Form 940 Filing Requirements: What Employers Need to Know

Form 940 is the annual federal return used to report an employer’s Federal Unemployment Tax Act (FUTA) liability. It brings together FUTA-taxable wages, state unemployment tax adjustments, deposits made during the year, and any balance due or overpayment.

Form 940 shows how much FUTA tax the employer owes for the year, how much was already deposited, and whether there is still a balance due or an overpayment. But filing Form 940 is not the same as paying the tax. Employers must still make any required FUTA deposits or payments separately.

This guide explains who must file Form 940, the main IRS Form 940 requirements, deposit rules, Schedule A, and how 1099Online supports electronic filing of the form.

How Form 940 and FUTA Tax Work

Form 940 covers one calendar year. Employers use it to report FUTA tax, which is the federal unemployment tax paid by employers.

For 2026, FUTA is calculated at 6% on the first $7,000 of wages paid to each employee. That means only the first $7,000 paid to each employee is counted for FUTA.

Most employers also pay state unemployment tax. If those state unemployment taxes are paid in full by the Form 940 due date, apply to the same wages subject to FUTA, and the employer is not in a credit-reduction state, the employer may qualify for the maximum 5.4% FUTA credit, reducing the effective FUTA rate from 6.0% to 0.6%.

The full reduction is not automatic. Employers may owe more FUTA if state unemployment taxes were paid after the Form 940 due date, if FUTA-taxable wages were excluded from state unemployment tax, or if wages were paid in a credit-reduction state.

Who Must File Form 940?

Under the general Form 940 employer requirements, a business usually files when either condition is met in the current or prior calendar year:

• It paid at least $1,500 in wages during any calendar quarter, or
• It had one or more employees for part of a day in at least 20 different weeks

The weeks do not have to be consecutive. Full-time, part-time, and temporary employees generally count. Partners and properly classified independent contractors do not.

Note: For a 2026 Form 940, the employer does not check only 2026. The employer must also look back to 2025. If the employer met either general FUTA condition in 2025 or 2026, Form 940 may be required.

Household and agricultural employers use separate FUTA filing requirements.

• A household employer may be subject to FUTA after paying $1,000 or more in household cash wages during any calendar quarter in the current or prior calendar year.
• Agricultural employers generally use the $20,000 quarterly cash-wage condition or the 10-farmworker, 20-week condition for the current or prior calendar year.

Form 940 may be required even if the FUTA tax due is low, as long as a filing condition is met.

Form 940 Due Date and Filing Rules

Form 940 is an annual return, not a quarterly return. For 2026 wages, Form 940 is normally due February 1, 2027, because January 31 falls on a Sunday. Only employers that made all required FUTA deposits on time and in full have until February 10, 2027, to file the annual Form 940.

The filing deadline tells employers when to submit the annual Form 940, whereas deposit rules tell employers when FUTA tax must be paid during the year.

FUTA Deposit Rules & When to Pay

The due date for filing Form 940 is not the same as the due date for depositing the federal unemployment tax. Here’s how the deposit schedule works:

Employers review FUTA tax at the end of each quarter.

• If the total FUTA tax owed for the quarter, plus any amount carried over from earlier quarters, is $500 or less, the employer carries it forward to the next quarter.
• If the FUTA tax owed for the quarter, plus any amount carried over from earlier quarters, is more than $500, the employer must deposit it by electronic funds transfer. The deposit is due by the last day of the month after that quarter ends.

At year-end, if the fourth-quarter FUTA tax plus any carried-over amount is $500 or less, the employer may generally pay it with Form 940 instead of making a separate deposit.

What Employers Need Before Filing Form 940

Employee-level payroll records and state unemployment reports are the two most important items needed for filing Form 940.

Before preparing Form 940, employers need the following information:

• Business name, EIN, address, tax year, and return status
• Total payments made to employees
• Payments excluded from FUTA wages
• Wages above the $7,000 wage base for each employee
• Total FUTA-taxable wages and quarterly liability
• FUTA deposits made and any overpayment applied from a prior year
• State unemployment wages, rates, payments, and payment dates
• Schedule A details, if required
• Authorized signer information

Notes:
Electronic filers should have an approved signature method ready. Depending on the filing arrangement, this may involve a 94x Online Signature PIN or an authorization form used with an electronic return originator.

When calculating FUTA-taxable wages for Form 940, the $7,000 wage base must be applied separately to each employee, not as one combined limit for total payroll.

How State Unemployment Tax Affects FUTA

Employers can usually reduce their federal FUTA tax if they also paid state unemployment tax.

Form 940 does not look only at federal FUTA wages. It also takes into account whether state unemployment tax was paid correctly and on time.

For example, an employer may start with FUTA tax calculated at 6%. If the employer qualifies for the full state unemployment tax credit, the effective FUTA rate is usually reduced to 0.6%.

The full credit may be reduced if:

• State unemployment tax was paid late,
• Some FUTA-taxable wages were not taxed by the state unemployment system, or
• The employer paid wages in a credit-reduction state.

When Is Schedule A Required?

Schedule A is added to Form 940 when the IRS needs state-by-state FUTA information. That usually happens for two reasons:

First, the employer was required to pay state unemployment tax in more than one state. Schedule A helps show the wages and credit details by state.

Second, the employer paid wages subject to the unemployment tax laws of a credit-reduction state.

A credit-reduction state is a state that has certain unpaid federal unemployment loans. Because of that, employers in that state get a smaller FUTA credit, so they may owe more FUTA tax.

Employers should use the final Schedule A for the year they are filing instead of reusing an old Schedule A list because credit-reduction states and rates can change each year.

Common Form 940 Filing Scenarios

Common Form 940 Filing Errors

Employers can reduce correction work by checking thoroughly and avoiding these errors before submission:

• Using an incorrect EIN, business name, or tax year
• Applying the $7,000 wage base to the total payroll instead of each employee
• Including payments made to independent contractors
• Misclassifying taxable payments as FUTA-exempt
• Claiming the full state credit when contributions were paid late
• Omitting Schedule A when it is required
• Reporting deposits as liability, or liability as deposits
• Not marking the amended or final return
• Not tracking the filing until the IRS accepts it

Notes:

• Penalties may apply if required FUTA deposits are not made on time or in the required amount
• An EFTPS payment is only a payment and does not satisfy reporting requirements, so employers must still file Form 940

Also, in keeping with the above point, note that a payment confirmation only proves that money was transferred. It does not prove that the annual return was filed.

How 1099Online Supports Form 940 Filing

1099Online gives employers a guided way to prepare and eFile Form 940.

With 1099Online:

1. Filers can choose Form 940 and enter business information
2. FUTA wage, adjustment, deposit, and balance-due details can be added manually or imported from Excel or CSV
3. Schedule A can be completed when multi-state or credit-reduction reporting applies
4. The return can be reviewed before submission
5. Form 940 can be electronically filed with the IRS
6. Filing status and IRS acceptance confirmation can be tracked after submission

The platform also supports amended Form 940 filing when a previously accepted return must be corrected.

1099Online can simplify the filing workflow; however, it is important for the employer to reconcile payroll, state unemployment payments, quarterly FUTA liability, and federal deposits before filing.

FAQs

1. Do I need to file Form 940 if my FUTA liability is under $500?

For a regular business employer, the Form 940 filing condition is met if either of these is true in the current or prior calendar year: the employer paid $1,500 or more in wages during any calendar quarter, or the employer had one or more employees for at least part of a day in 20 or more different weeks.

So yes, even if FUTA tax is only $500, Form 940 may still be required if one of those filing conditions is met. The $500 rule only affects whether a deposit is required, not whether the return must be filed.

2. Is Form 940 required if I have only one employee?

Maybe. If the employee worked fewer than 20 different weeks and was paid less than $1,500 in every quarter, Form 940 is generally not required under the regular business employer rules. But Form 940 may be required if the employer paid $1,500 or more in any quarter, or if the employee worked for part of a day in 20 or more different weeks.

3. Do independent contractors count for Form 940?

No. Payments to properly classified independent contractors are not FUTA wages.

4. When is Schedule A required?

Schedule A is generally filed with Form 940 if the employer was required to pay state unemployment tax in more than one state or paid wages subject to unemployment tax laws in a credit-reduction state.

5. Does filing Form 940 also pay FUTA tax?

No. Filing the return and making FUTA deposits are separate responsibilities. Deposits are generally required once the accumulated liability exceeds $500.

6. How do I correct an accepted or rejected Form 940?

If Form 940 was accepted and later found to contain an error, submit an amended Form 940 and mark it as amended. If the return was rejected, review the rejection reason, correct the issue, and resubmit the return. 1099Online supports amended Form 940 filing for previously accepted returns and helps filers resolve and resubmit rejected returns.