Instructions for Filling Out Form 940

Instructions for Filling Out Form 940

Written by 
Pilot Team
November 21, 2023
Instructions for Filling Out Form 940

Instructions to Fill Out Form 940

This document offers a comprehensive guide for employers on how to accurately complete Form 940, the Employer's Annual Federal Unemployment (FUTA) Tax Return, for the year 2023. It covers everything from general instructions and specific steps for each part of the form to calculating FUTA tax liability and adjustments.

In this article, we'll provide information on Form 940 and a step-by-step guide on how to fill it out, keeping it straight to the point.

What is Form 940?

Form 940, the Employer's Annual Federal Unemployment (FUTA) Tax Return, is used by employers to report their annual FUTA tax liability. The purpose of this form is to provide funds for unemployment compensation to workers who have lost their jobs, in conjunction with state unemployment systems.

Employers must file Form 940 annually to calculate and report their total FUTA tax liability, taking into account payments made to employees, exemptions, adjustments for state unemployment tax contributions, and any FUTA tax already deposited. This form is essential for employers to comply with federal unemployment tax regulations.

Who Must File Form 940?

Employers are required to file Form 940 if they meet either of the following criteria: they paid wages of $1,500 or more to employees in any calendar quarter during 2022 or 2023, or they had one or more employees for at least some part of a day in any 20 or more different weeks in 2022 or 20 or more different weeks in 2023. This includes all full-time, part-time, and temporary employees, but partners in a partnership are not considered employees for this purpose.

Form 940 Tax Filing Deadlines and Due Dates

  • The due date for filing Form 940 for 2023 is January 31, 2024.
  • If all FUTA tax was deposited when due, the form may be filed by February 12, 2024.

Form 940 Late Payment Penalty

If you fail to pay your FUTA tax on time, you may be subject to penalties. While the specific penalty amount for late payment of Form 940 is not explicitly stated in the instructions, it's crucial to deposit and pay FUTA tax when due, file the form accurately and on time, and ensure tax payments are honored to avoid penalties and interest. For specific penalty amounts or calculations, it's recommended to refer to the IRS's general penalty guidelines or contact the IRS directly.

Step-by-Step Instructions for Form 940

Step by Step Instructions for Filling Out Form 940:

  1. Enter Your Business Information: At the top of Form 940, fill in your Employer Identification Number (EIN), name, trade name (if different), and address.
  2. Part 1 - Tell Us About Your Return: Indicate if you are a multi-state employer or if you paid wages in a credit reduction state.
  3. Part 2 - Determine Your FUTA Tax Before Adjustments: Calculate total payments to all employees, subtract payments exempt from FUTA tax, and determine the total of payments made to each employee in excess of $7,000. Then, calculate your FUTA tax before adjustments.
  4. Part 3 - Determine Your Adjustments: If applicable, fill out the adjustments for state unemployment tax paid late or not at all, and for credit reduction.
  5. Part 4 - Determine Your FUTA Tax and Balance Due or Overpayment: Add up the total FUTA tax after adjustments, enter the FUTA tax deposited for the year, and calculate any balance due or overpayment.
  6. Part 5 - Report Your FUTA Tax Liability by Quarter: If your total FUTA tax for the year is more than $500, report the amount of your FUTA tax liability for each quarter.
  7. Part 6 - May We Speak With Your Third-Party Designee?: If you want to allow someone else to discuss your Form 940 with the IRS, provide their information.
  8. Part 7 - Sign Here: Sign and date the form, and provide your title and telephone number.
  9. Attachments: Attach Schedule A (Form 940) if you are a multi-state employer or if you paid wages in a credit reduction state. Complete any other necessary worksheets or schedules as instructed.

How to Submit Form 940

To submit Form 940, first determine if you need to file the form and follow the specific instructions for each part, including reporting FUTA tax liability by quarter and determining adjustments. Once completed, sign and date the form in Part 7. When and where to file the form can be found in the general instructions section of the IRS website.

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