What IRS Form 940 (2019) Is For

IRS Form 940 (2019) reports the FUTA tax owed by employers under the Federal Unemployment Tax Act. The funds collected are sent to the federal government to support state unemployment programs that provide benefits to eligible workers.

Employers must file this form if they:

• The employer paid wages of $1,500 or more in any calendar quarter of 2018 or 2019, meeting the filing threshold under federal law.
  
  
• The employer had one or more employees working for at least part of a day in 20 or more different weeks during either year, indicating ongoing employment.

Certain agricultural employers, household employees, and S corporations may have specific filing requirements. The federal unemployment tax is paid entirely by employers and is not deducted from employee wages.

When You’d Use Form 940 (2019)

An employer would use the 2019 Form 940 under the following circumstances:

• The employer is filing late because the original return due on January 31, 2020, was not submitted to the IRS.
  
  
• The employer is amending a previously filed 2019 tax return to correct reporting errors or update payment details.
  
  
• The employer is responding to an IRS notice requesting clarification of a missing return, payment, or resolution of an unpaid FUTA tax balance.

Filing the correct year’s form is essential. The IRS requires the 2019 version, not the current year’s form, to ensure the tax paid, penalties, and interest are calculated accurately. The form may be submitted electronically or by mail.

Key Rules or Details for 2019

For 2019, the standard FUTA tax rate was 6.0% on the first $7,000 of taxable wages per employee. Employers typically received a maximum credit of 5.4% for state unemployment taxes paid on time, reducing the effective FUTA rate to 0.6%.

Credit Reduction State

The U.S. Virgin Islands (USVI) was the only state to experience a credit reduction in 2019, with a 2.7% reduction rate. Employers who paid wages subject to the USVI unemployment tax were required to complete Schedule A (Form 940) and pay an additional FUTA tax.

Applicable Employers

• Businesses that paid wages to employees
  
  
• Partnerships and corporations with active payroll
  
  
• Agricultural employers or household employers meeting wage thresholds

Always refer to the official IRS instructions for details about exemptions and state unemployment requirements.

Step-by-Step (High Level)

Follow these general steps to complete and file Form 940 (2019):

• The employer should gather payroll records, including 2019 wage reports, state unemployment tax payment documentation, and any IRS correspondence from the same period.
  
  
• The form must be completed using the official 2019 version to ensure the calculations match that year’s FUTA requirements and wage limits.
  
  
• The employer should calculate FUTA tax on the first $7,000 of each employee’s wages, applying any state tax credits that reduce the federal unemployment tax.
  
  
• Schedule A (Form 940) must be attached if the business paid wages in multiple states or in a state with a credit reduction, such as the U.S. Virgin Islands.
  
  
• Penalties and interest should be calculated carefully, including both failure-to-file and failure-to-pay penalties, to determine the correct total tax owed.
  
  
• The completed return should be mailed to the appropriate “without payment” IRS address or filed electronically using IRS-approved software.
  
  
• Employers should retain copies of all forms, schedules, and supporting payroll documentation for at least four years after filing in case of future IRS review.

Common Mistakes and How to Avoid Them

• Using the wrong year’s form: Employers often submit the incorrect version; they should always use Form 940 (2019) when reporting 2019 wages to ensure accurate calculations.
  
  
• Incorrect FUTA calculations: Some employers misapply the wage base; only the first $7,000 of each employee’s annual wages is subject to FUTA tax.
  
  
• Missing Schedule A: Businesses operating in multiple states or the U.S. Virgin Islands must include Schedule A (Form 940) to report their multi-state wage distribution accurately.
  
  
• Incorrect Mailing Address: Returns are sometimes sent to the wrong IRS office. Employers should verify the current “without payment” address on the IRS website before mailing any documents to ensure accuracy.
  
  
• Incomplete penalty calculations: Employers occasionally omit penalties; both failure-to-file and failure-to-pay penalties must be included when determining the total amount due.
  
  
• Missing documentation: Employers should retain payroll summaries, wage records, and proof of state unemployment tax payments for at least four years to support their filing in case of an IRS inquiry.

What Happens After You File

The IRS usually processes employment tax returns within six to eight weeks. Employers may receive a notice confirming receipt or requesting additional details.

If additional tax, interest, or penalties are owed:

• The employer can request a payment plan using Form 9465 to pay the balance over time.
  
  
• The employer can apply for penalty abatement with Form 843 if reasonable cause exists.
  
  
• The employer can check their business tax account or request IRS transcripts to verify filing status and payments. 

If the return indicates an overpayment, the IRS will either apply the credit to future taxes or issue a refund, as specified by the employer.

FAQs

What is IRS Form 940 (2019) used for?

IRS Form 940 (2019) reports the federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Employers pay this tax on wages paid to fund unemployment insurance benefits provided by the federal government through state programs.

Who must file Form 940 for 2019?

Employers who paid wages of $1,500 or more in any calendar quarter of 2018 or 2019 must file Form 940. Agricultural employers, household employees, and certain S corporations also have special filing requirements under federal law.

What was the FUTA tax rate for 2019?

The FUTA tax rate for 2019 was 6.0% on the first $7,000 of taxable wages per employee. Employers generally received a maximum credit of 5.4% for timely state unemployment tax payments, lowering the effective rate to 0.6%.

What are credit reduction states?

A credit reduction occurs when a state borrows federal funds for unemployment benefits and hasn’t repaid them by the due date. For 2019, only the U.S. Virgin Islands was a credit reduction state, requiring employers to pay additional tax.

When was the 2019 Form 940 due?

The original due date for IRS Form 940 (2019) was January 31, 2020. Employers who missed the deadline can still file a late return or amend their tax return, although penalties and interest may apply under federal law.