The FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs.
Only employers pay FUTA tax. They do not deduct FUTA tax from their employees’ wages.
The FUTA tax only applies to the first $7,000 employers pay to each worker during the calendar tax year after subtracting any payments exempt from FUTA.
The deadline for filing Form 940 for 2017 is
Note: If you fully deposited all your FUTA tax when it was due, you have until February 12, 2018 to file Form 940.
A state that hasn’t repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state”.
Credit against federal unemployment tax will be reduced based on the credit reduction rate for the for that credit reduction state. Use Schedule A (form 940) to calculate the credit reduction.
Failure to file Form 940 by the deadline will result in a 5% penalty of the tax due. This amount will accrue on a monthly basis until the amount owed is paid in full. The IRS will also penalize you for making a late payment or for not paying the full amount you owe. You will be charged 2-15% of the unpaid tax depending on how many days late your payment is.