Form 940 for 2025 — Employer's Annual Federal Unemployment (FUTA) Tax Return

What is Form 940?

Form 940 is the annual return for the Federal Unemployment Tax Act (FUTA) tax, which together with state unemployment systems funds unemployment benefits. Only the employer pays FUTA tax: nothing is withheld from employees. The tax applies to the first $7,000 you pay each employee in the year (the FUTA wage base), after taking out payments that are exempt from FUTA tax.

The form starts from total payments to employees (line 3), subtracts exempt payments and the amounts over $7,000 per employee to get taxable FUTA wages (line 7), and multiplies by 0.006 (line 8), which assumes you get the full credit for paying state unemployment tax. Adjustments follow when wages were excluded from state unemployment tax, you paid state tax late, or you paid wages in a credit reduction state (Schedule A). Part 5 breaks the tax down by quarter when the total is more than $500.

VergeHR walks you through each part, works out lines 6, 7, 8, 9, 12 and the balance due or overpayment, fills in the 4th-quarter liability and line 17 from line 12, and prints your answers into the IRS's own 2025 PDF, including the Form 940-V payment voucher if you pay by check. You sign and file it yourself: VergeHR never files anything with the IRS.

Who needs to fill out Form 940?

• Employers that paid $1,500 or more in wages in any calendar quarter of 2024 or 2025.
• Employers that had at least one employee for some part of a day in 20 or more different weeks in 2024 or in 2025, counting full-time, part-time and temporary employees.
• Successor employers that took over another employer's business and its employees during the year.
• Businesses that closed or stopped paying wages in 2025 (they tick "Final" and attach a statement).
• Section 3504 agents, certified PEOs and other third parties filing an aggregate Form 940.

When to Use Form 940

• Once a year, for calendar year 2025, by February 2, 2026 (or February 10, 2026 if every FUTA deposit was made on time).
• During the year you deposit FUTA tax electronically once your undeposited liability is more than $500. Form 940 then reconciles the year.
• Use the Form 940-V voucher only to pay a balance of $500 or less by check or money order with the return.
• For 2026 wages, use the 2026 Form 940 once the IRS publishes it.

What You Need Before You Start

• Your EIN, legal business name, trade name and address as the IRS has them.
• The state or states where you had to pay state unemployment tax, and whether any is a credit reduction state (Schedule A (Form 940)).
• Total payments to all employees for 2025, and the part exempt from FUTA tax (fringe benefits, group-term life insurance, retirement/pension, dependent care, other).
• For each employee, the amount paid over the $7,000 FUTA wage base.
• The worksheet result (line 10) if some wages were excluded from state unemployment tax or you paid state tax late.
• Your FUTA tax deposits for the year, and your FUTA liability for each quarter if the total is more than $500.
• Your bank's routing and account numbers if you want an overpayment refunded by direct deposit.

What’s On Form 940

The 2025 edition has 3 pages. VergeHR asks for it in 8 parts, and it is signed by Employer:

1. Employer and type of returnEmployer
2. Aggregate return filers onlyEmployer
3. Parts 1 to 4: FUTA tax for 2025Employer
4. Part 5: FUTA tax liability by quarter (only if line 12 is more than $500)Employer
5. Part 6: Third-party designeeEmployer
6. Part 7: Sign hereEmployer
7. Paid preparer use onlyPaid preparer
8. Form 940-V payment voucherEmployer

How to fill out Form 940, step by step

1 Header and type of return

Enter the EIN, legal name, trade name and address. Tick any type of return that applies: amended, successor employer, no payments to employees in 2025, or final. If you made no payments to employees, you skip to Part 7 and sign. Aggregate filers tick their filer type.

2 Part 1 — state unemployment tax

Line 1a is the two-letter abbreviation of the one state where you paid state unemployment tax; line 1b is ticked instead by multi-state employers, who complete Schedule A (Form 940). Complete 1a or 1b even if your state rate was zero. Tick line 2 if you paid wages in a credit reduction state.

3 Part 2 — FUTA tax before adjustments (lines 3 to 8)

Line 3 is all payments to employees. Line 4 is the part exempt from FUTA tax, with boxes 4a to 4e for the kinds. Line 5 is the total paid to each employee over $7,000, after exempt payments. VergeHR adds lines 4 and 5 (line 6), subtracts from line 3 for taxable FUTA wages (line 7), and multiplies by 0.006 (line 8).

4 Part 3 — adjustments (lines 9 to 11)

If ALL your taxable FUTA wages were excluded from state unemployment tax, line 9 is line 7 × 0.054 and lines 10 and 11 stay blank. If only SOME were excluded, or you paid any state unemployment tax late, enter line 7 of the worksheet in the instructions on line 10. If credit reduction applies, line 11 is the total from Schedule A.

5 Part 4 — balance due or overpayment (lines 12 to 15)

Line 12 adds lines 8 to 11. Line 13 is the FUTA tax you deposited for the year, including any overpayment applied from a prior year. The difference is a balance due (line 14) or an overpayment (line 15a), which you can apply to your next return or have refunded, now by direct deposit (lines 15c to 15e).

6 Part 5 — liability by quarter

Only if line 12 is more than $500: enter your FUTA tax liability (not deposits) for the first three quarters. VergeHR copies line 12 to line 17 and works out the 4th quarter as the difference, as the instructions describe. Credit reduction liability belongs to the 4th quarter.

7 Parts 6 and 7 — designee and signature

Name a third-party designee with a 5-digit PIN if you want someone to be able to discuss the return with the IRS. Then print your name, title and phone and sign; a paid preparer fills in and signs their box.

Common Mistakes to Avoid

• Leaving lines 1a and 1b both blank when you did pay state unemployment tax (or had a 0% state rate).
• Forgetting that the $7,000 wage base applies per employee: line 5 is the total of each employee's excess over $7,000.
• Reporting deposits instead of liabilities in Part 5, or quarterly amounts that don't add up to line 12.
• Ticking line 9 when you paid no state tax only because your state rate was 0%. Line 9 doesn't apply then.
• Missing Schedule A (Form 940) when you're a multi-state employer or paid wages in a credit reduction state.
• Paying a balance of more than $500 with the return instead of depositing it, which can bring a penalty.
• Rounding to whole dollars: every amount has its own cents box.

After You Fill It Out

Check the figures against your payroll records and your FUTA deposits, then sign and date page 2 by hand (or send it for signature from VergeHR). VergeHR keeps a copy of the filled PDF in Files.

Mail it to the address in the Instructions for Form 940 for your state and whether you enclose a payment, or have it e-filed. If you pay a balance of $500 or less by check or money order, make it payable to "United States Treasury", write your EIN, "Form 940" and "2025" on it, and enclose the 940-V voucher without stapling it. If you pay electronically, use the "without a payment" address and don't send the voucher.

Attach Schedule A (Form 940) if you're a multi-state employer or paid wages in a credit reduction state, Schedule R if you're an aggregate filer, and for a final return a statement naming who keeps the payroll records and where.

Form 940: frequently asked questions

Official Sources

• Blank form (PDF), published by Internal Revenue Service (IRS): https://www.irs.gov/pub/irs-pdf/f940.pdf
• Official instructions and guidance: https://www.irs.gov/forms-pubs/about-form-940
• Edition shown on this page: 940 for 2025 (created 6/2/25) (checked 2026-09-28).

VergeHR is not affiliated with or endorsed by Internal Revenue Service (IRS) or any government. This page explains the form in general terms and is not legal, tax or immigration advice. Always read the official instructions, and check that you are using the edition the recipient accepts. Page last reviewed 2026-09-28.

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