To fill out Form 940 for 2023, you should have the following documents on hand:
- Your payroll record for 2023
- Download Form 940 for 2023
- Download the IRS Instructions for form 940.
- Download Schedule A (Form 940) if you paid wages in more than one state or paid wages in a credit reduction state.
You can access the link to IRS Form 940 for 2023 on the IRS website. You could also access the link to these URL on our website or here.
How to track payroll in Excel?
If you don’t use payroll software, you could use a payroll spreadsheet to track your payroll. You could design it, or you could download a copy for free at ninasoap.com under Free Downloads under the name “Free Payroll Spreadsheet-Form 940-B22F2”. There are a few different ones you can choose from also. You could customize your copy to fit your business needs.
How to track wages for unemployment tax?
Your payroll spreadsheet should track payroll for each employee by month as well as the cumulative payroll for each employee for FUTA purposes.
Your payroll worksheet should also calculate FUTA on each employee payroll for you to know when your business pays FUTA tax on the first $7,000 you paid an employee after you excluded wages exempt from FUTA like fringe benefits.
Is FUTA calculated on gross or net wages?
FUTA (Federal Unemployment Tax Act) is calculated on the gross wages up to the first $7,000 paid to each employee during the year after wages exempt from FUTA are excluded.
What income is exempt from FUTA?
Payments that are not a result of work or service provided to earn these payments are excluded from wages subject to FUTA tax. They include:
Fringe benefits like value of certain meals and lodging, contributions to accident or health plans for employees, certain employer payments to health savings accounts.
Group-term life insurance
Retirement or pension plan: employer contributions to qualifies retirement plans.
Dependent care up to a certain amount
Other payments including:
Non-cash payments for agricultural labor
Payment to H-2A visa workers
Payment for certain phishing activities
Payments for work-related injury or sickness under a workers’ compensation law
Payment for domestic services if less than $1,000 was paid to all domestic workers within 1 quarter of the year.
Payment for domestic services if you file Schedule H (Form 1040).
Payments to certain statutory employees.
Payment to non-employees who are treated as your employees by your state labor department.
Payments for services provided by your parent, spouse, or child under the age of 21.
You can read more and the exceptions to the rule in the IRS instructions for 2023 Form 940 page 9.
As a note of caution our free payroll spreadsheet is not designed to automatically exclude payment exempt from FUTA tax. Use it with caution when recording your employees’ wages and customize it to fit your business requirements.
How often do employers pay FUTA?
Employers make FUTA tax deposits on a quarterly basis if their quarter FUTA tax liability is more than $500 for the quarter. The payment should be made by the end of the month that follows the quarter the payment is for. If the tax liability is $500 or less for a quarter, you are not required to make a deposit for that quarter. You roll that tax liability to the next quarter until the total FUTA tax liability is more than $500 and you deposit it by the last date of the month that follows the end of the quarter the cumulative of the FUTA tax liability if for.
You can read more in the IRS instructions for 2023 Form 940 page 5.
How do you pay FUTA tax online?
You pay FUTA tax via EFT (Electronic Funds Transfer) through your IRS EFTPS (Electronic Federal Transfer Payments System) account that you create with IRS on their website www.irs.gov.
https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system
Because you are required to make tax deposits to IRS when your FUTA liability is more than $500 a quarter, you want to be able to determine the FUTA liability for each month and for each quarter to know when you need to make a tax liability or not. Otherwise, you could also set a routine for yourself to make FUTA tax deposit every quarter even if your tax liability for a quarter is less than $500.
How do I make a FUTA deposit?
Make FUTA tax deposits by EFT (Electronic Funds Transfer) using EFTPS system (Electronic Federal Transfer Payments System). You create your EFTPS account. At the end of each quarter, you log into your EFTPS account and make a FUTA tax deposit via EFT.
How to make FUTA tax payment?
When filling out Form 940 electronically using a tax software, you could make FUTA tax payment using EFW (Electronic Funds Withdrawal) through the tax software program you used.
Don’t use EFW to make FUTA tax deposit.
You are required to make a FUTA tax deposit if your FUTA tax liability is more than $500 at the end of a quarter. You can make a deposit or make a payment if your FUTA tax liability is $500 or less when you file Form 940 Employer Annual Federal Unemployment Tax Return.
You can pay FUTA tax by check or money order with your Form 940 when you file paper return and your FUTA tax due is $500 or less.
Is FUTA paid by employer or employee? Who pays unemployment tax?
FUTA Federal Unemployment Tax is paid by the employer. Do NOT withhold unemployment tax from your employees’ wages.
What is the FUTA threshold?
The employer pays FUTA on the first $7,000 paid in wages to each employee during calendar year after you withdraw payment that are exempt from FUTA tax.
Who is required to file FUTA? When is IRS Form 940 required?
If you have paid at least $1,500 or more to any employee in any quarter in 2022 or 2023, you are required to pay FUTA. You are required to file IRS Form 940.
If you employed one or more employees a part of a day in any 20 weeks during 2022 or 2023 regardless of whether it is a temporally employee, part time employee, or full-time employee, your business is required to paid FUTA. Therefore, you are required to file IRS Form 940. If you are an LLC or partnership, don’t count partners as employees.
If Form 940 is one tax return requirement listed on your EIN letter (Form SS-4) received from IRS after you applied for EIN for your business, you are required to file Form 940 even if you paid $0 wages.
You can read more in the IRS instructions for 2023 Form 940 page 3.
What is Form 940 and when must it be filed?
Form 940 is unemployment tax return you file with IRS at the end of the calendar year to report wages paid to employees in your business, the portion of the wages that is subject to FUTA (Federal Unemployment Tax), and the amount of unemployment tax your business is required to pay for the year.
Form 940 is due by January 31st.
Where do I mail my 940 to the IRS?
On IRS Instruction for Form 940 for 2023, page 4, you would locate the IRS addresses.
If you will mail Form 940 with payment,
- Locate your state in the address column.
- Locate the address in “with a payment” column that is on the same row as your state.
- That is the address to mail your Form 940 with payment.
If you will mail Form 940 without payment,
- Locate your state in the address column.
- Locate the address in “without a payment” column that is on the same row as your state.
- That is the address to mail Form 940 if you made FUTA deposits and will not add payment to Form 940 or you have paid no wages and therefore owe $0 FUTA tax.
Is there a new for 940 for 2023?
You can find the latest version on IRS website:
Is FUTA paid quarterly or annually?
FUTA tax is paid annually or deposited quarterly. If FUTA is more than $500 during a quarter, you are required to make FUTA deposit for that quarter. If your FUTA tax is less than $500 for a quarter, you don’t need to deposit it. You carry it to the next quarter until the cumulative exceeds $500 for a quarter and you deposit the full amount.
If your FUTA in quarter 4 is more than $500, you are required to deposit it by the end of January.
If your FUTA tax in quarter 4 is $500 or less, you can deposit it or make payment with your Form 940.
Form 940 is filed once a year. FUTA payment is made once a year with FUTA Form 940 if the payment is less than $500. FUTA tax is deposited quarterly when the amount is more than $500 for the quarter.
FUTA tax rate for 2023
FUTA tax is 0.6% if you can claim the maximum credit. Otherwise, it is 6% of the $7,000 paid to each employee a year.
If you paid FUTA tax to your state by the due date of IRS Form 940 (January 31st), you could get a credit on FUTA up to 5.4%.
Your business pays 0.6% on the first $7,000 wages paid to each employee during the year after you exclude payments not subject to FUTA from the wages. Every quarter, determine the portion of the first $7,000 paid to each employee during that quarter to pay FUTA tax on it. Once you pay FUTA tax on the $7,000 wages for an employee, you don’t continue paying FUTA tax on that employee for that year.
You can check with your state department of labor or your state workforce for unemployment insurance rules and whether your business is required to contribute to your state unemployment tax.
https://oui.doleta.gov/unemploy/agencies.asp
You can also search on Google.com for your state unemployment.
If you are required to pay unemployment tax to your state, you should register with your state labor department and file and pay your unemployment taxes.
How to fill out Form 940 for 2023?
When a line is $0, leave it blank. Don’t enter 0.
You can round totals to the nearest dollar or show the cents.
Business information
Enter your business EIN on EIN line.
Name: Enter your business legal name. That is the business name you entered on the business EIN application form Line business legal name.
If you are a sole proprietor, that will be your fist and last name.
If you are a single member LLC that file Schedule C (Form 1040), you enter your business EIN and your business legal name on Form 940.
Trade name: If your business has a DBA name you filed with your state, you enter that name as Trade name.
Address: Enter your business address including street number and name, city, state, and zip code.
You can read more in the IRS instructions for 2023 Form 940 page 8.
How to fill out Form 940 if you paid no wages or have no employee in 2023?
There is a box at the right “Type of Return”.
Check box “c” no payments to employees in 2023.
You fill out form 940 with your business name and EIN on page 1 and top of page 2. Lines where amounts to be entered is $0, leave them blank.
When you are done, review and print the form 940 out. Sign and date. Make a copy of the form for your business record.
Mail the Form 940 to the IRS address on page 4 of IRS Instructions for Form 940 for 2023 column “without Payment” that corresponds to your state.
How to fill out Form 940 if you paid wages?
Form 940 Part 1
Line 1a: Enter your state abbreviation.
Line 1b: Do you pay state unemployment tax to multiple states? check the box if it applies to you otherwise, leave it blank. If you checked the box, open Schedule A (Form 940) and check the boxes next to the states you paid wages during the year. Make sure to enter your business EIN and business name of the Schedule A (Form 940).
Line 2: Did you pay wages in a state that is in the list of credit reduction states? If yes, check the box otherwise, leave it blank.
Form 940 Part 2
Line 3: Total payments to all employees: Enter the total wages paid to your employees during the year. On line 3 you will include fringe benefits… or any wages you paid that are exempt from FUTA tax.
Line 4: Payments exempt from FUTA: On line 4 check boxes for payments on line 3 that are exempt from FUTA. Enter the total amount exempt from FUTA on line 4 also.
Line 5: Enter the total payments portion made to all employees above the first $7,000 you paid each one of them.
Line 6: Wages excluded from FUTA: It is the total amount you should not pay FUTA tax on. That is the total of line 4 payment exempt from FUTA and line 5 payment paid above the first $7,000 paid to each employee.
Line 7: Taxable FUTA wages: Subtract line 6 from line 3. That is the amount to pay FUTA tax on.
Line 8: Multiply the amount subject to FUTA by 0.6%.
Form 940 Part 3
Line 9: If you are not going to pay unemployment tax to your state, multiply line 7 total taxable FUTA wages by 5.4%. Some states don’t require unemployment tax from S corporation officers (owners). If your state unemployment tax rate is 0% you do not complete Line 9. If your state unemployment tax is 0%, it doesn’t mean wages you paid employees are excluded from your state unemployment tax.
For Line 9 not to be related to you, you must pay all your state unemployment tax for the year on time by the time IRS Form 940 is due, which is January 31.
If Line 10 or Line 11 apply to you, complete them. Otherwise, leave them blank.
If your business is in a credit reduction state or you paid wages in a credit reduction state, if Line 9 applied to you as well and you completed it, do NOT complete Line 11 Credit Reduction line. You do not complete Schedule A (Form 940) in this case. It is not needed.
If your business is in a credit reduction state or you paid wages in a credit reduction state, and if Line 9 doesn’t apply to you, Complete Schedule A (Form 940) and complete Line 11 Credit Reduction line on Form 940 with the total from Schedule A (Form 940).
To know whether you live in a credit reduction state or paid wages in a credit reduction state, open Schedule A (Form 940).
IRS decide the states that are among the credit reduction states.
For these credit reduction states, Schedule A (Form 940) has fillable space next to them for the lines to be filled. For the other states on the list but are not among the credit reduction states, their lines are grey.
Form 940 Part 4
Line 12: Total FUTA: add line 8, line 9, line 10, and line 11.
Line 13: Enter the FUTA tax deposited during the year. Also, if you requested a prior year refund to be applied to the next tax return, add it.
Have a record of any tax overpayments and which tax returns they are related to for your business record.
Have a record of tax deposits you made during the year on behalf of your business and the tax returns they are related to.
Line 14: Balance due: It is the difference between line 12 total FUTA tax and line 13 total deposits. If the total deposited line 13 is less than the total tax line 12, you owe FUTA tax. You enter that difference on line 14. You can pay the FUTA tax liability with form 940 if it is $500 or less. If it is more than $500. You must make a deposit.
Line 15: If the total deposited line 13 is more than the total tax line 12, IRS owe you a refund. You enter the difference amount on line 15 instead. You check the box for IRS to keep the refund until you apply it toward a next return, or you can check the 2nd box for IRS to send you a refund instead.
Form 940 Page 2
Enter your business legal name that you have on page 1 at the top of page 2. Enter your business EIN number on page 2.
Form 940 Part 5
If your total FUTA tax on Line 12 is more than $500, you complete Line 16 to Line 17. If your Line 12 is $500 or less, leave Line 16 to Line 17 blank and go to the next part.
Line 16a to Line 17: If your FUTA tax on line 12 is more than $500, you need to enter Box 16 a to 16d FUTA tax liability for each quarter regardless of whether you made deposits during the year.
Line 17 is the total of Line 16 a to line 16 d. Line 17 should match Line 12.
It is a good idea to tailor your payroll workbook to record and track your payroll by month and calculate total payroll by quarter as well as FUTA tax for each month and each quarter especially if your total annual FUTA will be more than $500.
Form 940 Part 6
You can check “No” if you prefer IRS addresses any questions, they may have with you only.
Form 940 Part 7
Add your name, your business title, and your phone number.
Leave the Paid Preparer Use Only section alone if you are filling out Form 940 for your own business.
If you are not going to add payment to Form 940, you are done completing form 940. You don’t need to fill out Form 940 V.
Print Form 940 out.
Review it and sign and date.
Alternative electronic signature
https://www.irs.gov/irb/2005-28_IRB#RP-2005-39
Make a copy of the signed Form 940 and keep for your business record.
Put the signed Form 940 in an envelope and seal.
Look in IRS instructions for Form 940 for 2023 page 4 for the right address to use.
Where to mail Form 940 without a payment?
- Locate your state in the address column.
- Locate the address in “without a payment” column that is on the same row as your state.
- That is the address to write on the envelope.
Without Payment address that corresponds to the row where your state is listed is the address to mail Form 940 if you made FUTA deposits and will not add payment to Form 940 or if you have paid no wages during the year and therefore owe $0 FUTA tax.
Mail your Form 940 via USPS certified mail with a tracking number.
Keep the receipt with your Form 940 in your business records.
Form 940 V
If your FUTA tax on Line 14 Balance Due is $500 or less, you can make deposits via EFT (Electronic Funds Transfer) using EFTPS System or you could pay it with the Form 940.
If you decide to pay your balance due with Form 940, you must fill out Form 940V.
Form 940 V Line 1
Enter your business EIN.
Form 940 V Line 2
Enter your balance due from Form 940 Line 14.
Form 940 V Line 3
Enter your business Legal name and address as on Form 940 Page 1.
Review Form 940 V and print it out.
How to write a Payment for Form 940?
You can use money order or your business check. When you pay by check, when the payment is out of your bank account you have another proof IRS received your Form 940. Plus, you have more space on the check to write on it compared to a money order.
Make the check or money order payable to: “United State Treasury”.
Write the balance due you have on Form 940 V.
Write your business EIN number on it.
Write in the memo area: Form 940 for 2023.
Sign the check.
Review the check and make a copy of the check and the Form 940 V to keep for your business record along with Form 940.
You can fold the Form 940V full sheet of paper and add the check in one of the folds. Then add both Form 940 V and the check in a smaller envelope and write Form 940 V and check payment on the envelope.
Then you put that smaller envelope in a bigger envelope (9 in x 12 in) where you put your Form 940.
Then you seal the big envelope. That is how I do it so that I don’t have loose papers moving around in the bigger envelope.
Do not staple Form 940V to anything in the envelope. Do not staple the check to anything in the envelope. You should have Form 940, Form 940 V, and check payment in the envelope to mail to IRS.
Where do you mail Form 940 with Payment?
On IRS Instruction for Form 940 for 2023, page 4 you would locate the IRS addresses.
- Locate your state in the address column.
- Locate the address in “with a payment” column that is on the same row as your state.
- That is the address to mail your Form 940, Form 940 V, and the payment check or money order.
Mail your Form 940 with form 940V and payment via USPS certified mail with a tracking number. Keep the receipt with your Form 940 in your business records.
You can access the link to IRS Form 940 for 2023 and its instructions on IRS website or from our website “Federal Tax Forms and Instructions Links” (https://ninasoap.com/federal-tax-forms-and-instructions/federal-tax-forms-and-instructions-links/).
Conclusion: How to Fill out IRS Form 940 for 2023 Employer’s Annual Federal Unemployment Tax Return FUTA
The video and article demonstrate step by step how to complete Form 940, Form 940 V, and payment for 2023 and the right address to mail your Form 940.
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