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Form 940, Employer’s Annual FUTA Tax Return, page 1
Moderate · 54/100Form Complexity Index

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What this form asks for

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Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, is used by employers to report their annual FUTA tax liability. This form is crucial for ensuring that employers meet their federal unemployment tax obligations, which fund unemployment benefits for workers.
Fillable fields90
Pages3
Sections18
Form Complexity IndexModerate, 54/100

The AI checks your answers before you download

15 checks built for this form, so a wrong date or a missing answer is caught before anyone else sees it.

Ensures that all required business information is accurately filled out, including the employer's name, address, and Employer Identification Number (EIN).

The AI ensures that the Employer's Annual Federal Unemployment Tax Return form contains all the necessary business details. It checks for the accuracy and completeness of the employer's name, address, and Employer Identification Number (EIN). The AI cross-references this information with official records to prevent any discrepancies. It also alerts the user if any of these critical fields are left blank or are incorrectly filled.

Verifies that FUTA tax calculations are correctly performed based on the first $7,000 paid to each employee after subtracting exempt payments.

The AI verifies the accuracy of the Federal Unemployment Tax Act (FUTA) tax calculations. It ensures that the calculations are based on the first $7,000 of income paid to each employee, as mandated by law, after accounting for any exempt payments. The AI checks the arithmetic operations and the application of the correct tax rate to ensure that the total tax liability is calculated correctly. It also flags any discrepancies in the calculation for user review.

Confirms that all sections of the form are completed, including adjustments for state unemployment tax contributions and total tax liability.

The AI confirms that every section of the Employer's Annual Federal Unemployment Tax Return form is thoroughly completed. This includes the careful review of adjustments for state unemployment tax contributions, which may affect the total tax liability. The AI ensures that these adjustments are entered correctly and that the final tax liability reflects these changes. It also ensures that no relevant sections are overlooked, which could result in an inaccurate filing.

Checks if the 'Amended' box is marked and an explanation is attached in cases where the form is an amendment to a previously filed Form 940.

The AI checks if the 'Amended' box is marked on the Employer's Annual Federal Unemployment Tax Return form when it is intended to amend a previously filed Form 940. It ensures that an explanation for the amendment is attached, as required by the IRS. The AI reviews the documentation for completeness and relevance to the amendments made on the form, and it prompts the user to provide any missing information or clarification.

Validates that the overpayment option is correctly indicated, whether to apply it to the next return or to request a refund.

The AI validates the selection made regarding any overpayment of FUTA taxes. It ensures that the employer has correctly indicated whether the overpayment should be applied to the next tax return or if a refund is requested. The AI checks for consistency in the selection made and the information provided on the form. It also alerts the user if the overpayment option is not clearly specified, which could delay processing or result in errors in future tax liabilities.

FUTA Tax Liability Reporting

Ensures that the FUTA tax liability by quarter is accurately reported in Part 5 of the Employer's Annual Federal Unemployment Tax Return. This validation check is crucial when the employer's tax liability exceeds $500 for the year. It verifies the correctness of the amounts entered for each quarter, ensuring they sum up to the total tax liability reported. This check is essential for maintaining compliance with federal tax regulations and avoiding potential penalties for underpayment or incorrect reporting.

And 9 more checks
  • Employer and Preparer Signature Verification
  • Schedule A (Form 940) Completion
  • Successor Employer Status Indication
  • No Payments to Employees or Final Return
  • Filing Deadline Compliance
  • Correct Mailing Address Verification
  • Inclusion of Worksheets and Recordkeeping
  • Electronic Filing and Payment Compliance
  • Numerical Entry and Calculation Accuracy

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How to Fill Out Form 940 Online for Free in 2026

What the AI walks you through.

  1. Visit instafill.ai site and select Form 940.
  2. Enter your employer identification number (EIN).
  3. Fill in your business name and address.
  4. Complete the required payment and tax information.
  5. Sign and date the form electronically.
  6. Check for accuracy and submit the form.

Common Mistakes in Completing Form 940

The ones the AI is built to catch.

Inaccurate Business Information Reporting
Providing incorrect business name, Employer Identification Number (EIN), or address on the Employer's Annual Federal Unemployment Tax Return (Form 940) can lead to significant issues. This mistake may result in delayed processing of the return, potential penalties, and miscalculations of tax liabilities. To avoid this error, ensure that all business information is up-to-date and accurate before submitting the form. Double-check all entries for typos and inconsistencies.
Miscalculation of FUTA Tax Liability
Calculating FUTA tax liability incorrectly by reporting inaccurate wages or exempt payments can lead to underpayment or overpayment of taxes. This mistake may result in penalties and interest charges. To prevent this error, carefully review the instructions for calculating FUTA tax liability and ensure that all wage and exempt payment amounts are reported accurately. Consider using payroll software or a tax professional to assist with calculations.
Neglecting to Sign and Provide Preparer Information
Failing to sign the form and provide preparer information, if applicable, can result in processing delays and potential penalties. To avoid this mistake, ensure that the form is signed by an authorized person and that any required preparer information is provided. This information may include the preparer's name, EIN, and signature. Review the instructions carefully to determine if preparer information is required.
Missing the Due Date for Filing the Return
Missing the due date for filing the Employer's Annual Federal Unemployment Tax Return (Form 940) can result in penalties and interest charges. To prevent this mistake, familiarize yourself with the due date for filing the form and ensure that it is submitted on time. Consider setting reminders or using payroll software to help manage filing deadlines.
Failure to Attach Schedule A (Form 940)
For multi-state employers or those who paid wages in credit reduction states, failing to attach Schedule A (Form 940) can result in processing delays and potential penalties. Schedule A is used to report wages paid in other states and to calculate the tax liability for those wages. To avoid this mistake, ensure that Schedule A is completed accurately and attached to the Form 940 before submitting it for processing.
Failure to check the appropriate box for amended returns, successor employers, or final returns
When filing the Employer's Annual Federal Unemployment Tax Return (Form 940), it is essential to accurately identify the type of return being filed. This includes checking the appropriate box for amended returns, successor employers, or final returns. Failure to do so can result in incorrect tax calculations and potential penalties. To avoid this mistake, carefully review the instructions provided on the form and ensure that the correct box is checked based on the specific circumstances of your business. It is also recommended to maintain clear records of any changes to your business status and the corresponding Form 940 filings.
Incorrectly reporting FUTA tax deposits or overpayments
Another common mistake when filing Form 940 is incorrectly reporting Federal Unemployment Tax Act (FUTA) tax deposits or overpayments. This can lead to significant penalties and interest charges. To prevent this error, it is crucial to maintain accurate records of all FUTA tax deposits and ensure that they are reported correctly on the form. It is also recommended to double-check all calculations and consult the instructions provided on the form to ensure that any overpayments are reported appropriately.
Neglecting to keep proper records of Form 940 and related worksheets
Proper record-keeping is essential when filing the Employer's Annual Federal Unemployment Tax Return. Failing to maintain accurate records of Form 940 and related worksheets can make it difficult to accurately complete future filings and may result in penalties. To avoid this mistake, it is recommended to establish a system for organizing and storing all relevant records, including copies of filed Forms 940, supporting documentation, and worksheets. Additionally, it is essential to regularly review these records to ensure that they are complete and up-to-date.

Frequently Asked Questions About Form 940

 

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How does the AI fill out Form 940?
You answer a few questions in plain words, or upload a document you already have. The AI reads what you give it and puts each answer into the right field of Form 940, on every page, in seconds. It checks the answers against the form's own rules, and you review and change anything before you download, print or sign.
What happens to my information?
It is encrypted in transit and at rest, and it is never used to train AI.
How complex is Form 940 to fill out?
Form 940 has a Form Complexity Index of 54 out of 100, in the moderate tier: 90 fillable fields across 3 pages. Instafill.ai's AI fills it in under a minute, with every field there for you to review before you download.
What is the Form 940 used for?
The Employer's Annual Federal Unemployment (FUTA) Tax Return, Form 940, is used to report total wages paid to employees and the amount of unemployment tax that is due. The tax is used to fund state unemployment programs.
When is the Form 940 due?
The Form 940 is typically due annually by January 31st if the employer's tax liability is less than $500. If the employer's tax liability is $500 or more, the Form 940 is due quarterly. The due dates for quarterly filers are: January 31 (for wages paid in the preceding calendar year's fourth quarter), April 30 (for wages paid in the first three months of the current calendar year), July 31 (for wages paid in the second and third quarters of the current calendar year), and October 31 (for wages paid in the fourth quarter of the current calendar year).
Who is required to file the Form 940?
Employers who paid wages of $1,500 or more in any calendar quarter or had one or more employees for at least some part of a day in 20 or more different weeks in a calendar year are required to file Form 940. Employers in certain industries may have different filing requirements.
What information is required in Part 1 of Form 940?
Part 1 of Form 940 requires the employer to report total wages paid to employees during the tax year, the total tax due, and the total tax paid. The employer must also report any state unemployment tax offsets, any tax adjustments, and any contributions to the Federal Unemployment Tax Act (FUTA) reserve fund.
What is meant by 'multi-state employer' in Part 1 of Form 940?
A multi-state employer is an employer who has employees in more than one state. These employers must file a separate Form 940 for each state where they have employees, in addition to filing a single Form 940 for their total federal unemployment tax liability. The employer must also report total wages paid to employees in each state on the corresponding state Form 940.
What is the purpose of Schedule A in Part 2 of Form 940?
Schedule A in Part 2 of Form 940 is used to report contributions to state unemployment funds and reemployment tax. Employers who have paid unemployment compensation to their employees under state or federal law during the tax year must complete this schedule.
What payments are exempt from FUTA tax in Part 4 of Form 940?
Payments exempt from FUTA tax include: wages paid to employees under the age of 20 during their first year of employment, wages paid for services performed in a week in which the employee's total wages were less than $1,500, and wages paid for services performed in a week in which the employee was not employed for 30 or more days during the tax year.
What is the difference between lines 6 and 7 in Part 2 of Form 940?
Line 6 represents the total wages paid to employees subject to FUTA tax during the tax year. Line 7 represents the total wages paid to employees on which FUTA tax was paid or credited during the tax year. The difference between the two is the amount of FUTA tax paid or credited during the tax year, which is reported on line 8.
What adjustments need to be made in Part 3 of Form 940?
Adjustments may be necessary in Part 3 of Form 940 for various reasons, such as correcting errors on previous returns, reporting late payments or reimbursements, or claiming tax credits. Employers should carefully review the instructions for Part 3 and make any necessary adjustments to ensure the accuracy of their return.
What is the difference between lines 12 and 13 in Part 4 of Form 940?
Line 12 represents the total amount of FUTA tax paid or credited during the tax year, while line 13 represents the total amount of FUTA tax that is required to be paid based on the wages reported on line 6 of Part 2. The difference between the two is the amount of FUTA tax that has been deposited or paid during the tax year, which should be the same as the amount reported on line 8 of Part 2.
What is the purpose of Form 940-V, Payment Voucher?
Form 940-V, Payment Voucher, is used to make payments of the Federal Unemployment Tax Act (FUTA) tax liability. It is important to note that while Form 940 is used to report and calculate the FUTA tax liability, Form 940-V is used to make the actual payment to the IRS.
What information is required in Box 1 of Form 940-V?
Box 1 of Form 940-V requires the employer identification number (EIN), the name and address of the employer, and the total amount of FUTA tax being paid. This information is necessary for the IRS to properly process and apply the payment to the correct employer account.
What payment method should be used when FUTA tax liability is more than $500?
When an employer's FUTA tax liability exceeds $500, they are required to make electronic fund transfers (EFTs) to pay the tax. This can be done through the Electronic Federal Tax Payment System (EFTPS) or by using a credit or debit card. Employers should refer to the instructions on Form 940-V for detailed information on setting up an EFT account or making a payment with a credit or debit card.
What penalties may apply for failing to deposit FUTA tax on time?
Employers who fail to deposit FUTA tax on time may be subject to penalties. The penalty for failing to deposit on time is generally 2% per month or part of a month that the tax is not deposited, up to a maximum of 15%. Employers should refer to the instructions on Form 940 and IRS Publication 960 for more information on penalty calculations and exceptions.
What is the role of a third-party designee in Form 940?
A third-party designee is an individual or entity authorized by an employer to receive and pay FUTA taxes on their behalf. This can be useful for employers who may not have the time or resources to handle the tax payments themselves. To designate a third-party designee, the employer must complete Part 10 of Form 940 and provide the designee's name and contact information. The designee will then be responsible for making the FUTA tax payments and receiving any corresponding penalties or interest.
What is the significance of the Privacy Act and Paperwork Reduction Act Notice on Form 940?
The Privacy Act and Paperwork Reduction Act (PRA) notices on Form 940 serve important functions in protecting individual privacy and reducing the burden of government paperwork. The Privacy Act notice informs taxpayers that the Internal Revenue Service (IRS) is collecting, using, and disclosing personal information on the form for tax administration purposes. It also explains individuals' rights under the Privacy Act, including the right to access and correct their personal information. The Paperwork Reduction Act notice advises taxpayers that the IRS has obtained approval from the Office of Management and Budget (OMB) for the collection and use of information on the form. This notice includes the OMB control number and the expiration date of the approval. The PRA aims to minimize the burden on taxpayers by ensuring that forms are necessary, efficient, and effective. By including these notices on Form 940, the IRS demonstrates its commitment to transparency, accountability, and compliance with federal laws and regulations.
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