What IRS Form 940 (2015) Is For

IRS Form 940 (2015) reports an employer’s annual Federal Unemployment Tax Act (FUTA) liability to the IRS. This federal law provides funding for unemployment benefits and operates in conjunction with state unemployment tax systems. Employers are responsible for paying both the federal and state portions of the unemployment tax.

A business must file Form 940 if it paid $1,500 or more in wages in any calendar quarter during 2014 or 2015, or if it employed one or more workers for part of a day in 20 or more different weeks. Agricultural and household employers are subject to separate filing thresholds under federal law. The 2015 version ensures proper reporting of the FUTA tax rate, credit reductions, and state unemployment tax payments for that tax year.

When You’d Use Form 940 for 2015

You should use the 2015 version of Form 940 when filing a late or amended return. Common reasons include receiving an IRS notice for an unfiled return, discovering unpaid FUTA tax during an internal audit, or correcting previously filed information. Employers may also file when resolving outstanding tax balances for a closed business.

The original due date for the 2015 Form 940 was February 1, 2016, or February 10, 2016, if all FUTA taxes were deposited on time. While the IRS still accepts late filings, penalties and interest may apply. Refund claims are limited by statute—generally three years from the filing date or two years from the payment date, whichever is later.

Key Rules or Details for 2015

For the 2015 tax year, the FUTA tax rate was 6.0 percent on the first $7,000 of each employee’s wages. Most employers received a 5.4 percent credit for timely state unemployment tax payments, which reduced the net FUTA tax rate to 0.6 percent. Employers in credit reduction states—those repaying federal unemployment loans—paid a higher rate and were required to attach Schedule A (Form 940) to their return.

Other Key 2015 Details

• Employers with over $500 in FUTA liability per quarter had to make deposits instead of paying with the annual return.
  
  
• Electronic deposits via EFTPS were required when the total liability exceeded $500 to ensure timely payments.
  
  
• The FUTA wage base remained $7,000 per employee, applying only to the first $7,000 of each worker’s wages.
  
  
• Household employers owed FUTA tax if they paid $1,000 or more in cash wages in any quarter of 2014 or 2015.
  
  
• Agricultural employers were required to file if they paid $ 20,000 or more in wages or employed 10 or more workers for at least one day in 20 or more weeks of the year.

Step-by-Step (High Level)

Step 1: Gather transcripts.

Begin by reviewing your business’s IRS records. Request account transcripts using Form 4506-T or by calling 1-800-908-9946. These transcripts confirm whether a 2015 Form 940 was previously filed and indicate any outstanding payments or balances under the Federal Unemployment Tax Act.

Step 2: Use the correct form.

Download the official 2015 version of Form 940 from the IRS website. Always use the exact year’s form to ensure you’re applying the correct FUTA tax rate, wage base, and credit rules. Substituting a current-year form can cause processing delays or inaccurate calculations.

Step 3: Complete all required fields.

Fill in every section carefully, including total wages paid, FUTA-taxable wages, state unemployment tax contributions, and any applicable credit reductions. Verify that the total tax amount and net FUTA tax rate are correct before signing the form.

Step 4: Attach required schedules.

If your business operated in more than one state or if any of those states were credit reduction states, attach Schedule A (Form 940). This schedule calculates any additional FUTA tax owed at the federal level and ensures your return is complete.

Step 5: File correctly.

Mail your completed return to the appropriate IRS address listed in the 2015 instructions. If you are submitting payment with the form, verify that you are using the “Without Payment” mailing address. Electronic filing options may not be available for older returns, so paper submission is typically required.

Step 6: Keep documentation.

Maintain a complete copy of your filed return, payment confirmation, and all supporting records. Keeping these documents organized helps if the IRS requests verification or if you need to reference prior-year filings when calculating current-year FUTA taxes.

Common Mistakes and How to Avoid Them

• Using the wrong year’s form: Always select Form 940 (2015); each year’s form reflects different tax rates and credit rules.
• Incorrect wage calculations: To avoid incorrect wage calculations, apply the $7,000 FUTA wage base per employee per year.
• Late state payments: To avoid late state payments, pay state unemployment taxes by your Form 940 due date to claim the full 5.4% credit.
• Deposit timing errors: Deposits are due by the last day of the month following each quarter once your total exceeds $500.
• Ignoring credit reduction states: Check the Department of Labor’s annual list of credit reduction states and adjust your FUTA credit accordingly to avoid underpayment and penalties.
• Incomplete Successor Information: To avoid incomplete successor information, identify predecessor wages when acquiring a business and clearly mark the successor status.

What Happens After You File

Processing older returns may take several months, but the IRS will send you an acknowledgment once your return is received and processed.

If you owe a balance, you can:

• Request an installment agreement by submitting Form 9465 to set up monthly payments with the IRS.
  
  
• Apply online at IRS.gov if you qualify for an installment agreement to speed up the approval process.
  
  
• Make a partial payment to immediately reduce the amount of penalties and interest that continue to accrue.

Penalties include a 5% monthly late-filing penalty (up to 25%) and a 0.5% monthly late-payment penalty, with interest accruing daily until the full balance is paid.

If you disagree with an IRS notice, you can file an appeal with the IRS Independent Office of Appeals within 30 days of the notice date.

FAQs

Can I still file Form 940 for the 2015 tax year?

Yes, late filings are accepted, but penalties and interest apply if tax was owed.

What was the FUTA tax rate for 2015?

The standard rate was 6.0% on the first $7,000 of wages, reduced by the 5.4% credit for timely state payments.

How do I know if my state was a credit reduction state?

Check the official 2015 Form 940 Instructions or the IRS website for that year’s list.

Can I still claim a refund for the 2015 FUTA tax?

Refunds are generally allowed within three years of filing or two years of payment, whichever is later.

Do I need to amend my state unemployment return?

Yes, if federal changes affect wages or taxes reported to your state.

What if I can’t pay the total due?

Apply for an installment agreement using Form 9465 or request an online payment plan.

Do I still need to file Form 940 if my business has closed?

Yes, file a final return, check box “d,” and note your record-keeping location.