2023

Instructions for Form 940

Employer's Annual Federal Unemployment (FUTA) Tax Return

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code 

unless otherwise noted.

Future Developments

For the latest information about developments related to 

Form 940 and its instructions, such as legislation enacted 

after they were published, go to IRS.gov/Form940.

What's New

Credit reduction state. A state that hasn't repaid money 

it borrowed from the federal government to pay 

unemployment benefits is called a credit reduction state. 

The U.S. Department of Labor determines these states. If 

an employer pays wages that are subject to the 

unemployment tax laws of a credit reduction state, that 

employer must pay additional federal unemployment tax 

when filing its Form 940.

For 2023, there are credit reduction states. If you paid 

any wages that are subject to the unemployment 

compensation laws of a credit reduction state, your credit 

against federal unemployment tax will be reduced based 

on the credit reduction rate for that credit reduction state. 

Use Schedule A (Form 940) to figure the credit reduction. 

For more information, see the Schedule A (Form 940) 

instructions or go to IRS.gov.

New Form 940 (sp) available in Spanish for tax year 

2023. All employers, including employers in Puerto Rico 

and the U.S. Virgin Islands, have the option to file new 

Form 940 (sp) for tax year 2023. Form 940-PR is no longer 

available to file for tax years beginning after December 31, 

2022.

Electronically filing an amended Form 940. Beginning 

sometime in 2024, the IRS expects to make filing an 

amended Form 940 available as part of Modernized e-File 

(MeF). Monitor IRS.gov for more information on 

availability.

Reminders

Moving expense and bicycle commuting reimbursements are subject to FUTA tax. The Tax Cuts and Jobs 

Act (P.L. 115-97) suspends the exclusion for qualified 

moving expense reimbursements from your employee's 

income under section 132 and the deduction from the 

employee's income under section 217, as well as the 

exclusion for qualified bicycle commuting reimbursements 

from your employee's income under section 132, 

beginning after 2017 and before 2026. Therefore, moving 

expense and bicycle commuting reimbursements aren't 

exempt from FUTA tax during this period. Don't include 

moving expense or bicycle commuting reimbursements on 

Form 940, line 4. For more information about fringe 

benefits, see Pub. 15-B.

Certification program for professional employer organizations (PEOs). The Stephen Beck, Jr., Achieving a 

Better Life Experience Act of 2014 required the IRS to 

establish a voluntary certification program for PEOs. 

PEOs handle various payroll administration and tax 

reporting responsibilities for their business clients and are 

typically paid a fee based on payroll costs. To become and 

remain certified under the certification program, certified 

professional employer organizations (CPEOs) must meet 

various requirements described in sections 3511 and 

7705 and related published guidance. Certification as a 

CPEO may affect the employment tax liabilities of both the 

CPEO and its customers. A CPEO is generally treated for 

employment tax purposes as the employer of any 

individual who performs services for a customer of the 

CPEO and is covered by a contract described in section 

7705(e)(2) between the CPEO and the customer (CPEO 

contract), but only for wages and other compensation paid 

to the individual by the CPEO. To become a CPEO, the 

organization must apply through the IRS Online 

Registration System. For more information or to apply to 

become a CPEO, go to IRS.gov/CPEO.

For wages paid to a work site employee, a CPEO is 

eligible for the credit for state unemployment tax paid to a 

state unemployment fund, whether the CPEO or a 

customer of the CPEO made the contribution. In addition, 

a CPEO is allowed the additional credit if the CPEO is 

permitted, under state law, to collect and remit 

contributions to the state unemployment fund with respect 

to a work site employee. For more information on the 

credit, see Credit for State Unemployment Tax Paid to a 

State Unemployment Fund, later.

CPEOs must generally file Form 940 and Schedule R 

(Form 940), Allocation Schedule for Aggregate Form 940 

Filers, electronically. For more information about a CPEO’s 

requirement to file electronically, see Rev. Proc. 2023-18, 

2023-13 I.R.B 605, available at IRS.gov/irb/

2023-13_IRB#REV-PROC-2023-18.

Outsourcing payroll duties. Generally, as an employer, 

you're responsible to ensure that tax returns are filed and 

deposits and payments are made, even if you contract 

with a third party to perform these acts. You remain 

responsible if the third party fails to perform any required 

action. Before you choose to outsource any of your payroll 

and related tax duties (that is, withholding, reporting, and 

paying over social security, Medicare, FUTA, and income 

taxes) to a third-party payer, such as a payroll service 

provider or reporting agent, go to IRS.gov/

OutsourcingPayrollDuties for helpful information on this 

topic. If a CPEO pays wages and other compensation to 

an individual performing services for you, and the services 

are covered by a CPEO contract, then the CPEO is 

generally treated for employment tax purposes as the 

employer, but only for wages and other compensation 

Nov 28, 2023 Cat. No. 13660I
paid to the individual by the CPEO. However, with respect 

to certain employees covered by a CPEO contract, you 

may also be treated as an employer of the employees 

and, consequently, may also be liable for federal 

employment taxes imposed on wages and other 

compensation paid by the CPEO to such employees. For 

more information on the different types of third-party payer 

arrangements, see section 16 of Pub. 15.

Aggregate Form 940 filers. Approved section 3504 

agents and CPEOs must complete Schedule R (Form 

940) when filing an aggregate Form 940. Aggregate 

Forms 940 are filed by agents of home care service 

recipients approved by the IRS under section 3504. To 

request approval to act as an agent for an employer, the 

agent files Form 2678 with the IRS unless you’re a state or 

local government agency acting as an agent under the 

special procedures provided in Rev. Proc. 2013-39, 

2013-52 I.R.B. 830, available at IRS.gov/irb/

2013-52_IRB#RP-2013-39.

Aggregate Forms 940 are also filed by CPEOs 

approved by the IRS under section 7705. CPEOs file Form 

8973, Certified Professional Employer Organization/

Customer Reporting Agreement, to notify the IRS that they 

started or ended a service contract with a customer. 

CPEOs must generally file Form 940 and Schedule R 

(Form 940) electronically. For more information about a 

CPEO's requirement to file electronically, see Rev. Proc. 

2023-18.

If you change your business name, business address, or responsible party. Notify the IRS immediately 

if you change your business name, business address, or 

responsible party.

• Write to the IRS office where you file your returns (using 

the Without a payment address under Where Do You File, 

later) to notify the IRS of any business name change. See 

Pub. 1635 to see if you need to apply for a new employer 

identification number (EIN).

• Complete and mail Form 8822-B to notify the IRS of a 

business address or responsible party change. Don’t mail 

Form 8822-B with your Form 940. For a definition of 

“responsible party,” see the Instructions for Form SS-4.

Federal tax deposits must be made by electronic 

funds transfer (EFT). You must use EFT to make all 

federal tax deposits. Generally, an EFT is made using the 

Electronic Federal Tax Payment System (EFTPS). If you 

don't want to use EFTPS, you can arrange for your tax 

professional, financial institution, payroll service, or other 

trusted third party to make electronic deposits on your 

behalf. Also, you may arrange for your financial institution 

to initiate a same-day wire payment on your behalf. 

EFTPS is a free service provided by the Department of the 

Treasury. Services provided by your tax professional, 

financial institution, payroll service, or other third party 

may have a fee.

For more information on making federal tax deposits, 

see section 11 of Pub. 15. To get more information about 

EFTPS or to enroll in EFTPS, go to EFTPS.gov, or call 

800-555-4477 or 800-244-4829 (Spanish). To contact 

EFTPS using Telecommunications Relay Services (TRS) 

for people who are deaf, hard of hearing, or have a speech 

disability, dial 711 and then provide the TRS assistant the 

800-555-4477 number above or 800-733-4829. Additional 

information about EFTPS is also available in Pub. 966.

Electronic filing and payment. Businesses can enjoy 

the benefits of filing and paying their federal taxes 

electronically. Whether you rely on a tax professional or 

handle your own taxes, the IRS offers you convenient and 

secure programs to make filing and paying easier. Spend 

less time worrying about taxes and more time running your 

business. Use e-file and EFTPS to your benefit.

• For e-file, go to IRS.gov/EmploymentEfile for additional 

information. A fee may be charged to file electronically.

• For EFTPS, go to EFTPS.gov or call one of the numbers 

provided under Federal tax deposits must be made by 

electronic funds transfer (EFT), earlier.

Electronic funds withdrawal (EFW). If you file Form 

940 electronically, you can e-file and use EFW to pay the 

balance due in a single step using tax preparation 

software or through a tax professional. However, don't use 

EFW to make federal tax deposits. For more information 

on paying your taxes using EFW, go to IRS.gov/EFW.

Credit or debit card payments. You may pay your FUTA 

tax shown on line 14 using a credit or debit card. Your 

payment will be processed by a payment processor who 

will charge a processing fee. Don't use a credit or debit 

card to pay taxes that are required to be deposited (see 

When Must You Deposit Your FUTA Tax, later). For more 

information on paying your taxes with a credit or debit 

card, go to IRS.gov/PayByCard.

Online payment agreement. You may be eligible to 

apply for an installment agreement online if you can't pay 

the full amount of tax you owe when you file your return. 

For more information, see What if you can't pay in full, 

later.

Disregarded entities and qualified subchapter S subsidiaries (QSubs). Business entities that are 

disregarded as separate from their owner, including 

QSubs, are required to withhold and pay employment 

taxes and file employment tax returns using the name and 

EIN of the disregarded entity. For more information, see 

Disregarded entities, later.

State unemployment information. When you 

registered as an employer with your state, the state 

assigned you a state reporting number. If you don't have a 

state unemployment account and state experience tax 

rate, or if you have questions about your state account, 

you must contact your state unemployment agency. For a 

list of state unemployment agencies, go to the U.S. 

Department of Labor's website at oui.doleta.gov/

unemploy/agencies.asp.

Photographs of missing children. The IRS is a proud 

partner with the National Center for Missing & Exploited 

Children® (NCMEC). Photographs of missing children 

selected by the Center may appear in instructions on 

pages that would otherwise be blank. You can help bring 

these children home by looking at the photographs and 

calling 1-800-THE-LOST (1-800-843-5678) if you 

recognize a child.

How Can You Get More Help?

If you want more information about this form, see Pub. 15, 

go to IRS.gov, or call the Business and Specialty Tax Line 

-2- Instructions for Form 940 (2023)
toll free at 800-829-4933 or 800-829-4059 (TDD/TTY for 

persons who are deaf, hard of hearing, or have a speech 

disability), Monday–Friday from 7:00 a.m. to 7:00 p.m. 

local time (Alaska and Hawaii follow Pacific time; 

employers in Puerto Rico receive service from 8:00 a.m. 

to 8:00 p.m. local time).

For a list of related employment tax topics, go to 

IRS.gov/EmploymentTaxes. You can order forms, 

instructions, and publications at IRS.gov/OrderForms.

General Instructions

What's the Purpose of Form 940?

These instructions give you some background information 

about Form 940. They tell you who must file the form, how 

to fill it out line by line, and when and where to file it.

Use Form 940 to report your annual Federal 

Unemployment Tax Act (FUTA) tax. Together with state 

unemployment tax systems, the FUTA tax provides funds 

for paying unemployment compensation to workers who 

have lost their jobs. Most employers pay both a federal 

and a state unemployment tax. Only employers pay FUTA 

tax. Don't collect or deduct FUTA tax from your 

employees' wages.

The FUTA tax applies to the first $7,000 you pay to 

each employee during a calendar year after subtracting 

any payments exempt from FUTA tax.

Who Must File Form 940?

Except as noted below, if you answer “Yes” to either one of 

these questions, you must file Form 940.

• Did you pay wages of $1,500 or more to employees in 

any calendar quarter during 2022 or 2023?

• Did you have one or more employees for at least some 

part of a day in any 20 or more different weeks in 2022 or 

20 or more different weeks in 2023? Count all full-time, 

part-time, and temporary employees. However, if your 

business is a partnership, don't count its partners.

If your business was sold or transferred during the year, 

each employer who answered “Yes” to at least one 

question above must file Form 940. However, don't include 

any wages paid by the predecessor employer on your 

Form 940 unless you’re a successor employer. For details, 

see Successor employer under Type of Return, later.

If you’re not liable for FUTA tax for 2023 because you 

made no payments to employees in 2023, check box c in 

the top right corner of the form. Then, go to Part 7, sign 

the form, and file it with the IRS.

If you won’t be liable for filing Form 940 in the future 

because your business has closed or because you 

stopped paying wages, check box d in the top right corner 

of the form. For more information, see Final: Business 

closed or stopped paying wages under Type of Return, 

later.

For Employers of Household Employees . . .

If you’re a household employer, you must pay FUTA tax on 

wages that you paid to your household employees only if 

you paid cash wages of $1,000 or more in any calendar 

quarter in 2022 or 2023.

A household employee performs household work in a:

• Private home,

• Local college club, or

• Local chapter of a college fraternity or sorority.

Generally, employers of household employees must file 

Schedule H (Form 1040) instead of Form 940.

However, if you have other employees in addition to 

household employees, you can choose to include the 

FUTA taxes for your household employees on Form 940 

instead of filing Schedule H (Form 1040). If you choose to 

include household employees on your Form 940, you 

must also file Form 941, Employer's QUARTERLY Federal 

Tax Return; Form 943, Employer's Annual Federal Tax 

Return for Agricultural Employees; or Form 944, 

Employer's ANNUAL Federal Tax Return, to report social 

security, Medicare, and any withheld federal income taxes 

for your household employees. See Pub. 926 for more 

information.

For Agricultural Employers . . .

File Form 940 if you answer “Yes” to either of these 

questions.

• Did you pay cash wages of $20,000 or more to 

farmworkers during any calendar quarter in 2022 or 2023?

• Did you employ 10 or more farmworkers during some 

part of the day (whether or not at the same time) during 

any 20 or more different weeks in 2022 or 20 or more 

different weeks in 2023?

Count wages you paid to aliens who were admitted to 

the United States on a temporary basis to perform 

farmwork (workers with H-2A visas). However, wages paid 

to “H-2A visa workers” aren't subject to FUTA tax. See 

Pub. 51 for more information.

For Indian Tribal Governments . . .

Services rendered by employees of a federally recognized 

Indian tribal government employer (including any 

subdivision, subsidiary, or business enterprise wholly 

owned by the tribe) are exempt from FUTA tax and no 

Form 940 is required. However, the tribe must have 

participated in the state unemployment system for the full 

year and be in compliance with applicable state 

unemployment law. For more information, see section 

3309(d).

For Tax-Exempt Organizations . . .

Religious, educational, scientific, charitable, and other 

organizations described in section 501(c)(3) and exempt 

from tax under section 501(a) generally aren't subject to 

FUTA tax. However, a section 501(c)(3) organization is 

subject to FUTA tax when paying wages to employees on 

behalf of a non-section 501(c)(3) organization (for 

example, a section 501(c)(3) organization paying wages to 

employees of a related non-section 501(c)(3) 

organization, a section 501(c)(3) organization that is a 

section 3504 agent paying wages on behalf of a 

non-section 501(c)(3) organization, a section 501(c)(3) 

organization that is a common paymaster paying wages 

on behalf of a non-section 501(c)(3) organization, etc.).

Instructions for Form 940 (2023) -3-
For State or Local Government Employers . . .

Services rendered by employees of a state, or a political 

subdivision or instrumentality of the state, are exempt from 

FUTA tax and no Form 940 is required.

When Must You File Form 940?

The due date for filing Form 940 for 2023 is January 31, 

2024. However, if you deposited all your FUTA tax when it 

was due, you may file Form 940 by February 12, 2024.

If we receive Form 940 after the due date, we will treat 

Form 940 as filed on time if the envelope containing Form 

940 is properly addressed, contains sufficient postage, 

and is postmarked by the U.S. Postal Service on or before 

the due date, or sent by an IRS-designated private 

delivery service (PDS) on or before the due date. 

However, if you don't follow these guidelines, we will 

generally consider Form 940 filed when it is actually 

received. For more information about PDSs, see Where 

Do You File, later.

If any due date for filing falls on a Saturday, Sunday, or 

legal holiday, you may file your return on the next business 

day.

Where Do You File?

You’re encouraged to file Form 940 electronically. Go to 

IRS.gov/EmploymentEfile for more information on 

electronic filing. If you file a paper return, where you file 

depends on whether you include a payment with Form 

940. Mail your return to the address listed for your location 

in the table that follows.

PDSs can't deliver to P.O. boxes. You must use the U.S. 

Postal Service to mail an item to a P.O. box address. Go to 

IRS.gov/PDS for the current list of PDSs. For the IRS 

mailing address to use if you’re using a PDS, go to 

IRS.gov/PDSstreetAddresses. Select the mailing address 

listed on the webpage that is in the same state as the 

address to which you would mail returns filed without a 

payment, as shown in the table that follows.

Mailing Addresses for Form 940

If you’re 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 45280-6531

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 Internal Revenue Service 

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

Internal Revenue Service 

P.O. Box 409101

Ogden, UT 84409

Internal Revenue Service 

P.O. Box 932000

Louisville, KY 40293-2000

EXCEPTION for tax-exempt organizations; federal, state, and 

local governments; and Indian tribal governments, regardless 

of your location

Department of the Treasury 

Internal Revenue Service

Ogden, UT 84201-0046

Internal Revenue Service 

P.O. Box 932000

Louisville, KY 40293-2000

Your filing address may have changed from that 

used to file your employment tax return in prior 

years.

Credit for State Unemployment Tax 

Paid to a State Unemployment Fund

Generally, you get a credit for amounts you pay to a state 

(including the District of Columbia, Puerto Rico, and the 

U.S. Virgin Islands) unemployment fund by January 31, 

2024 (or February 12, 2024, if that is your Form 940 due 

date). Your FUTA tax may be higher if you don't pay the 

state unemployment tax timely by January 31, 2024 (or 

February 12, 2024, if that is your Form 940 due date). This 

CAUTION

!

is true regardless of whether state law defers the payment 

of taxes due until after this date. If you didn't pay all state 

unemployment tax by the due date of Form 940, see the 

line 10 instructions. For wages paid to a work site 

employee, a CPEO is eligible for the credit whether the 

CPEO or a customer of the CPEO made the contribution 

with respect to a work site employee.

State unemployment taxes are sometimes called 

contributions. These contributions are payments that a 

state requires an employer to make to its unemployment 

fund for the payment of unemployment benefits. They 

don't include:

• Any payments deducted or deductible from your 

employees' pay;

-4- Instructions for Form 940 (2023)
• Penalties, interest, or special administrative taxes; and

• Voluntary amounts you paid to get a lower assigned 

state experience rate.

Additional credit. You may receive an additional credit if 

you have a state experience rate lower than 5.4% (0.054). 

This applies even if your rate varies during the year. This 

additional credit is the difference between your actual 

state unemployment tax payments and the amount you 

would have been required to pay at 5.4%. For wages paid 

to a work site employee, the CPEO is allowed the 

additional credit if the CPEO is allowed, under state law, to 

collect and remit contributions to the state unemployment 

fund with respect to a work site employee.

Special credit for successor employers. You may be 

eligible for a credit based on the state unemployment 

taxes paid by a predecessor. You may claim this credit if 

you’re a successor employer who acquired a business in 

2023 from a predecessor who wasn't an employer for 

FUTA purposes and, therefore, wasn't required to file 

Form 940 for 2023. See section 3302(e). You can include 

amounts paid by the predecessor on the 

Worksheet—Line 10 as if you paid them. For details on 

successor employers, see Successor employer under 

Type of Return, later. If the predecessor was required to 

file Form 940, see the line 5 instructions.

When Must You Deposit Your FUTA 

Tax?

Although Form 940 covers a calendar year, you may have 

to deposit your FUTA tax before you file your return. If your 

FUTA tax is more than $500 for the calendar year, you 

must deposit at least one quarterly payment.

You must determine when to deposit your tax based on 

the amount of your quarterly tax liability. If your FUTA tax is 

$500 or less in a quarter, carry it over to the next quarter. 

Continue carrying your tax liability over until your 

cumulative tax is more than $500. At that point, you must 

deposit your tax for the quarter. Deposit your FUTA tax by 

the last day of the month after the end of the quarter. If 

your tax for the next quarter is $500 or less, you’re not 

required to deposit your tax again until the cumulative 

amount is more than $500.

Fourth quarter liabilities. If your FUTA tax for the fourth 

quarter (plus any undeposited amounts from earlier 

quarters) is more than $500, deposit the entire amount by 

January 31, 2024. If it is $500 or less, you can either 

deposit the amount or pay it with your Form 940 by 

January 31, 2024.

In years when there are credit reduction states, 

you must include liabilities owed for credit reduction 

with your fourth quarter deposit.

When To Deposit Your FUTA Tax

If your undeposited FUTA tax

is more than $500 on . . .* Deposit your tax by . . .

March 31 April 30

June 30 July 31

September 30 October 31

December 31 January 31

* Also, see the instructions for line 16.

If any deposit due date falls on a Saturday, 

Sunday, or legal holiday, you may deposit on the 

next business day. See Timeliness of federal tax 

deposits, later.

How Do You Figure Your FUTA Tax 

Liability for Each Quarter?

You owe FUTA tax on the first $7,000 you pay to each 

employee during the calendar year after subtracting any 

payments exempt from FUTA tax. The FUTA tax is 6.0% 

(0.060) for 2023. Most employers receive a maximum 

credit of up to 5.4% (0.054) against this FUTA tax. Every 

quarter, you must figure how much of the first $7,000 of 

each employee's annual wages you paid during that 

quarter.

Figure Your Tax Liability

Before you can figure the amount to deposit, figure your 

FUTA tax liability for the quarter. To figure your tax liability, 

add the first $7,000 of each employee's annual wages you 

paid during the quarter for FUTA wages paid and multiply 

that amount by 0.006.

The tax rates are based on your receiving the maximum 

credit against FUTA taxes. You’re entitled to the maximum 

credit if you paid all state unemployment tax by the due 

date of your Form 940 or if you weren't required to pay 

state unemployment tax during the calendar year due to 

your state experience rate.

Example. During the first quarter, you had three 

employees: Mary Smith, George Jones, and Jane Moore. 

You paid $11,000 to Mary, $2,000 to George, and $4,000 

to Jane. None of the payments made were exempt from 

FUTA tax.

To figure your liability for the first quarter, add the first $7,000 of each 

employee's wages subject to FUTA tax:

$7,000 Mary’s wages subject to FUTA tax 

2,000 George's wages subject to FUTA tax 

+ 4,000 Jane's wages subject to FUTA tax

$13,000 Total wages subject to FUTA tax for the first quarter

$13,000 Total wages subject to FUTA tax for the first quarter

x 0.006 Tax rate (based on maximum credit of 5.4%)

$78 Your liability for the first quarter

In this example, you don't have to make a deposit because your liability is 

$500 or less for the first quarter. However, you must carry this liability over 

to the second quarter.

If any wages subject to FUTA tax aren't subject to state 

unemployment tax, you may be liable for FUTA tax at the 

maximum rate of 6.0%. For instance, in certain states, 

TIP

Instructions for Form 940 (2023) -5-
wages paid to corporate officers, certain payments of sick 

pay by unions, and certain fringe benefits are excluded 

from state unemployment tax.

Example. Mary Smith and George Jones are 

corporate officers whose wages are excluded from state 

unemployment tax in your state. Jane Moore’s wages 

aren't excluded from state unemployment tax. During the 

first quarter, you paid $11,000 to Mary, $2,000 to George, 

and $4,000 to Jane.

$ 9,000 Total FUTA wages for Mary and George in first quarter

x 0.060 Tax rate

$540 Your liability for the first quarter for Mary and George

$4,000 Total FUTA wages subject to state unemployment tax

x 0.006 Tax rate (based on maximum credit of 5.4%)

$24 Your liability for the first quarter for Jane

$540 Your liability for the first quarter for Mary and George

+ 24 Your liability for first quarter for Jane

$564 Your liability for the first quarter for Mary, George, and Jane

In this example, you must deposit $564 by April 30 because your liability 

for the first quarter is more than $500. 

How Must You Deposit Your FUTA 

Tax?

You Must Deposit Your FUTA Tax Using EFT

You must use EFT to make all federal tax deposits. 

Generally, an EFT is made using EFTPS. If you don't want 

to use EFTPS, you can arrange for your tax professional, 

financial institution, payroll service, or other trusted third 

party to make electronic deposits on your behalf. Also, you 

may arrange for your financial institution to initiate a 

same-day wire payment on your behalf. EFTPS is a free 

service provided by the Department of the Treasury. 

Services provided by your tax professional, financial 

institution, payroll service, or other third party may have a 

fee.

For more information on making federal tax deposits, 

see Pub. 966. To get more information about EFTPS or to 

enroll in EFTPS, go to EFTPS.gov or call one of the 

numbers provided under Federal tax deposits must be 

made by electronic funds transfer (EFT), earlier.

If your business is new, the IRS will automatically 

pre-enroll you in EFTPS when you apply for an EIN. Follow 

the instructions on your EIN package to activate your 

enrollment.

For an EFTPS deposit to be on time, you must 

submit the deposit by 8 p.m. Eastern time the day 

before the date the deposit is due.

Same-day wire payment option. If you fail to submit a 

deposit transaction on EFTPS by 8 p.m. Eastern time the 

day before the date a deposit is due, you can still make 

your deposit on time by using the Federal Tax Collection 

Service (FTCS) to make a same-day wire payment. To use 

the same-day wire payment method, you will need to 

make arrangements with your financial institution ahead of 

time. Please check with your financial institution regarding 

CAUTION

!

availability, deadlines, and costs. Your financial institution 

may charge you a fee for payments made this way. To 

learn more about the information you will need to give your 

financial institution to make a same-day wire payment, go 

to IRS.gov/SameDayWire.

Timeliness of federal tax deposits. If a deposit is 

required to be made on a day that isn't a business day, the 

deposit is considered timely if it is made by the close of 

the next business day. A business day is any day other 

than a Saturday, Sunday, or legal holiday. The term “legal 

holiday” for deposit purposes includes only those legal 

holidays in the District of Columbia. Legal holidays in the 

District of Columbia are provided in section 11 of Pub. 15.

How Can You Avoid Penalties and 

Interest?

You can avoid paying penalties and interest if you do all of 

the following.

• Deposit and pay your tax when it is due.

• File your fully completed Form 940 accurately and on 

time.

• Attach Schedule R (Form 940) if required.

• Ensure your tax payments are honored by your financial 

institution.

Penalties and interest are charged on taxes paid late 

and returns filed late at a rate set by law. See sections 11 

and 12 of Pub. 15 for details.

Use Form 843 to request abatement of assessed 

penalties or interest. Don't request abatement of assessed 

penalties or interest on Form 940.

If you receive a notice about a penalty after you file this 

return, reply to the notice with an explanation and we will 

determine if you meet reasonable-cause criteria. Don't 

attach an explanation when you file your return.

Can You Amend a Return?

Beginning sometime in 2024, the IRS expects to 

make filing an amended Form 940 available as 

part of Modernized e-File (MeF). Monitor IRS.gov 

for more information on availability.

You use the 2023 Form 940 to amend a return that you 

previously filed for 2023. If you’re amending a return for a 

previous year, use that previous year's Form 940.

Follow the steps below to amend your return.

• Use a paper return to amend a Form 940, even if the 

Form 940 was filed electronically, until the ability to file an 

amended Form 940 electronically becomes available.

• Check the amended return box in the top right corner of 

Form 940, page 1, box a.

• Fill in all the amounts that should have been on the 

original form.

• Sign the form.

• Attach an explanation, including an attachment in MeF 

if filing the amended return electronically, telling us why 

you’re amending your return. For example, tell us if you’re 

filing to claim credit for tax paid to your state 

unemployment fund after the due date of Form 940.

• Unless filing the amended return electronically, file the 

amended return using the Without a payment address 

TIP

-6- Instructions for Form 940 (2023)
(even if a payment is included) under Where Do You File, 

earlier.

• If you file an amended return for an aggregate Form 

940, be sure to attach Schedule R (Form 940). Complete 

Schedule R (Form 940) only for employers who have 

adjustments on the amended Form 940.

Completing Your Form 940

Follow These Guidelines To Correctly Fill Out 

the Form

Make entries on Form 940 as follows to enable accurate 

scanning and processing.

• Make sure your business name and EIN are on every 

page of the form and any attachments.

• If you type or use a computer to fill out your form, use a 

12-point Courier font, if possible. Portable Document 

Format (PDF) forms on IRS.gov have fillable fields with 

acceptable font specifications.

• Don't enter dollar signs and decimal points. Commas 

are optional. Enter dollars to the left of the preprinted 

decimal point and cents to the right of it.

• You may choose to round your amounts to the nearest 

dollar, instead of reporting cents on this form. If you 

choose to round, you must round all entries. To round, 

drop the amounts under 50 cents and increase the 

amounts from 50 to 99 cents to the next dollar. For 

example, $1.49 becomes $1.00 and $2.50 becomes 

$3.00. If you use two or more amounts to figure an entry 

on the form, use cents to figure the answer and round the 

answer only.

• If you have a line with the value of zero, leave it blank.

Employer Identification Number (EIN), 

Name, Trade Name, and Address

Enter Your Business Information at the Top of 

the Form

Enter your EIN, name, and address in the spaces 

provided. You must enter your name and EIN here and on 

page 2. Enter the business (legal) name that you used 

when you applied for your EIN on Form SS-4. For 

example, if you’re a sole proprietor, enter “Ronald Smith” 

on the Name line and “Ron's Cycles” on the Trade Name 

line. Leave the Trade Name line blank if it is the same as 

your Name.

If you pay a tax preparer to fill out Form 940, make sure 

the preparer shows your business name exactly as it 

appeared when you applied for your EIN.

Employer identification number (EIN). To make sure 

that businesses comply with federal tax laws, the IRS 

monitors tax filings and payments by using a numerical 

system to identify taxpayers. A unique nine-digit EIN is 

assigned to all corporations, partnerships, and some sole 

proprietors. Businesses needing an EIN must apply for a 

number and use it throughout the life of the business on all 

tax returns, payments, and reports.

Your business should have only one EIN. If you have 

more than one and aren't sure which one to use, write to 

the IRS office where you file your returns (using the 

Without a payment address under Where Do You File, 

earlier) or call the IRS at 800-829-4933 (toll free). If you're 

outside the United States, call 267-941-1000 (toll call).

If you don't have an EIN, you may apply for one by 

going to IRS.gov/EIN. You may also apply for an EIN by 

faxing or mailing Form SS-4 or SS-4 (sp) to the IRS. If the 

principal business was created or organized outside the 

United States or U.S. territories, you may also apply for an 

EIN by calling 267-941-1099 (toll call). If you haven’t 

received your EIN by the due date of Form 940, write 

“Applied For” and the date you applied in the space shown 

for the number.

If you’re filing your tax return electronically, a valid 

EIN is required at the time the return is filed. If a 

valid EIN isn't provided, the return won't be 

accepted. This may result in penalties.

Always be sure the EIN on the form you file exactly 

matches the EIN that the IRS assigned to your 

business. Don't use a social security number 

(SSN) or individual taxpayer identification number (ITIN) 

on forms that ask for an EIN. Filing a Form 940 with an 

incorrect EIN or using the EIN of another's business may 

result in penalties and delays in processing your return.

Tell Us if You Change Your Business Name, 

Business Address, or Responsible Party

Notify the IRS immediately if you change your business 

name, business address, or responsible party.

Name change. Write to the IRS office where you filed 

your return (using the Without a payment address under 

Where Do You File, earlier) to notify the IRS of any name 

change. See Pub. 1635 to see if you also need to apply for 

a new EIN.

Address or responsible party change. Complete and 

mail Form 8822-B to notify the IRS of an address or 

responsible party change. Don’t mail Form 8822-B with 

your Form 940. For a definition of "responsible party," see 

the Instructions for Form SS-4.

Type of Return

Review the box at the top of the form. If any line applies to 

you, check the appropriate box to tell us which type of 

return you’re filing. You may check more than one box.

Amended. If this is an amended return that you’re filing to 

correct a return that you previously filed, check box a.

Successor employer. Check box b if you're a successor 

employer and:

• You’re reporting wages paid before you acquired the 

business by a predecessor who was required to file a 

Form 940 because the predecessor was an employer for 

FUTA tax purposes, or

• You’re claiming a special credit for state unemployment 

tax paid before you acquired the business by a 

predecessor who wasn't required to file a Form 940 

because the predecessor wasn't an employer for FUTA 

tax purposes.

A successor employer is an employer who:

• Acquires substantially all the property used in a trade or 

business of another person (predecessor) or used in a 

separate unit of a trade or business of a predecessor; and

CAUTION

!

TIP

Instructions for Form 940 (2023) -7-
• Immediately after the acquisition, employs one or more 

people who were employed by the predecessor.

No payments to employees in 2023. If you’re not liable 

for FUTA tax for 2023 because you made no payments to 

employees in 2023, check box c. Then, go to Part 7, sign 

the form, and file it with the IRS.

Final: Business closed or stopped paying wages. If 

this is a final return because you went out of business or 

stopped paying wages and you won't be liable for filing 

Form 940 in the future, check box d. Complete all 

applicable lines on the form, sign it in Part 7, and file it with 

the IRS. Also attach a statement to your return showing 

the name of the person keeping the payroll records and 

the address where those records will be kept.

Disregarded entities. A disregarded entity is required to 

file Form 940 using its name and EIN, not the name and 

EIN of its owner. An entity that has a single owner and is 

disregarded as separate from its owner for federal income 

tax purposes is treated as a separate entity for purposes 

of payment and reporting federal employment taxes. If the 

entity doesn't currently have an EIN, it must apply for one 

using one of the methods under Employer identification 

number (EIN), earlier. Disregarded entities include 

single-owner limited liability companies (LLCs) that 

haven't elected to be taxed as a corporation for federal 

income tax purposes, QSubs, and certain foreign entities 

treated as disregarded entities for U.S. income tax 

purposes. Although a disregarded entity is treated as a 

separate entity for employment tax purposes, it isn't 

subject to FUTA tax if it is owned by a tax-exempt 

organization under section 501(c)(3) and isn't required to 

file Form 940. For more information, see Disregarded 

entities and qualified subchapter S subsidiaries in the 

Introduction section of Pub. 15.

Specific Instructions

Part 1: Tell Us About Your Return

1. If You Were Required To Pay Your State 

Unemployment Tax In . . .

You must complete line 1a or line 1b even if you 

weren’t required to pay any state unemployment 

tax because your state unemployment tax rate(s) 

was zero. You may leave lines 1a and 1b blank only if all of 

the wages you paid to all employees in all states were 

excluded from state unemployment tax. If you leave lines 

1a and 1b blank, and line 7 is more than zero, you must 

complete line 9 because all of the taxable FUTA wages 

you paid were excluded from state unemployment tax.

Identify the state(s) where you were required to pay 

state unemployment taxes.

1a. One state only. Enter the two-letter U.S. Postal 

Service abbreviation for the state where you were required 

to pay your state unemployment tax on line 1a. For a list of 

state abbreviations, see the Schedule A (Form 940) 

instructions or go to the website for the U.S. Postal 

Service at USPS.com.

CAUTION

!

1b. More than one state (you’re a multi-state employer). Check the box on line 1b. Then, fill out Schedule A 

(Form 940) and attach it to your Form 940.

2. If You Paid Wages in a State That Is Subject to 

Credit Reduction

A state that hasn't repaid money it borrowed from the 

federal government to pay unemployment benefits is 

called a credit reduction state. The U.S. Department of 

Labor determines which states are credit reduction states.

If you paid wages that are subject to the unemployment 

tax laws of a credit reduction state, you may have to pay 

more FUTA tax when filing your Form 940.

For tax year 2023, there are credit reduction states. If 

you paid wages subject to the unemployment tax laws of 

these states, check the box on line 2 and fill out 

Schedule A (Form 940). See the instructions for line 9 

before completing the Schedule A (Form 940).

Part 2: Determine Your FUTA Tax 

Before Adjustments

If any line in Part 2 doesn't apply, leave it blank.

3. Total Payments to All Employees

Report the total payments you made during the calendar 

year on line 3. Include payments for the services of all 

employees, even if the payments aren't taxable for FUTA. 

Your method of payment doesn't determine whether 

payments are wages. You may have paid wages hourly, 

daily, weekly, monthly, or yearly. You may have paid wages 

for piecework or as a percentage of profits. Include the 

following.

• Compensation, such as the following.

—Salaries, wages, commissions, fees, bonuses, 

vacation allowances, and amounts you paid to 

full-time, part-time, or temporary employees.

• Fringe benefits, such as the following.

—Sick pay (including third-party sick pay if liability is 

transferred to the employer). For details on sick pay, 

see Pub. 15-A, Employer's Supplemental Tax Guide.

—The value of goods, lodging, food, clothing, and 

non-cash fringe benefits.

—Section 125 (cafeteria) plan benefits.

• Retirement/Pension, such as the following.

—Employer contributions to a 401(k) plan, payments 

to an Archer MSA, payments under adoption 

assistance programs, and contributions to SIMPLE 

retirement accounts (including elective salary 

reduction contributions).

—Amounts deferred under a non-qualified deferred 

compensation plan.

• Other payments, such as the following.

—Tips of $20 or more in a month that your employees 

reported to you.

—Payments made by a predecessor employer to the 

employees of a business you acquired.

—Payments to nonemployees who are treated as your 

employees by the state unemployment tax agency.

-8- Instructions for Form 940 (2023)
Wages may be subject to FUTA tax even if they 

are excluded from your state's unemployment tax.

For details on wages and other compensation, see 

section 5 of Pub. 15-A.

Example

You had three employees. You paid $44,000 to Joan 

Rose, $8,000 to Sara Blue, and $16,000 to John Green.

$44,000 Amount paid to Joan

8,000 Amount paid to Sara

+ 16,000 Amount paid to John

$68,000 Total payments to employees. You would enter this 

amount on line 3.

4. Payments Exempt From FUTA Tax

If you enter an amount on line 4, check the appropriate 

box or boxes on lines 4a through 4e to show the types of 

payments exempt from FUTA tax. You only report a 

payment as exempt from FUTA tax on line 4 if you 

included the payment on line 3.

Some payments are exempt from FUTA tax because 

the payments aren't included in the definition of wages or 

the services aren't included in the definition of 

employment. Payments exempt from FUTA tax may 

include the following.

• Fringe benefits, such as the following.

—The value of certain meals and lodging.

—Contributions to accident or health plans for 

employees, including certain employer payments to a 

health savings account or an Archer MSA.

—Payments for benefits excluded under section 125 

(cafeteria) plans.

• Group-term life insurance. For information about 

group-term life insurance and other payments for fringe 

benefits that may be exempt from FUTA tax, see Pub. 

15-B.

• Retirement/Pension, such as employer contributions 

to a qualified plan, including a SIMPLE retirement account 

(other than elective salary reduction contributions) and a 

401(k) plan.

• Dependent care, such as payments (up to $5,000 per 

employee, $2,500 if married filing separately) for a 

qualifying person's care that allows your employees to 

work and that would be excludable by the employee under 

section 129.

• Other payments, such as the following.

—All non-cash payments and certain cash payments 

for agricultural labor, and all payments to “H-2A” visa 

workers. See For Agricultural Employers, earlier, or 

Pub. 51.

—Payments made under a workers' compensation law 

because of a work-related injury or sickness. See 

section 6 of Pub. 15-A.

—Payments for domestic services if you didn't pay 

cash wages of $1,000 or more (for all domestic 

employees) in any calendar quarter in 2022 or 2023, 

or if you file Schedule H (Form 1040). See For 

Employers of Household Employees, earlier, or Pub. 

926.

CAUTION

!

—Payments for services provided to you by your 

parent, spouse, or child under the age of 21. See 

section 3 of Pub. 15.

—Payments for certain fishing activities. See Pub. 334, 

Tax Guide for Small Business.

—Payments to certain statutory employees. See 

section 1 of Pub. 15-A.

—Payments to nonemployees who are treated as your 

employees by the state unemployment tax agency.

See section 3306 and its related regulations for more 

information about FUTA taxation of retirement plan 

contributions, dependent care payments, and other 

payments.

For more information on payments exempt from FUTA 

tax, see section 15 of Pub. 15.

Example

You had three employees. You paid $44,000 to Joan 

Rose, including $2,000 in health insurance benefits. You 

paid $8,000 to Sara Blue, including $500 in retirement 

benefits. You paid $16,000 to John Green, including 

$2,000 in health and retirement benefits.

$ 2,000 Health insurance benefits for Joan

500 Retirement benefits for Sara

+ 2,000 Health and retirement benefits for John

$4,500 Total payments exempt from FUTA tax. You would enter 

this amount on line 4 and check boxes 4a and 4c.

5. Total of Payments Made to Each Employee in 

Excess of $7,000

Only the first $7,000 you paid to each employee in a 

calendar year, after subtracting any payments exempt 

from FUTA tax, is subject to FUTA tax. This $7,000 is 

called the FUTA wage base.

Enter on line 5 the total of the payments over the FUTA 

wage base you paid to each employee during 2023 after 

subtracting any payments exempt from FUTA tax 

shown on line 4.

Following Our Example

You had three employees. You paid $44,000 to Joan Rose, $8,000 to 

Sara Blue, and $16,000 to John Green, including a total of $4,500 in 

payments exempt from FUTA tax for all three employees. To 

determine the total payments made to each employee in excess of the 

FUTA wage base, the payments exempt from FUTA tax and the FUTA 

wage base must be subtracted from total payments. These amounts 

are shown in parentheses.

Employees Joan Sara John

Total payments to employees $44,000 $8,000 $16,000

Payments exempt from FUTA tax (2,000) (500) (2,000)

FUTA wage base (7,000) (7,000) (7,000)

$35,000 $ 500 $ 7,000

Total of payments made to each employee in excess of 

the FUTA wage base. You would enter this amount on 

line 5. 

$42,500

Instructions for Form 940 (2023) -9-
If you’re a successor employer . . . When you figure 

the payments made to each employee in excess of the 

FUTA wage base, you may include the payments that the 

predecessor made to the employees who continue to 

work for you only if the predecessor was an employer for 

FUTA tax purposes resulting in the predecessor being 

required to file Form 940.

Example for Successor Employers

During the calendar year, the predecessor employer paid $5,000 to Susan 

Jones. You acquired the predecessor's business. After the acquisition, you 

employed Susan and paid Susan an additional $3,000 in wages. None of 

the amounts paid to Susan were payments exempt from FUTA tax.

$5,000 Wages paid by predecessor employer 

 + 3,000 Wages paid by you

$8,000 Total payments to Susan. You would include this amount on 

line 3.

$8,000 Total payments to Susan

 – 7,000 FUTA wage base

$1,000 Payments made to Susan in excess of the FUTA wage base

 $1,000 Payments made to Susan in excess of the FUTA wage base

 + 5,000 Taxable FUTA wages paid by predecessor employer 

 $6,000 You would include this amount on line 5.

6. Subtotal

To figure your subtotal, add the amounts on lines 4 and 5 

and enter the result on line 6.

line 4

+ line 5

line 6

7. Total Taxable FUTA Wages

To figure your total taxable FUTA wages, subtract line 6 

from line 3 and enter the result on line 7.

line 3

− line 6

line 7

8. FUTA Tax Before Adjustments

To figure your total FUTA tax before adjustments, multiply 

line 7 by 0.006 and then enter the result on line 8.

line 7

 x 0.006

line 8

Part 3: Determine Your Adjustments

If any line in Part 3 doesn't apply, leave it blank.

9. If ALL of the Taxable FUTA Wages You Paid 

Were Excluded From State Unemployment 

Tax . . .

Line 9 doesn't apply to FUTA wages on which you 

paid no state unemployment tax only because the 

state assigned you a tax rate of 0%.

If all of the taxable FUTA wages you paid were 

excluded from state unemployment tax, multiply line 7 by 

0.054 and enter the result on line 9.

line 7

x 0.054

line 9

If you weren't required to pay state unemployment tax 

because all of the wages you paid were excluded from 

state unemployment tax, you must pay FUTA tax at the 

6.0% (0.060) rate. For example, if your state 

unemployment tax law excludes wages paid to corporate 

officers or employees in specific occupations, and the only 

wages you paid were to corporate officers or employees in 

those specific occupations, you must pay FUTA tax on 

those wages at the full FUTA rate of 6.0% (0.060). When 

you figured the FUTA tax before adjustments on line 8, it 

was based on the maximum allowable credit (5.4%) for 

state unemployment tax payments. Because you didn't 

pay state unemployment tax, you don't have a credit and 

must figure this adjustment.

If line 9 applies to you, lines 10 and 11 don't apply to 

you. Therefore, leave lines 10 and 11 blank. Don't fill out 

the worksheet in these instructions. Complete Schedule A 

(Form 940) only if you’re a multi-state employer.

10. If SOME of the Taxable FUTA Wages You Paid 

Were Excluded From State Unemployment Tax, 

or You Paid Any State Unemployment Tax 

Late . . .

You must fill out the worksheet on the next page if:

• Some of the taxable FUTA wages you paid were 

excluded from state unemployment tax, or

• Any of your payments of state unemployment tax were 

late.

The worksheet takes you step by step through the process 

of figuring your credit. At the end of the worksheet you'll 

find an example of how to use it. Don't complete the 

worksheet if line 9 applied to you (see the instructions for 

line 9, earlier).

Before you can properly fill out the worksheet, you 

will need to gather the following information. 

• Taxable FUTA wages (Form 940, line 7).

• Taxable state unemployment wages (state and federal 

wage bases may differ).

• The experience rates assigned to you by the states 

where you paid wages.

• The amount of state unemployment taxes you paid on 

time. “On time” means that you paid the state 

unemployment taxes by the due date for filing Form 940.

• The amount of state unemployment taxes you paid late. 

“Late” means after the due date for filing Form 940.

CAUTION

!

-10- Instructions for Form 940 (2023)
Don't include any penalties, interest, or 

unemployment taxes deducted from your 

employees' pay in the amount of state 

unemployment taxes. Also, don't include as state 

unemployment taxes any special administrative taxes or 

voluntary contributions you paid to get a lower assigned 

experience rate or any surcharges, excise taxes, or 

employment and training taxes. These items are generally 

listed as separate items on the state's quarterly wage 

report.

For line 3 of the worksheet: 

• If any of the experience rates assigned to you were less 

than 5.4% for any part of the calendar year, you must list 

CAUTION

!

each assigned experience rate separately on the 

worksheet.

• If you were assigned six or more experience rates that 

were less than 5.4% for any part of the calendar year, you 

must use another sheet to figure the additional credits and 

then include those additional credits in your line 3 total.

After you complete the worksheet, enter the amount 

from line 7 of the worksheet on Form 940, line 10. Don't 

attach the worksheet to your Form 940. Keep it with 

your records.

Instructions for Form 940 (2023) -11-
Worksheet—Line 10 Keep for Your Records

Read the Example on the next page before completing this worksheet.

Use this worksheet to figure your credit if:

Some of the wages you paid were excluded from state unemployment tax, OR

You paid any state unemployment tax late.

For this worksheet, don't round your figures.

Before you begin:

Before you can properly fill out this worksheet, you must gather the following information.

■ Taxable FUTA wages (Form 940, line 7).

■ Taxable state unemployment wages.

■ The experience rates assigned to you by the states where you paid wages.

■ The amount of state unemployment taxes you paid on time. “On time” means that you paid the state unemployment taxes by the due date for filing Form 940. 

Include any state unemployment taxes you paid on nonemployees who were treated as employees by your state unemployment agency.

■ The amount of state unemployment taxes you paid late. “Late” means after the due date for filing Form 940.

1. Maximum allowable credit — Enter Form 940, line 7

(Form 940, line 7 x 0.054 = line 1).

. x 0.054 on line 1 1. .

2. Credit for timely state unemployment tax payments — How much did you pay on time? 2. .

• If line 2 is equal to or more than line 1, STOP here. 

STOP

You’ve completed the worksheet. Leave Form 940, line 10, blank.

• If line 2 is less than line 1, continue this worksheet.

3. Additional credit — Were ALL of your assigned experience rates 5.4% or more?

• If yes, enter zero on line 3. Then, go to line 4 of this worksheet.

• If no, fill out the computations below. List ONLY THOSE STATES for which your assigned experience rate for any part of the 

calendar year was less than 5.4%.

State Computation rate

The difference between 5.4% 

(0.054) and your assigned 

experience rate (0.054 – .XXX 

(assigned experience rate) = 

computation rate)

Taxable state 

unemployment wages at 

assigned experience rate

Additional credit

1. . x . = .

2. . x . = .

3. . x . = .

4. . x . = .

5. . x . = .

If you need more lines, use another sheet and include those 

additional credits in the total.

Total .

Enter the total on line 3. 

3. .

4. Subtotal (line 2 + line 3 = line 4) 4. .

• If line 4 is equal to or more than line 1, STOP here. 

STOP

You’ve completed the worksheet. Leave Form 940, line 10, blank.

• If line 4 is less than line 1, continue this worksheet.

5. Credit for paying state unemployment taxes late:

5a. What is your remaining allowable credit? (line 1 – line 4 = line 5a) 5a. .

5b. How much state unemployment tax did you pay late? 5b. .

5c. Which is smaller, line 5a or line 5b? Enter the smaller number here. 5c. .

5d. Your allowable credit for paying state unemployment taxes late (line 5c x 0.900 = line 5d) 5d. .

6. Your FUTA credit (line 4 + line 5d = line 6) 6. .

• If line 6 is equal to or more than line 1, STOP here. 

STOP

You’ve completed the worksheet. Leave Form 940, line 10, blank.

• If line 6 is less than line 1, continue this worksheet.

7. Your adjustment (line 1 – line 6 = line 7) Enter line 7 from this worksheet on 

Form 940, line 10.

7. .

Don't attach this worksheet to your Form 940. Keep it for your records.

-12- Instructions for Form 940 (2023)
Example for Using the Worksheet

Jill Brown and Tom White are corporate officers whose wages are 

excluded from state unemployment tax in your state. Jack Davis’s wages 

aren't excluded from state unemployment tax. During 2023, you paid 

$44,000 to Jill, $22,000 to Tom, and $16,000 to Jack. Your state's wage 

base is $8,000. You paid some state unemployment tax on time, some 

late, and some remains unpaid.

Here are the records: 

Total taxable FUTA wages (Form 940, line 7) ....... $21,000.00

Taxable state unemployment wages ............ $ 8,000.00

Experience rate for 2023 ................... 0.041 (4.1%)

State unemployment tax paid on time ............ $100.00

State unemployment tax paid late .............. $78.00

State unemployment tax not paid .............. $150.00

1. Maximum allowable credit

$21,000.00 (Form 940, line 7)

 x 0.054 (maximum credit rate)

$1,134.00 1. $1,134.00

2. Credit for timely state unemployment tax 

payments

2. $100.00

3. Additional credit

0.054 (maximum credit rate) $8,000

 – 0.041 (your experience rate) x 0.013 

0.013 (your computation rate) $104.00 3. $104.00

4. Subtotal (line 2 + line 3)

$100.00

 + 104.00

$204.00 4. $204.00

5. Credit for paying state unemployment taxes late

5a. Remaining allowable credit (line 1 – line 4)

$1,134.00

 – 204.00

$930.00 5a. $930.00

5b. State unemployment tax paid late 5b. $78.00

5c. Which is smaller, line 5a or line 5b? 5c. $78.00

5d. Allowable credit (for paying 

late)

$78.00

 x 0.900

$70.20 5d. $70.20

6. Your FUTA credit (line 4 + line 5d)

$204.00

+ 70.20

$274.20 6. $274.20

7. Your adjustment (line 1 – line 6)

$1,134.00

– 274.20

$859.80 7. $859.80

You would enter line 7 from this worksheet 

on Form 940, line 10.

11. If Credit Reduction Applies . . .

If you paid FUTA taxable wages that were also subject to 

state unemployment taxes in any states that are subject to 

credit reduction, enter the total amount from Schedule A 

(Form 940) on Form 940, line 11. However, if you entered 

an amount on line 9 because all the FUTA taxable wages 

you paid were excluded from state unemployment tax, 

skip line 11 and go to line 12.

Part 4: Determine Your FUTA Tax and 

Balance Due or Overpayment

If any line in Part 4 doesn't apply, leave it blank.

12. Total FUTA Tax After Adjustments

Add the amounts shown on lines 8, 9, 10, and 11, and 

enter the result on line 12.

line 8

line 9

line 10

+ line 11

line 12

If line 9 is greater than zero, lines 10 and 11 must 

be zero because they don't apply.

13. FUTA Tax Deposited for the Year

Enter the amount of FUTA tax that you deposited for the 

year, including any overpayment that you applied from a 

prior year.

14. Balance Due

If line 13 is less than line 12, enter the difference on 

line 14.

line 12

– line 13

line 14

If line 14 is:

• More than $500, you must deposit your tax. See When 

Must You Deposit Your FUTA Tax, earlier.

• $500 or less, you can deposit your tax, pay your tax with 

a credit card or debit card, pay your tax by EFW if filing 

electronically, or pay your tax by check or money order 

with your return. For more information on electronic 

payment options, go to IRS.gov/Payments.

• Less than $1, you don't have to pay it.

If you don't deposit as required and pay any 

balance due with Form 940, you may be subject to 

a penalty.

If you pay by EFT, credit card, or debit card, file your 

return using the Without a payment address under Where 

Do You File, earlier. Don't file Form 940-V, Payment 

Voucher.

CAUTION

!

CAUTION

!

Instructions for Form 940 (2023) -13-
What if you can't pay in full? If you can't pay the full 

amount of tax you owe, you can apply for an installment 

agreement online. You can apply for an installment 

agreement online if:

• You can't pay the full amount shown on line 14,

• The total amount you owe is $25,000 or less, and

• You can pay the liability in full in 24 months.

To apply using the Online Payment Agreement 

Application, go to IRS.gov/OPA.

Under an installment agreement, you can pay what you 

owe in monthly installments. There are certain conditions 

you must meet to enter into and maintain an installment 

agreement, such as paying the liability within 24 months, 

and making all required deposits and timely filing tax 

returns during the length of the agreement.

If your installment agreement is accepted, you will be 

charged a fee and you will be subject to penalties and 

interest on the amount of tax not paid by the due date of 

the return.

15. Overpayment

If line 13 is more than line 12, enter the difference on 

line 15.

line 13

– line 12

line 15

If you deposited more than the FUTA tax due for the 

year, you may choose to have us either:

• Apply the refund to your next return, or

• Send you a refund.

Check the appropriate box on line 15 to tell us which 

option you select. Check only one box on line 15. If you 

don’t check either box or if you check both boxes, we will 

generally apply the overpayment to your next return. 

Regardless of any box you check or don’t check, we may 

apply your overpayment to any past due tax account that 

is shown in our records under your EIN.

If line 15 is less than $1, we will send you a refund or 

apply it to your next return only if you ask for it in writing.

Part 5: Report Your FUTA Tax Liability 

by Quarter Only if Line 12 Is More 

Than $500

Fill out Part 5 only if line 12 is more than $500. If line 12 is 

$500 or less, leave Part 5 blank and go to Part 6.

16. Report the Amount of Your FUTA Tax 

Liability for Each Quarter

Enter the amount of your FUTA tax liability for each 

quarter on lines 16a–d. Don't enter the amount you 

deposited. If you had no liability for a quarter, leave the 

line blank.

16a. 1st quarter (January 1 to March 31)

16b. 2nd quarter (April 1 to June 30)

16c. 3rd quarter (July 1 to September 30)

16d. 4th quarter (October 1 to December 31)

To figure your FUTA tax liability for the fourth quarter, 

complete Form 940 through line 12. Then, copy the 

amount from line 12 onto line 17. Lastly, subtract the sum 

of lines 16a through 16c from line 17 and enter the result 

on line 16d.

Example

You paid wages on March 28 and your FUTA tax on those wages was 

$200. You weren't required to make a deposit for the 1st quarter 

because your accumulated FUTA tax was $500 or less. You paid 

additional wages on June 28 and your FUTA tax on those wages was 

$400. Because your accumulated FUTA tax for the 1st and 2nd 

quarters exceeded $500, you were required to make a deposit of $600 

by July 31.

You would enter $200 on line 16a because your liability for the 1st

quarter is $200. You would also enter $400 on line 16b to show your 

2

nd quarter liability.

In years when there are credit reduction states, 

you must include liabilities owed for credit 

reduction with your fourth quarter deposit. You 

may deposit the anticipated extra liability throughout the 

year, but it isn't due until the due date for the deposit for 

the fourth quarter, and the associated liability should be 

recorded as being incurred in the fourth quarter.

17. Total Tax Liability for the Year

Your total tax liability for the year must equal line 12. Copy 

the amount from line 12 onto line 17.

Part 6: May We Speak With Your 

Third-Party Designee?

If you want to allow an employee, your paid tax preparer, 

or another person to discuss your Form 940 with the IRS, 

check the “Yes” box. Then, enter the name and phone 

number of the person you choose as your designee. Be 

sure to give us the specific name of a person—not the 

name of the firm that prepared your tax return.

Have your designee select a five-digit personal 

identification number (PIN) that they must use as 

identification when talking to the IRS about your form.

By checking “Yes,” you authorize us to talk to your 

designee about any questions that we may have while we 

process your return. Your authorization applies only to this 

form, for this year; it doesn't apply to other forms or other 

tax years.

You’re authorizing your designee to:

• Give us any information that is missing from your return,

• Ask us for information about processing your return, 

and

• Respond to certain IRS notices that you have shared 

with your designee about math errors and in preparing 

your return. We won't send notices to your designee.

You’re not authorizing your designee to:

• Receive any refund check,

• Bind you to anything (including additional tax liability), 

or

• Otherwise represent you before the IRS.

TIP

-14- Instructions for Form 940 (2023)
The authorization will automatically expire 1 year after 

the due date for filing your Form 940 (regardless of 

extensions). If you or your designee wants to end the 

authorization before it expires, write to the IRS office for 

your location using the Without a payment address under 

Where Do You File, earlier.

If you want to expand your designee's authorization or if 

you want us to send your designee copies of your notices, 

see Pub. 947.

Part 7: Sign Here (Approved Roles)

You MUST Fill Out Both Pages of This Form and 

SIGN It

Failure to sign will delay the processing of your return.

On page 2 in Part 7, sign and print your name and title. 

Then, enter the date and the best daytime telephone 

number, including area code, where we can reach you if 

we have any questions.

Who Must Sign Form 940?

The following persons are authorized to sign the return for 

each type of business entity.

• Sole proprietorship—The individual who owns the 

business.

• Partnership (including an LLC treated as a 

partnership) or unincorporated organization—A 

responsible and duly authorized partner, member, or 

officer having knowledge of its affairs.

• Corporation (including an LLC treated as a 

corporation)—The president, vice president, or other 

principal officer duly authorized to sign.

• Single-member LLC treated as a disregarded entity 

for federal income tax purposes—The owner of the 

LLC or a principal officer duly authorized to sign.

• Trust or estate—The fiduciary.

Form 940 may also be signed by a duly authorized 

agent of the taxpayer if a valid power of attorney or 

reporting agent authorization (Form 8655) has been filed.

Alternative signature method. Corporate officers or 

duly authorized agents may sign Form 940 by rubber 

stamp, mechanical device, or computer software program. 

For details and required documentation, see Rev. Proc. 

2005-39, 2005-28 I.R.B. 82, available at IRS.gov/irb/

2005-28_IRB#RP-2005-39.

Paid preparers. A paid preparer must sign Form 940 and 

provide the information in the Paid Preparer Use Only 

section of Part 7 if the preparer was paid to prepare Form 

940 and isn't an employee of the filing entity. Paid 

preparers must sign paper returns with a manual 

signature. The preparer must give you a copy of the return 

in addition to the copy to be filed with the IRS.

If you’re a paid preparer, enter your Preparer Tax 

Identification Number (PTIN) in the space provided. 

Include your complete address. If you work for a firm, 

enter the firm's name and the EIN of the firm. You can 

apply for a PTIN online or by filing Form W-12. For more 

information about applying for a PTIN online, go to 

IRS.gov/PTIN. You can't use your PTIN in place of the EIN 

of the tax preparation firm.

Generally, don't complete the Paid Preparer Use Only 

section if you’re filing the return as a reporting agent and 

have a valid Form 8655 on file with the IRS. However, a 

reporting agent must complete this section if the reporting 

agent offered legal advice, for example, by advising the 

client on determining whether its workers are employees 

or independent contractors for federal tax purposes.

Privacy Act and Paperwork Reduction Act Notice. We 

ask for the information on Form 940 to carry out the 

Internal Revenue laws of the United States. We need it to 

figure and collect the right amount of tax. Subtitle C, 

Employment Taxes, of the Internal Revenue Code 

imposes unemployment tax under the Federal 

Unemployment Tax Act. Form 940 is used to determine 

the amount of the taxes that you owe. Section 6011 

requires you to provide the requested information if the tax 

is applicable to you. Section 6109 requires you to provide 

your identification number. If you fail to provide this 

information in a timely manner, or provide false or 

fraudulent information, you may be subject to penalties.

You’re not required to provide the information requested 

on a form that is subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control number. 

Books or records relating to a form or its instructions must 

be retained as long as their contents may become 

material in the administration of any Internal Revenue law.

Generally, tax returns and return information are 

confidential, as required by section 6103. However, 

section 6103 allows or requires the IRS to disclose or give 

the information shown on your tax return to others as 

described in the Code. For example, we may disclose your 

tax information to the Department of Justice for civil and 

criminal litigation, and to cities, states, the District of 

Columbia, and U.S. commonwealths and territories to 

administer their tax laws. We may also disclose this 

information to other countries under a tax treaty, to federal 

and state agencies to enforce federal nontax criminal 

laws, or to federal law enforcement and intelligence 

agencies to combat terrorism.

If you have comments concerning the accuracy of 

these time estimates or suggestions for making these 

forms simpler, we would be happy to hear from you. You 

can send us comments from IRS.gov/FormComments. Or 

you can send your comments to Internal Revenue Service, 

Tax Forms and Publications Division, 1111 Constitution 

Ave. NW, IR-6526, Washington, DC 20224. Don't send 

Form 940 to this address. Instead, see Where Do You File, 

earlier.

Instructions for Form 940 (2023) -15-
Estimated Average Times

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average 

time is:

Form Recordkeeping Preparing, copying, assembling, and sending 

the form to the IRS

Schedule A (Form 940) 16 hr., 1 min. 15 min.

Worksheet (Form 940) 1 hr., 41 min. 21 min.

-16- Instructions for Form 940 (2023)