To complete and file Form 940, download the current PDF version of the form from the IRS website. While you can fill out the form by hand, the PDF form has editable fields you can fill out using your computer or laptop.
Here’s how to fill out each of the required sections of Form 940 (note that, if any line is not applicable, you should leave the field blank):
General Information Section
At the top of the form, you’ll find a general information section. This is where you’ll need to enter the following:
- Your business’s Employer Identification Number (EIN)
- Your business’s legal name
- Your business’s trade name, if it uses one
- Your business address
In the area designated Type of Return, check off any of the four boxes that apply to you (amended, successor employer, no payments to employees in the tax year and final: business closed or stopped paying wages).
Part 1 (State Unemployment Tax Information)
In this section, you’ll indicate whether:
- You’re a single-state employer (i.e., you paid state unemployment tax in only one state) (Line 1a)
- You’re a multi-state employer (i.e., you paid state unemployment tax in more than one state) (Line 1b)
- You paid wages to employees in a credit reduction state (Line 2)
If you’re a multi-state employer or you paid wages in a credit reduction state, you’ll also need to complete and submit Schedule A of Form 940.
Part 2 (FUTA Tax Before Adjustments)
You’ll be calculating your FUTA tax before adjustments in this section. To complete the section, you’ll need to enter:
- The total amount you paid to all your employees (Line 3)
- The amount of payments that are exempt from FUTA tax (fringe benefits, group-term life insurance premiums, retirement/pension payments and dependent care payments) (Line 4)
- The total amount of payments made to each of your employees that’s in excess of $7,000 (Line 5)
Calculate the subtotal on Line 6 by adding Line 4 and Line 5, then determine the total taxable FUTA wages on Line 7 by subtracting Line 6 from Line 3.
To compute your FUTA tax before adjustments on Line 8, multiply the amount on Line 7 by 0.006.
Here’s a sample calculation:
- Line 3: You paid a total of $200,000 to all your employees. You enter 200,000 on Line 3.
- Line 4: $50,000 of these payments is exempt from FUTA tax. You enter 50,000 on Line 4.
- Line 5: The total amount of payments made to each of your employees in excess of $7,000 is $40,000. You enter 40,000 on Line 5.
- Line 6: You enter 90,000 on Line 6 (Line 4 + Line 5, or 50,000 + 40,000)
- Line 7: You enter 110,000 on Line 7 (Line 3 − Line 6, or 200,000 − 90,000)
- Line 8: Your FUTA tax before adjustments is Line 7 x 0.006 (110,000 x 0.006) is 660. You enter 660 on Line 8.
Part 3 (Adjustments)
In this section you’ll determine your adjustments:
- If all of the total taxable FUTA wages you’ve paid (Line 7) were excluded from state unemployment tax, multiply the amount in Line 7 by 0.054, and enter it as Line 9.
- Otherwise, if only some of the total taxable FUTA wages you paid (Line 7) were excluded from state unemployment tax, or you made any late state unemployment tax payments, you’ll need to complete Worksheet—Line 10 from the Instructions for Form 940. Enter the amount from line 7 of the worksheet on Line 10. Note that you won’t need to include the worksheet as part of your Form 940 filing).
- If you filled out Schedule A of Form 940 for wages paid in a credit reduction state, enter the total from Schedule A on Line 11.
Part 4 (FUTA Tax and Balance Due/Overpayment)
You’ll calculate your FUTA tax in this section:
- Calculate your total FUTA tax after adjustments by adding Lines 8, 9, 10 and 11. Enter this amount on Line 12.
- Enter the amount of FUTA tax you’ve deposited for the year (including the overpayment applied from a previous year, if any) on Line 13.
Next, you’ll determine whether you have a balance due or an overpayment:
- If Line 12 is more than Line 13, enter the difference on Line 14. This is your balance due. If Line 14 is more than $500, you’ll be required to use EFT to deposit your balance due. If it’s $500 or less, you can choose to pay the amount when you file your Form 940 (fill out Form 940-V at the end of the form).
- If Line 13 is more than Line 12, enter the difference on Line 15. This is your overpayment. You can choose to apply the amount in Line 15 to your next return, or have it refunded.
For example, if Line 12 is 500 and Line 13 is 800, you’d enter the difference (300) on Line 14, and you’d have a balance due. This balance is less than $500, so you can choose to pay it when you file your Form 940.
If, however, Line 12 is 800 and Line 13 is 500, you’d enter the difference (300) on Line 15 instead. You’d have an overpayment, and you can choose to apply this overpayment to your next return or have it refunded to you.
Part 5 (FUTA Tax Liability by Quarter)
You only need to complete Part 5 if the amount in Line 12 is more than $500. First, enter your FUTA tax liability for each of the first three quarters as follows:
- Line 16a: First quarter (January 1 to March 31)
- Line 16b: Second quarter (April 1 to June 30)
- Line 16c: Third quarter (July 1 to September 30)
Note that you need to enter your FUTA tax liability and not the actual amounts you’ve deposited for each quarter. Here’s an example:
- You paid no wages in the first quarter, so you had no FUTA tax liability. You leave Line 16a blank.
- You paid wages in the second quarter, resulting in a FUTA tax liability of $100. However, since the amount was $500 or less, you decided to defer this $100 payment to the next quarter. Despite this deferral, you’ll still enter 100 on Line 16b.
- You paid wages in the third quarter that resulted in a FUTA tax liability of $450. You made a FUTA tax deposit of $550 in the third quarter ($450 + $100 from the second quarter). But your FUTA tax liability for the third quarter was $450, and not the amount of your deposit ($550). You’d enter 450 on Line 16c.
You’ll then need to calculate your FUTA tax liability for the fourth quarter. To do this, add the amounts from Lines 16a, 16b and 16c, and subtract this sum from the number on Line 12, which you calculated previously. This result is your FUTA tax liability for the fourth quarter (Line 16d).
For example, let’s say Line 12 is 800. To determine your FUTA tax liability for the fourth quarter, you’d add Lines 16a, 16b and 16c from the example above (0 + 100 + 450 = 550). You’d then subtract that sum from Line 12 (800 − 550 = 250). This number (250) is your FUTA tax liability for the fourth quarter. You’d enter 250 on Line 16d.
Line 17 is the sum of Lines 16a, 16b, 16c and 16d. Using the numbers in our example, this would be 0 + 100 + 450 + 250, or 800. Note that Line 17 must always equal Line 12.
Part 6 (Third-Party Designee)
In this part, you can give the IRS permission to speak to a third-party designee about Form 940 (for example, an employee or an accountant). To do this, check off Yes and enter your designee’s name and phone number, plus a five-digit personal identification number (PIN).
This PIN can be any five-digit number you choose. Your designee will use it when talking with the IRS to identify themselves as the third party you’ve designated to speak on your behalf regarding Form 940.
Your designee is only authorized to:
- Supply the IRS with any information missing from this Form 940
- Ask the IRS for information related to the processing of this Form 940
- Respond to any IRS notices you share with them regarding errors on this Form 940
If you don’t wish to designate a third party, check off No.
Part 7 (Signature)
To complete Form 940, sign the signature box in this part. Add the date in the date field, and include your name, title and the best phone number for the IRS to reach you in the appropriate fields next to the signature box.
If you paid a tax preparer (who is not your employee) to complete Form 940 for you, they must fill out and sign the Paid Preparer section in Part 7.
Your Form 940 is now complete. You can file it by mailing it to the IRS using the appropriate mailing address for your state, and take one more task off your payroll to-do list.
