Form 940 - Credit Reduction IRS Changes for 2022
Updated on December 2, 2022 - 10:30 AM by Admin, TaxBandits
IRS Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, is used to report Federal Unemployment Tax Acts (FUTA) taxes to the IRS.
According to the IRS, employers who fall under these categories must file Form 940.
- Employers who paid $1500 or more to employees during any quarter of the current or prior tax year
- If you hired employees for 20 weeks of the tax year.
It is also important to note that states have their own unemployment taxes, referred to as SUTA. This will factor into completing your Form 940.
The following topics are covered in this article:
1. What are the Form 940 Credit Reduction States for 2022?
Credit reduction states are states that have borrowed money from the federal government but have not yet paid this back. For the 2022 tax year, the Form 940 credit reduction states are California, Connecticut, Illinois, and New York. This means that if you paid wages that are subject to this state’s unemployment compensation laws, you can apply a credit reduction of 0.3%. If you are located in the US Virgin Islands, the credit reduction rate is 3.6%, you can indicate this by checking the box on line 2 of Form 940 and completing 940 Schedule A.
Visit https://www.taxbandits.com/payroll-forms/form-940-irs-changes/ to learn more about Form 940 Schedule A.
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2. Are there any IRS changes to the Form 940 for 2022?
Employers in the following states are subject to higher FUTA taxes due to the credit reduction:
| States | 2020 | 2021 | 2022 |
|---|---|---|---|
| California (CA) | 0.0% | 0.0% | 0.3% |
| Connecticut (CT) | - | - | 0.3% |
| Illinois (IL) | - | - | 0.3% |
| New York (NY) | - | - | 0.3% |
| U.S. Virgin Islands (VI) | 3.0% | 3.3% | 3.6% |
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3. Due date to file Form 940
The Federal Unemployment Tax Return must be filed annually. The deadline to file Form 940 with the IRS for the 2022 tax year is January 31, 2023.
Note: If you have deposited all the FUTA taxes on time, you can file Form 940 by February 10, 2023, instead.
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4. How to e-file Form 940 with TaxBandits?
Follow these 3 simple steps to file Form 940 electronically with TaxBandits:
- Step:1 Enter Form 940 Details
- Step:2 Review the Summary Form 940
- Step:3 Pay the filing fee & transmit the completed Form to the IRS
Visit, https://www.taxbandits.com/payroll-forms/e-file-form-940-online/ to learn more about Form 940 online filing.
TaxBandits, an IRS authorized e-file provider, offers a better solution for 940 filing at the lowest price of just $4.95/form.
TaxBandits streamlines your filing and makes the process more convenient, especially by supporting both the 94x online signature PIN and Form 8453-EMP support. Plus, you will receive updates on the IRS status of your form.
