IRS form 940 is a document that is required to be filed annually by businesses that hire and retain employees. Through this form, businesses report their annual federal unemployment taxes. These taxes do not get deducted from employee salaries. There are many state unemployment programs in the U.S. that together with the federal unemployment taxes, recompense workers who are no longer employed or have lost their jobs. Form 940 is furnished by employers to the Federal Reserve, reporting the amount of Federal Unemployment Tax (FUTA) that will be paid by them for their employees.
Who is it for?
Generally all business employers will pay FUTA taxes if they have at least one employee on at least one day in 20 different weeks in a year, or if they remunerate a sum exceeding $1,500 in salaries in any “calendar quarter” (or the 4 three-month periods) of the year. Household and agricultural employers will be governed by separate rules. Household employers will be liable to pay FUTA taxes if they pay more than $1,000 in total wages in any quarter. Whereas the latter will pay FUTA taxes on hired help only if they pay over $20,000 in wages in any quarter or if they have more than 10 farm workers on at least one day in 20 different weeks.