your return after the due date, they will treat your return as filed on time if the envelope was postmarked on or before the due date. If you e-file IRS Form 940, you have until 11:59 p.m. in your time zone to e-file.
Completing Form 940
To complete Form 940, first you’ll need to provide employer information, including your name and trade name (if any), EIN, and address. Then, you’ll indicate if you’re filing an amended return, filing as a successor, filing no employee payments, or if this is your final form because the business closed.
- Next, in Part 1, provide state unemployment tax information, if applicable.
- In Part 2, you’ll determine your FUTA tax before adjustments by entering your total payments to all employees, payments exempt from FUTA tax, and total payments made in excess of $7000.
- Part 3 determines your adjustments by asking a few questions regarding your FUTA tax.
- You’ll use Parts 2 and 3 to complete Part 4, which determines your FUTA tax and balance due.
- In Part 5, report the amount of FUTA tax liability per quarter (if any). Then sign your name and include your payment through EFT and you’re done!
- In Part 6, sign your name and include your payment through EFT and you’re done!
Form 940 Filing Penalties
If you pay FUTA taxes late, file or e-file Form 940 late or incorrectly, make insufficient payments, or fail to make deposits using EFT, you may incur penalties and interest which is assessed at a rate set by law and the IRS. You can avoid paying penalties if you
- Deposit your tax when it’s due,
- File your completed Form 940 accurately and on time,
- Attach Schedule R (if required), and
- Ensure your tax payments are honored by your financial institution.
Visit https://www.taxbandits.com/payroll-forms/form-940-penalty/ to learn more the 940 penalty.