Form 940 vs 941: What’s the Difference?

Form 940 and Form 941 are both IRS payroll tax forms, but they serve different purposes. Form 940 is filed annually to report Federal Unemployment (FUTA) tax, while Form 941 is filed quarterly to report federal income tax withholding, Social Security, and Medicare taxes.

By Charles Hardy | Last Updated:
August 13, 2026

See Key Differences
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Key takeaways

  • Form 940 is filed annually to report Federal Unemployment (FUTA) tax.
  • Form 941 is filed quarterly to report federal income tax withholding, Social Security, and Medicare taxes.
  • Different purposes: Form 940 reports FUTA tax, which is paid only by the employer, while Form 941 reports payroll taxes, including federal income tax withholding, Social Security, and Medicare (paid by both employer and employee).
  • Most employers need to file both Form 940 and 941 to stay compliant with IRS payroll
    tax requirements.

What is the difference between 940 and 941?

Form 940 is used to report FUTA taxes, while Form 941 is used to report federal income tax withheld, Social Security, and Medicare tax withholding.

Check out the table below to find the key differences between Form 940 and 941.

Form 940 Form 941
Purpose Reports Federal Unemployment (FUTA) tax paid by
the employer		 Reports payroll taxes, including income tax withholding, Social Security,
and Medicare
Filing Frequency Filed annually Filed quarterly
Due Dates January 31 April 30, July 31, October 31, January 31
Taxes Reported Employer-paid FUTA tax only Social Security and Medicare taxes paid by both employer
and employee
Who is Liable

Employer only

Paid by the employer; it is not withheld from the employee's wages

Employer and employee

Both employee and employer contribute to FICA tax

Who is required to file Form 940 and Form 941?

Most employers are required to file both Form 940 and Form 941, but the filing requirements differ based on wages
and employment.

  • Form 940 must be filed if you:
    • Paid $1,500 or more in wages in any calendar quarter, or
    • Had at least one employee for 20 or more weeks in a year
  • Form 941 must be filed if you:
    • Pay wages subject to federal income tax withholding, or
    • Withhold Social Security and Medicare taxes

In general, if your business has employees and processes payroll, you’ll likely need to file Form 941 quarterly and Form
940 annually.

What are the common errors on Form 940 and 941, and how to avoid them?

Filing Form 940 or Form 941 incorrectly can lead to delays or penalties. Know the common mistakes and simple ways to avoid them.

Common Error How to Avoid It
Filing the wrong form Use Form 940 for FUTA tax and Form 941 for federal income, Social Security, and Medicare taxes. Verify the filing requirement before submitting.
Missing filing deadlines Track the annual Form 940 and quarterly Form 941 deadlines. Review and submit each return on time to
avoid penalties.
Incorrect tax calculations Reconcile payroll records and verify taxable wages, tax rates, and total tax amounts. Correct discrepancies before filing.
Misreporting taxable wages Review FUTA-taxable wages for Form 940 and taxable payroll wages for Form 941. Ensure reported amounts match payroll records.
Incorrect employee tax withholding Verify federal income tax, Social Security, and Medicare amounts against payroll records. Correct any discrepancies before filing.
Failing to reconcile payroll records Compare payroll reports with the amounts reported on Forms 940 and 941. Resolve differences before submitting the return.

How do you file Form 940 and Form 941?

The IRS allows employers to file Form 940 and Form 941 either electronically (e-file) or by mailing paper forms.

However, the IRS strongly encourages electronic filing, as it is faster, more accurate, and provides confirmation once the return is accepted. Electronic filing also allows you to submit payments securely along with your return.

For businesses managing payroll taxes regularly, using an IRS-authorized e-file provider can simplify the process by:

  • Reducing errors
  • Ensuring compliance with filing requirements
  • Providing real-time status updates

If you’re looking for a faster and more reliable way to file, you can e-file Form 940 and 941 online with TaxBandits and manage your filings in
one place.

Learn more

How do I correct errors on Form 940 and 941?

If you’ve made an error on Form 940 or Form 941, you can correct it easily by filing the appropriate amendment form.

  • Form 940: File an amended Form 940 to correct errors on a previously filed return, such as incorrect FUTA wages or tax amounts.
  • Form 941: File Form 941-X to correct errors on a previously filed Form 941, including incorrect wages, tax withholdings, or Social Security and Medicare taxes.
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Starting with the 2024 tax year, the IRS requires Form 940 and 941 corrections to be e-filed electronically, making it easier to submit corrected returns and track their filing status.

Real-Life Scenarios: Choose the Right Filing Form for Your Business

Review common employer scenarios to determine the right filing between Form 940 and Form 941.

Scenario Form to File Why?
No Payroll or Taxes to Report Form 940 or Form 941 Employers generally must file Form 941 for each quarter unless the IRS has notified them that they qualify for an exception.
Household Employer Schedule H (Form 1040) Household employers generally report employment taxes on Schedule H rather than
Form 941.
Seasonal Employer Form 941 Report wages and payroll taxes for the applicable quarters.
Business Closed During the Year Final Form 940 and/or Form 941 File the applicable final return when the business stops paying wages.
Employer in a Credit Reduction State Form 940 Report the FUTA tax affected by the credit reduction.
Employees Paid During the Quarter Form 941 Report federal income tax, Social Security, and Medicare taxes withheld from wages.
Annual FUTA Tax Reporting Form 940 Report the employer’s annual FUTA tax liability.
Error Found After Filing Amended Form 940 or Form 941-X Correct Form 940 errors with an amended return and Form 941 errors with Form 941-X.
Employer Has Both FUTA and Payroll
Tax Obligations		 Form 940 and Form 941 Use Form 940 for FUTA tax and Form 941 for federal
payroll taxes.
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