IRS Form 940 Instructions for 2022

Line by Line Form 940 Instructions for 2022 Tax Year

Updated on January 26, 2023 - 10:30 AM by Admin, TaxBandits

Form 940 is an IRS tax form that is used to report Federal Unemployment or FUTA taxes. This is filed annually by employers that pay a federal unemployment tax.These taxes are specific to employers, no amount of unemployment taxes are withheld from their employees’ pay. Here is an overview of Form 940 instructions for the 2022 tax year.

The following topics are covered in this article:

1. What is new in the IRS Form 940 Instructions for 2022?

A credit reduction state is one that borrowed from the federal government to fund their state unemployment benefits. The credit reduction rate for California, Connecticut, Illinois, and New York is 0.3% and for the U.S. Virgin Islands is 3.6%.

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2. Part 1: Information about the return filed

IRS Form 940 - Part 1

In Part 1 of Form 940, you are required to enter some basic information about your return. If there is a line that does not apply to your business, leave it blank.

  • On Line 1a, you should indicate if you are an employer that only paid unemployment taxes in one state. Do so by entering the abbreviation for this state.
  • On Line 1b, check the box if you paid unemployment taxes in more than one state. This indicates that your business is a multi-state employer, required to complete and attach 940 Schedule R.
  • On Line 2, indicate if you paid wages in a state that is considered a credit reduction state. For the 2022 tax year, the credit reduction states are California, Connecticut, Illinois, and New York and the US Virgin Islands.

3. Part 2: Determining the FUTA tax before adjustments

Form 940 - Part 2

In Part 2 of Form 940, you will be determining your FUTA tax before adjustments. Again, if there is a line that doesn't apply to your business, skip it.

  • On Line 3, enter the total payments to all of your employees, even if not all of the payments aren’t subject to FUTA taxes.
  • On Line 4, enter any payments that are exempt from FUTA taxes. For example, the payment doesn’t fit the definition of wages. Check each of these that apply:
    • Fringe benefits (4a)
    • Group-term life insurance (4b)
    • Retirement/Pension (4c)
    • Dependent care (4d)
    • Other (4e)
  • On Line 5, enter any payments made to an employee over $7,000. The FUTA wage base is $7,000, this means that any amount beyond the wage base is not subject to FUTA taxes. Subtract any payments that were exempt from FUTA taxes from this amount.
  • On Line 6, enter the subtotal. Add the amounts on Lines 4 and 5 and enter this total on Line
  • Line 7, is the total taxable FUTA wages. To get this amount, subtract Line 6 from Line 3.
  • Line 8, is the FUTA tax before adjustments, multiply Line 7 by 0.006 to get this amount.

4. Part 3: Calculating the adjustments

940 Tax Form - Part 3

In Part 3, you will be determining your adjustments. Only complete the lines that apply to your business.

  • Complete Line 9, if ALL of the taxable FUTA wages were excluded from state unemployment taxes. To do this, multiply line 7 by 0.054 and enter this amount here. Then, you can proceed to Part 4.
  • Complete Line 10, is SOME of the taxable FUTA wages were excluded from state unemployment taxes. You should also complete Line 9 if you paid any of your state unemployment taxes late.
  • If credit reduction applies, complete Line 11 as well. Enter the total from Schedule A here.

5. Part 4: Determine the FUTA tax and the balance due or overpayment

940 Form - Part 4

In Part 4, you will be determining your FUTA tax balance due and if you overpaid.

  • In Line 12, take the sum of lines 8, 9, 10, 11. Please note that if the amount on Line 9 is greater than zero, Lines 10 and 11 must be zero.
  • Enter your FUTA deposits for the year on Line 13. Include any overpayments applied from the previous year.
  • On Line 14, you will calculate the balance due. If the amount on Line 13 is smaller than the amount on Line 12, enter the difference.
  • If Line 13 is greater than Line 12, enter the difference on Line 15, this is the overpayment. Check the box to apply the overpayment to a later return, or to receive a refund.

6. Part 5: Report FUTA tax liability if after adjustment is more than $500

You only need to complete Part 5 of Form 940 if the amount you entered on Line 12 is $500 or greater, otherwise skip ahead to Part 6.

  • In Line 16, enter your FUTA liability (not deposits) for each quarter
    • 16a (Q1)
    • 16b (Q2)
    • 16c (Q3)
    • 16d (Q4)
    • Other (4e)
  • In Line 17, enter the total FUTA liability for the year by adding up the amount from each quarter.

7. Third-party designee and Signing information

Congratulations for making it all the way to Part 6! This means all the hard work is out of the way, now it’s time to e-sign Form 940.

With TaxBandits you can use your IRS-assigned Online Signature PIN, or alternatively, you can use Form 8453-EMP. In the meantime, be sure to apply for an Online Signature PIN through TaxBandits, this is a free service that we offer.

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8. What is the mailing address for Form 940?

Although e-filing is the IRS-preferred method of filing Form 940, they will accept paper copies. If you plan to file a paper copy, choose the address below that applies to your business location.

If you are in Without a payment With a payment
Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0046
Internal Revenue Service
P.O. Box 806531
Cincinnati, OH 45280-653
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0046
Internal Revenue Service
P.O. Box 932000
Louisville, KY 40293-2000
Puerto Rico, U.S. Virgin Islands Department of the Treasury
P.O. Box 409101 Ogden,
UT 84409
Internal Revenue Service
P.O. Box 932000
Louisville, KY 40293-2000
If the location of your legal residence, principal place of business, office, or agency is not listed Department of the Treasury
P.O. Box 409101 Ogden,
UT 84409
Internal Revenue Service
P.O. Box 932000
Louisville, KY 40293-2000

Click here to learn more about Form 940 mailing address.

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