Payroll – Details on the IRS Form 940
Form 940 Filing Requirements: Employers who were not household employers or agricultural employers must file Form 940 if they paid a combined total of $1,500 or more in wages to all of their employees in any calendar quarter; or had one or more employees for some part of a day in any 20 different weeks during the year. Count all regular, temporary, and part-time employees. A partnership should not count its partners as employees. Note: Agricultural employers must file Form 940 if they paid a combined total of $20,000 or more to farm workers during any calendar quarter; or had 10 or more farm workers during some part of a day for at least 1 day during any 20 different weeks during the year. Note: Household employers use Schedule H of Form 1040 instead of Form 940 to report and pay FUTA taxes for their household employees.
Form 940 Filing Deadline
Form 940 is due by January 31, of the following calendar year.
Form 940 Extensions
If all tax is deposited when due, deadline is extended 10 days. There is no additional extension for filing Form 940.
Form 940 Penalties
Form 940 late filing penalty of 5% of tax per month up to 25%.
Form 940 late payment penalty of 0.5% of tax per month up to 25%.
Form 940 FUTA Tax Rate
6.2% of each employee’s first $7,000 of wages.
Certified State Unemployment Fund
If the employer pays into a certified state unemployment fund by the due date of Form 940, the employer may receive a credit of up to 5.4% of the total taxable Form 940 FUTA wages. This means the FUTA tax rate is 0.8% of employee wages when combined with state unemployment taxes.
Form 940 Tax Deposit Requirements
Employer must make a deposit of Form 940 FUTA taxes at an authorized federal depository any time the Form 940 FUTA tax liability exceeds $100 in a calendar quarter. If the Form 940 FUTA tax liability is $100 or less in a quarter, it can either be deposited or added to the next quarter. If the liability for the fourth quarter plus undepositedamounts from earlier quarters is over $100, deposit the entire amount by January 31. If the tax is $100 or less, the payment can either be deposited or paid with Form 940 by January 31. Use Form 8109, Federal Tax Deposit Coupon to make FUTA tax deposits; or if required, use EFTPS.
The Form 940 FUTA deposit is due by the following dates. If undeposited Form 940 FUTA taxes are over $100 on deposit them by
March 31 – April 30
June 30 – July 31
September 30 – October 31
December 31 – January 31