940 Return Definition

Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, is a type of return employers use to report their FUTA tax liability.

940 Return Extended Definition
Employers must pay federal unemployment, or FUTA, tax on wages paid to each employee. Use Form 940 to report wages paid to employees, wages excluded from FUTA tax, and your total FUTA tax liability.

FUTA tax is an employer-only tax, meaning you don’t withhold it from employee wages. Federal and state unemployment taxes fund unemployment benefits for employees who’ve lost their jobs.

File Form 940 if you paid wages of at least $1,500 to any employee during the standard calendar year or if you had an employee work anytime during 20 or more weeks.

In addition to filing the 940 return, you must also make timely FUTA tax deposits with the IRS.

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Last Updated By

Rachel Blakely-Gray | Feb 14, 2023