Form 940 (2015): Employer’s Federal Unemployment
Tax Return
Form 940 for tax year 2015 reports federal unemployment taxes owed on wages paid to employees. The 2015 instructions included updates to Schedule A to reflect changes in how states calculate unemployment rates and explained how to determine your tax responsibilities after modifications to the list of states with reduced credits.
Determining Your Filing Requirement
You must file Form 940 if you meet any of the three employer qualification tests. If you paid
$1,500 or more in any quarter of 2014 or 2015, or had one or more employees for at least part of a day in 20 different weeks, you must file the general test.
Household employers must file if they paid cash wages of $1,000 or more in any calendar quarter. Agricultural employers must file if they paid $20,000 or more to farmworkers in any calendar quarter, or employed 10 or more farmworkers during some part of the day in any 20 or more different weeks during 2014 or 2015.
Completing Form 940 for 2015
Step 1: Verify Employer Qualification
Determine whether your business meets any of the three employer tests for FUTA filing requirements. Review your 2014 and 2015 payroll records to confirm you satisfy at least one test before proceeding with Form 940 preparation.
Step 2: Report Total Wages and Exemptions
Complete Part 1, identifying your obligations for state unemployment tax and your credit reduction status. Report all wages subject to FUTA tax in Part 2, lines 3 through 7, including salaries paid to employees working in the United States, while excluding exempt payments.
Step 3: Complete Schedule A for State Information
File Schedule A if you paid wages in multiple states or in any credit reduction state. In 2015,
California, Connecticut, Ohio, and the U.S. Virgin Islands were credit reduction states that required employers to pay additional FUTA tax when filing Form 940.
Step 4: Calculate FUTA Tax Credits
Determine your FUTA tax credit in Part 2 based on prompt payments of state unemployment taxes. Employers in non-credit reduction states receive a maximum credit of 5.4 percent when they pay state unemployment taxes by the Form 940 due date, resulting in an effective FUTA rate of 0.6 percent.
Step 5: Determine Current Year Adjustments
Complete Part 3 to calculate adjustments to your FUTA tax liability for the current year. Line 9 addresses wages excluded from state unemployment tax, line 10 handles partial exclusions or late state payments, and line 11 reports credit reduction amounts from Schedule A.
Step 6: Calculate Total Tax and Deposits
Complete Part 4 to determine your final FUTA tax liability after all adjustments. Compare your total FUTA tax deposited during 2015 with your calculated liability to decide whether or not you owe additional tax or have an overpayment to apply or refund.
Step 7: Report Quarterly Liability
Complete Part 5 only if your total FUTA tax liability exceeds $500 for the year. Report your quarterly FUTA tax liability for each calendar quarter, ensuring the total matches your line 12 amount to satisfy IRS reconciliation requirements.
- Confusing Form 940 with Form 941: Form 940 reports annual FUTA tax on
- Missing the 20-week test: Many employers focus only on the $1,500 wage threshold
- Claiming unrelated tax credits: The Work Opportunity Tax Credit is a federal income
- Filing amendments incorrectly: Amendments to prior-year returns require filing a
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 8: Sign and Date the Return
The responsible officer or authorized agent must sign Form 940, Part 7, with their original signature. Include your daytime phone number and complete the third-party designee section if you authorize someone to discuss your return with the IRS.
Year-Specific Updates for 2015
The 2015 Schedule A incorporated final state unemployment insurance rate tables effective
January 1, 2015, reflecting revised classifications for credit reduction states. Part 2 instructions explained how FUTA credit reductions work with timely state unemployment tax payments, clearing up confusion employers had in 2014 about eligibility for partial-year credits.
The 2015 form added explicit language regarding the treatment of certain agricultural and household employee wages under updated FUTA coverage rules. For employers with operations in multiple states, the 2015 instructions reinforced the requirement to file separate
Schedule A entries for each state with particular attention to apportionment rules.
Common Mistakes to Avoid unemployment compensation, while Form 941 reports quarterly FICA taxes and income tax withholding. These are independent returns reporting different tax obligations that do not require reconciliation with each other. and overlook the alternative 20-week test. You must file Form 940 if you had even one employee for part of a day in 20 or more different weeks, regardless of total wages paid. tax credit claimed on Form 5884 and is unrelated to FUTA tax liability. Form 940 does not provide any lines for claiming employment incentive credits that reduce FUTA tax. separate amended Form 940 by checking box “a” in the Type of Return section. Part 3 of
Form 940 addresses current-year adjustments only, not corrections to previously filed returns.
Filing Deadlines and Payment Requirements
The due date for filing Form 940 for 2015 is February 1, 2016. However, if you deposited all your FUTA tax when due, you may file Form 940 by February 10, 2016. If your FUTA tax liability exceeds $500 for any quarter, you must deposit the tax electronically by the last day of the month following that quarter.
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