What is on Form 940?

Answer 1

Form 940 is Employer's Annual Federal Unemployment (FUTA) Tax Return. It's a two-page form for reporting the employer's federal unemployment tax liability on the first $7,000 paid to each employee during the calendar year.

Part 1 asks if the employer also has paid state unemployment tax, in addition to FUTA. Part 2 determines the employer's FUTA tax on the total taxable FUTA wages (up to $7,000 per employee) at .8 percent (.008). Part 3 determines if the employer can receive a credit on the FUTA tax rate for having paid state unemployment tax. Part 4 determines if the employer has a balance due or an overpayment on the FUTA already paid for the year.