What is IRS Form 940?

Form 940 is used to report the Employer’s Annual Federal Unemployment Tax (FUTA). The FUTA helps provide unemployment compensation to workers who have lost their jobs. Employers pay the FUTA tax without deducting from employee wages. An employer’s FUTA tax payment is calculated as 6% of the first $7,000 each of their employees earn. If employers pay their state unemployment taxes (SUTA) on time, the FUTA tax can be lowered to 0.6%.

All employers who have paid a W-2 employee $1,500 or more or have had an employee on payroll for more than 20 weeks are required to file Form 940 and make the FUTA payment that goes with it.

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The below information is needed to file 940 with the IRS. To save the filing time and reduce errors, keep the required information handy. Also, make sure you report the correct information before filing the form with the IRS.

• Business Details: Name, Address, and EIN
• Total payments made to all employees
• Adjustments for state exclusions (if applicable)
• FUTA Tax
• Overpayments or Balances Due
• FUTA liability deposits

Form 940 is due on January 31st. When the deadline falls on a holiday or weekend, the deadline is pushed to the next business day. For 2023 filing, the Form 940 deadline is January 31, 2024.

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The penalty for late filing Form 940 is 5% of the tax that was due. This amount continues to accrue on a monthly basis until it is paid back in full. The IRS also penalizes employers for late or partial payments. Employers can be charged from 2-15% of their unpaid tax, depending on how late their payment is.

Payers can mail a paper copy of Form 940 to the IRS or file 940 electronically. The IRS recommends e-filing because it is faster, safer, and more efficient.. Most employers find it simpler to file their Form 940 and pay taxes electronically.

If you choose to file by paper, it is hard to track the status of your return, and you will never know whether your return has been accepted or rejected. Also, the filing cost is higher compared to e-filing, where you have to pay the filing
cost alone.

With ExpressEfile, payers can E-File Form 940 in 3 simple steps.

• 1. Enter the form information
• 2. Review your form and make changes, if required
• 3. Transmit it directly to the IRS

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