What Form 940 is for
Form 940 reports your Federal Unemployment Tax Act (FUTA) tax for the year. Together with state unemployment tax systems, FUTA provides funds for paying unemployment compensation to workers who have lost their jobs. Only employers pay FUTA tax. You never collect or deduct it from your employees' wages. The tax applies to the first $7,000 you pay each employee during a calendar year, after subtracting payments exempt from FUTA tax.
You file it once a year, but you may have to deposit the tax before you file. Employers who paid $1,500 or more in wages in a calendar quarter, or who had an employee in 20 or more different weeks, use this form. Household employers and farm employers have their own tests. Services for state and local government employers are exempt from FUTA tax, and no Form 940 is required.
Who has to file Form 940?
You must file Form 940 if you answer yes to either of two questions. Did you pay wages of $1,500 or more to employees in any calendar quarter during 2024 or 2025? Did you have one or more employees for at least some part of a day in 20 or more different weeks in 2024 or 20 or more different weeks in 2025? Count full-time, part-time, and temporary employees. If your business is a partnership, don't count its partners.
If your business was sold or transferred during the year, each employer who answered yes to at least one question files a Form 940. Made no payments to employees in 2025? Check box c at the top of the form, go to Part 7, sign it, and file it. Closed the business or stopped paying wages for good? Check box d, complete all lines that apply, sign it, and attach a statement naming who keeps the payroll records and where.
- Household employers: you pay FUTA tax only if you paid cash wages of $1,000 or more in any calendar quarter in 2024 or 2025, and you generally file Schedule H (Form 1040) instead of Form 940.
- Farm employers: file if you paid cash wages of $20,000 or more to farmworkers in any calendar quarter in 2024 or 2025, or employed 10 or more farmworkers during some part of the day in 20 or more different weeks in 2024 or 2025.
- State and local government employers: services are exempt from FUTA tax and no Form 940 is required.
- Federally recognized Indian tribal government employers: exempt if the tribe participated in the state unemployment system for the full year and follows state unemployment law.
- Section 501(c)(3) organizations exempt under section 501(a): generally not subject to FUTA tax, but they are when paying wages on behalf of a non-section 501(c)(3) organization.
When is Form 940 for 2025 due, and when do you deposit?
The due date for filing Form 940 for 2025 is February 2, 2026. If you deposited all your FUTA tax when it was due, you may file by February 10, 2026 instead. A return mailed in a properly addressed envelope with enough postage counts as filed on time if the U.S. Postal Service postmarks it by the due date, or if an IRS-designated private delivery service sends it by then. When a due date falls on a Saturday, Sunday, or legal holiday, the next business day works.
You may have to deposit before you file. If your FUTA tax is more than $500 for the calendar year, you must make at least one quarterly deposit. When your tax for a quarter is $500 or less, carry it to the next quarter and keep carrying it until the running total passes $500. Then deposit by the last day of the month after the quarter ends. All federal tax deposits must be made by electronic funds transfer.
- More than $500 undeposited on March 31: deposit by April 30
- More than $500 undeposited on June 30: deposit by July 31
- More than $500 undeposited on September 30: deposit by October 31
- More than $500 undeposited on December 31: deposit by January 31
- Fourth quarter plus any undeposited earlier amounts over $500: deposit the whole amount by February 2, 2026
How do you figure the tax on lines 3 through 12?
Line 3 is every payment you made to employees during the year, even pay that isn't taxable for FUTA. That covers salaries, wages, commissions, fees, bonuses, vacation allowances, sick pay, the value of goods and lodging, section 125 plan benefits, 401(k) contributions, and reported tips of $20 or more in a month. Line 4 backs out the payments exempt from FUTA tax that you included on line 3. Line 5 is everything you paid each employee above the $7,000 wage base, after subtracting the line 4 exempt amounts.
Add lines 4 and 5 for line 6, subtract line 6 from line 3 for line 7, then multiply line 7 by 0.006 for line 8. The FUTA rate is 6.0% for 2025, and most employers get a credit of up to 5.4% for state unemployment tax, which is why line 8 uses 0.006. Wages can be subject to FUTA tax even when your state excludes them from state unemployment tax.
- All your taxable FUTA wages excluded from state unemployment tax: multiply line 7 by 0.054 on line 9, leave lines 10 and 11 blank, and go to line 12.
- Some wages excluded, or any state unemployment tax paid after the Form 940 due date: fill out the Worksheet for Line 10 in the instructions and put its line 7 on line 10. Keep the worksheet with your records.
- Wages in a credit reduction state: fill out Schedule A (Form 940) and carry the total to line 11.
- A state experience rate under 5.4% can earn you additional credit, figured on line 3 of the worksheet.
Where do you send Form 940 and how do you pay?
You're encouraged to file electronically. On paper, the address depends on your location and on whether you include a payment. Employers in the first group of states send returns without a payment to Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999-0046. The second group uses Ogden, UT 84201-0046. Puerto Rico, the U.S. Virgin Islands, and unlisted locations use Internal Revenue Service, P.O. Box 409101, Ogden, UT 84409. Tax-exempt organizations and governments use the Ogden, UT 84201-0046 address no matter where they are.
Every paper return with a payment goes to Internal Revenue Service, P.O. Box 932000, Louisville, KY 40293-2000. Pay your balance due electronically. If line 14 is $500 or less you can pay it with your return, and if it's less than $1 you don't have to pay it. Paying by check or money order means completing Form 940-V, making the check out to "United States Treasury," and writing your EIN, "Form 940," and "2025" on it. Don't send cash and don't staple the voucher to your payment.
What's new on the 2025 Form 940?
Aggregate return filers now identify themselves on the form. If you combine amounts from multiple clients onto one Form 940, check the box for section 3504 agent, certified professional employer organization, or other third party, and attach Schedule R (Form 940). The IRS also issues Form 940 refunds by direct deposit now, following Executive Order 14247 issued on March 25, 2025. Complete lines 15c through 15e with your routing number, account type, and account number, or check the box on line 15b to apply the overpayment to your next return.
Balance due payments should be made electronically for the same reason. Form 940 return transcripts are available through your IRS business tax account for tax years 2023 and later. Moving expense and bicycle commuting reimbursements are still subject to FUTA tax for 2025, so keep them off line 4. Amended returns can be filed through Modernized e-File. To amend 2025, use the 2025 Form 940, check box a, fill in the correct amounts, sign it, and attach an explanation.
Form 940 line by line
| Line | What goes there |
|---|---|
| 1a | The two-letter USPS abbreviation for the state where you had to pay state unemployment tax, if you paid in one state only. |
| 1b | Check this box if you paid state unemployment tax in more than one state. You're a multi-state employer and must complete Schedule A (Form 940). |
| 2 | Check this box if you paid wages in a state subject to credit reduction, then fill out Schedule A (Form 940). |
| 3 | Total payments to all employees for the year, including pay that isn't taxable for FUTA, such as wages, commissions, bonuses, and fringe benefits. |
| 4 | Payments already counted on line 3 that are exempt from FUTA tax. Check boxes 4a through 4e for the type, such as fringe benefits or dependent care. |
| 5 | The total you paid each employee above the $7,000 FUTA wage base, after subtracting the exempt payments shown on line 4. |
| 7 | Total taxable FUTA wages. Subtract line 6 from line 3. |
| 8 | FUTA tax before adjustments. Multiply line 7 by 0.006. |
| 9 | If all your taxable FUTA wages were excluded from state unemployment tax, multiply line 7 by 0.054 and then go to line 12. |
| 10 | If only some wages were excluded, or you paid any state unemployment tax late, fill out the worksheet in the instructions and enter its line 7 here. |
| 12 | Total FUTA tax after adjustments. Add lines 8, 9, 10, and 11. |
| 13 | The FUTA tax you deposited for the year, including any overpayment applied from a prior year. |
| 14 | Balance due when line 12 is more than line 13. Over $500 you must deposit it. $500 or less you may pay with this return. |
| 16 | Your FUTA tax liability for each quarter, in Part 5. Fill it out only if line 12 is more than $500, and don't enter amounts you deposited. |
Source: IRS, Form 940 (Rev. 2025) and Instructions for Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. This page explains the form in plain English. It is not tax advice.