IRS Form 940 for 2022: Employer’s Annual Federal Unemployment (FUTA) Tax Return

IRS Annual Form 940 - Explained

Updated on December 2, 2022 - 10:30 AM by Admin, TaxBandits

Form 940 is an IRS tax form that is filed annually with the IRS by employers. Since it’s been almost a year since your business has filed, your business may need a helpful refresher. If you are a newer business that hasn’t
filed a Form 940 before, here is a helpful guide to get you started!

The following topics are covered in this article:

1. What is IRS Form 940 and who must file it?

Form 940 is the Employer’s Annual Federal Unemployment (FUTA) Tax Return. The purpose of this form is to report Federal Unemployment Tax Acts (FUTA) taxes to the IRS.

According to the IRS, employers that paid $1500 or more to employees during any quarter of the current or prior tax year or if you hired employees for 20 weeks of the tax year. These include full-time, part-time, or seasonal/temporary employment. 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.

2. What is Credit Reduction in Form 940?

You may have heard the term, Credit Reduction, and wondered how this is relevant to Form 940. Credit reduction states have borrowed money from the federal government but have not yet paid this back.

For the tax year 2022, 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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Form 940 Schedule A

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3. Who are Multi-State Employers?

Multi-state employers are required to pay state unemployment taxes in more than one state because they hire employees across more than one state. You will need to indicate that you are a multi-state employer by checking the box on line 1b of Form 940. Additionally, you are required to complete and attach Schedule A (Form 940) to determine credit reduction information.

4. What information is required to file Form 940 for 2022?

To get started with Form 940, you will need to have your basic business information on hand.

This includes the Name, Legal address, and Employer Identification Number (EIN). You will also need to have the total payments made to all employees and figure your employer-share of FUTA taxes. It is also crucial that you have information regarding your FUTA liability deposits.

5. When is the deadline for the 940 tax Form?

The deadline to file Form 940 with the IRS for the 2022 tax year is January 31, 2023. If the due date falls on the weekend or a federal holiday then the following day is the deadline. If the FUTA taxes are deposited, then it can be filed by February 10, 2023.

File before the deadline to avoid penalties

6. Are there any penalties associated with IRS Form 940?

If your business fails to file an accurate 940 tax form with the IRS by January 31, 2023, the IRS will assess penalties.

By doing the following you can avoid unwanted interest and penalties from the IRS:

  • Deposit your FUTA taxes on time
  • File your annual Form 940 by the deadline
  • Attach the required Schedules (A, R)

For filing Form 940, select the IRS recommended way of e-filing.
With TaxBandits, file the 940 Form easily with the other supported Forms.