Form 940 for 2024: Federal Unemployment Tax Return Checklist
Form Purpose
Form 940 calculates and reports the annual Federal Unemployment Tax Act (FUTA) tax liability for 2024. The form applies a 6.0% gross tax rate, with most employers receiving a 5.4% credit, resulting in a 0.6% net rate on wages up to $7,000 per employee per year. Multi-state employers and those in credit reduction states must complete Schedule A (Form 940) to report their tax liability for the year. All filers must report quarterly tax liability if the total annual FUTA tax exceeds $500.
Completion Steps
Step 1: Enter Entity Information and Verify EIN Format
Provide your employer name (legal business name, not trade name), complete mailing address, and Employer Identification Number (EIN) in the correct format. If your EIN application is pending, write “Applied For” and the application date in the EIN field. This information must match IRS records exactly to ensure proper crediting and correspondence.
Step 2: Determine Return Type and Check All Applicable Boxes
Mark the appropriate box if you are filing an amended return, reporting as a successor employer, indicating no employee payments in 2024, or declaring final business closure. These checkboxes appear at the top of page 1 and must be completed before beginning wage calculations.
Step 3: Complete Part 1 to Identify Multi-State or Credit-Reduction Status
If liable for state unemployment tax in only one state, enter the two-letter state abbreviation on line 1a. If operating in multiple states, check line 1b and complete Schedule A (Form 940). For 2024, three jurisdictions had credit reductions: California (0.9%), New York (0.9%), and the U.S. Virgin Islands (4.2%). If you paid wages in any credit reduction state, verify line 2 and complete Schedule A.
Step 4: Enter Total Payments to All Employees on Line 3
Report the gross wages paid to all employees during the calendar year 2024, regardless of amount. Include all forms of compensation subject to FUTA tax reporting before applying any exemptions or wage caps. This includes salaries, wages, commissions, fees, bonuses, vacation allowances, and certain fringe benefits.
Step 5: Identify and Itemize All FUTA-Exempt Payments on Line 4
Check all applicable boxes (4a through 4e) for fringe benefits, group-term life insurance over $50,000, retirement or pension plan contributions, dependent care benefits, or other exempt payments specified in the instructions. Enter the total exempt amount on line 4. These five categories remain unchanged from prior years.
Step 6: Calculate Excess Wages Over $7,000 Per Employee on Line 5
For each employee whose 2024 compensation exceeded $7,000, enter only the amount above $7,000. Sum all per-employee excess amounts. The $7,000 annual wage base is the federal taxable wage limit and has remained unchanged since 1983.
Step 7: Compute Subtotal of Exclusions on Line 6
Add line 4 (exempt payments) and line 5 (excess wages). This subtotal represents all wages not subject to FUTA tax and will be subtracted from total payments to determine taxable wages.
Step 8: Calculate Taxable FUTA Wages on Line 7
Subtract line 6 from line 3 to determine your taxable FUTA wages. This amount represents the first $7,000 of wages paid to each employee during 2024, minus any exempt payments.
Step 9: Calculate FUTA Tax Before Adjustments on Line 8
Multiply line 7 by 0.006 (the net tax rate after the standard 5.4% credit). This calculation assumes you paid all required state unemployment taxes timely and are entitled to the maximum credit. Enter the results on line 8.
Step 10: Determine Adjustments in Part 3
Line 9: If all taxable FUTA wages have been excluded from the state unemployment tax, multiply the amount on line 7 by 0.054 and enter the result on line 9. This applies when wages are subject to federal but not state unemployment tax.
Line 10: If some wages were excluded from the state unemployment tax or were paid late, complete the worksheet in the instructions and enter the adjustment on line 10.
Line 11: If you paid wages in a credit reduction state, complete Schedule A (Form 940) and enter the credit reduction amount on line 11. For 2024, employers in California and New York face an additional 0.9% tax, while employers in the U.S. Virgin Islands face a further 4.2% tax on the first $7,000 of each employee’s wages.
Step 11: Calculate Total FUTA Tax After Adjustments on Line 12
Add lines 8, 9, 10, and 11 to determine your total FUTA tax for 2024. This amount determines whether quarterly deposit requirements apply and whether you owe additional tax or have an overpayment.
Step 12: Report Quarterly Liability If Line 12 Exceeds $500
Complete Part 5 only if your total FUTA tax (line 12) exceeds $500. Enter your tax liability (not deposits made) for each quarter: line 16a (January through March), line 16b (April through June), line 16c (July through September), and line 16d (October through December). The quarterly amounts must equal the amount on line 12. The $500 threshold determines the timing requirements for deposits throughout the year.
Step 13: Determine Balance Due or Overpayment on Lines 13 Through 15
Line 13: Enter total FUTA tax deposits made during 2024, including any overpayment from a prior year that you applied to 2024.
Line 14: If line 12 is more than line 13, subtract line 13 from line 12. This is the balance you owe. Pay this amount by the filing deadline using electronic payment methods.
Line 15: If line 13 is more than line 12, subtract line 12 from line 13. This is your overpayment. On line 15a, enter the amount to be applied to your next return. On line 15b, enter the amount to be refunded.
Step 14: Complete Part 6 if You Are a Multi-State Employer
Multi-state employers must indicate whether they paid wages in states with different state experience rates. This information affects credit calculations and may require additional reporting on Schedule A.
Step 15: Sign and Date the Return in Part 7
The return must be signed by the employer or an authorized representative. Enter your name, title, best contact phone number, and date. If using a paid preparer, that person must also complete and sign the paid preparer section with their Preparer Tax Identification Number (PTIN).
Filing Deadlines and Requirements
When to File
Form 940 for 2024 is due January 31, 2025. However, if you deposited all FUTA tax when due, you have until February 10, 2025, to file your return. If the due date falls on a Saturday, Sunday, or legal holiday, you may file on the next business day.
Where to File
Electronic filing is strongly encouraged. For paper returns, mail to the address specified in the instructions based on your location and whether you include a payment. Different addresses apply for returns with and without payments.
Deposit Requirements
If your FUTA tax liability exceeds $500 in any quarter, you must deposit it by the last day of the month following the quarter's end. Fourth quarter deposits are due January 31, 2025. If your liability is $500 or less, carry it forward to the next quarter or pay with your annual return. In years with credit reduction states, include the credit reduction amounts with your fourth-quarter deposit.
Payment Methods
All deposits must be made electronically using the Electronic Federal Tax Payment System (EFTPS), IRS Direct Pay, or through your IRS business tax account. Same-day wire payments are available for late deposits. Credit and debit card payments are accepted for balance due amounts only; they are not accepted for required deposits.
Important Reminders
Credit Reduction States for 2024
California, New York, and the U.S. Virgin Islands are credit reduction states for 2024. Employers who pay wages in these jurisdictions will pay higher FUTA taxes. California and New York employers will pay an effective rate of 1.5% (0.6% standard rate plus 0.9% credit reduction) on the first $7,000 of wages. U.S. Virgin Islands employers will pay an effective rate of 4.8% (0.6% standard rate plus 4.2% credit reduction).
State Unemployment Tax Timing
To receive the full 5.4% FUTA credit, you must pay all required state unemployment taxes by your Form 940 due date (January 31, 2025, or February 10, 2025, if you deposited timely). Late state unemployment tax payments result in reduced credits and higher FUTA tax liability.
Amended Returns
If you need to correct a previously filed 2024 Form 940, check box a (Amended) at the top of the form, complete all lines with corrected amounts, attach an explanation, and file using the “without a payment” address. Electronic filing of amended returns is available through Modernized e-File.
Record Retention
Maintain all payroll records, tax returns, and documentation supporting your Form 940 for at least four years from the due date or payment date, whichever is later.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
