IRS Form 940 (2022): Employer's Annual FUTA Tax Return

Employers use IRS Form 940 (2022) to report annual Federal Unemployment Tax Act liability, including total wages, taxable wages, and state unemployment credits. The form applies to businesses that paid employee wages in 2022 and meet FUTA filing requirements and federal unemployment reporting obligations.

Late Filers

Employers missing the January 31, 2023, deadline must still file Form 940, as failure-to-file penalties may reach 25 percent of the unpaid FUTA tax.

Multi-State Employers

Businesses that paid wages across multiple states in 2022 must carefully review payroll activity and determine whether the Schedule A credit reduction rules apply.

State Unemployment Tax Credit

Employers may reduce gross FUTA liability through eligible state unemployment tax credits, lowering the effective federal unemployment tax rate to 0.6 percent.

Claiming 2022 Credits

Employers who pay state unemployment taxes on time may claim up to a 5.4 percent FUTA credit, unless operating in a credit-reduction state.

IRS Compliance

Accurately filing Form 940 demonstrates federal payroll tax compliance and helps employers avoid IRS notices, penalties, interest charges, and unresolved FUTA balances.

Citizens Abroad / Military

Employers with workers abroad or in U.S. territories must determine whether wages remain subject to FUTA reporting requirements during 2022 filings.

Follow the steps below to complete Form 940 (2022) accurately and comply with IRS requirements. Several steps reflect tax rules specific to 2022 filings.

1. Gather your documents before starting

Collect all 2022 payroll records, including quarterly wage summaries, state unemployment tax payment confirmations, prior-year Form 940 filings, and any IRS correspondence. Ensure employer records match EIN details exactly before beginning preparation to avoid filing errors or delays.

2. Choose the correct return type

Form 940 does not use personal filing statuses; instead, it requires selecting the correct return type: original return, amended return, final return, successor employer return, or no payments return. Avoid outdated or incorrect labels, as misclassification can cause IRS processing delays, rejected filings, misapplied FUTA payments, and extended IRS account reviews.

3. Report all income on the correct lines

Report total employee payments on Line 3, exempt payments like certain fringe benefits on Line 4, and wages above the $7,000 FUTA base on Line 5. Line 6 totals exclusions, and Line 7 calculates taxable FUTA wages. For 2022, moving expense and bicycle commuting reimbursements are subject to FUTA tax and aren't included on line 4.

4. Figure taxable FUTA wages

Form 940 does not calculate AGI directly; taxable FUTA wages are determined by subtracting exempt wages and excess wages above $7,000 per employee. Line 7 represents the final taxable amount used to calculate gross FUTA tax before applying any allowable state unemployment credits.

5. Apply the state unemployment tax credit

Employers apply the standard 5.4 percent FUTA credit if state unemployment taxes were paid on time, reducing the net rate to 0.6 percent. Credit reduction states require additional adjustments on line 11 and Schedule A for California, Connecticut, Illinois, New York, and the U.S. Virgin Islands filers, increasing total federal unemployment tax liability.

6. Claim the 2022-specific credit (2022 Only)

Eligible employers receive up to a 5.4 percent FUTA credit when state unemployment taxes are paid timely. Credit reduction states require Schedule A and additional calculations to adjust reduced credits and the additional FUTA tax owed accurately.

Missing W-2s or Tax Records for 2022?

Late filers often find original payroll documents missing years after the tax period closes. Business payroll records, IRS transcripts, and Social Security Administration data can help reconstruct information needed to complete an accurate 2022 Form 940 return.

IRS Wage & Income Transcript

This transcript type is primarily an individual filer resource, but employers may use available business transcripts—including tax return and tax account transcripts—to verify previously reported employment tax information.

IRS Account Transcript

An IRS account transcript shows payments, assessments, penalties, and credits posted to an employer’s account, helping clarify what was reported or paid for the 2022 tax year.

Social Security Administration

SSA employer services support wage reporting and SSN verification, and SSA records may help confirm wage data previously submitted under the employer's identification number when reconstructing prior-year payroll information.

Contact Prior Employers

IRS rules require employers to retain employment tax records for at least four years, and payroll providers or prior businesses may still have 2022 wage and tax documentation available.

Filing late is better than not filing, since failure-to-file penalties accrue faster than failure-to-pay penalties, making prompt submission the most effective step.

These errors are the most frequent causes of IRS processing delays, rejected returns, or missed credits in 2022.

• Using the wrong tax year form — Filing a Form 940 edition other than 2022 can cause IRS processing delays, corrections, or outright rejection of the return.
• Missing Schedule A / 2022 credit reduction — Employers in multiple states or credit reduction jurisdictions must attach Schedule A; omission results in incomplete FUTA reporting and potential underpayment.
• Wrong EIN or business name — Incorrect EIN or business name entries can misalign Internal Revenue Service records, delay processing, and cause misapplied payments or account discrepancies.
• Applying credit reduction rules incorrectly — Employers must apply the correct 2022 credit reduction rules, especially in California, Connecticut, Illinois, New York, and the U.S. Virgin Islands jurisdictions.
• Misapplying the $7,000 wage base — FUTA applies only to the first $7,000 of wages; misreporting wage thresholds causes inaccurate taxable wage calculations and liability errors.
• Assuming a refund is still available — Refund claims for 2022 FUTA tax are generally limited to three years from filing or two years from payment, and it may have already expired.
• Missing or incorrect Social Security numbers — While Form 940 excludes SSNs, errors in related W-2 or SSA wage filings can still trigger an IRS compliance mismatch.
• Unsigned return — A Form 940 without an authorized signature is invalid and will not be processed until a properly signed version is submitted.
• Missing attachments — Required Schedule A must accompany multi-state or credit reduction filings; omission leads to incomplete returns, IRS processing delays, and potential FUTA tax calculation errors.

What is IRS Form 940 (2022) used for?

Employers use IRS Form 940 (2022) to report the employer's annual federal unemployment tax liability to the federal government for 2022. It summarizes wages, taxable wages, state credits, and adjustments.

Can I still file a 2022 Form 940 return?

Yes, employers can still file the 2022 Form 940 with the federal government even after the deadlines. Filing now stops the failure-to-file penalty from growing (it is capped at 25%), but the failure-to-pay penalty and interest continue until the tax is paid.

What is the FUTA tax rate for 2022?

The FUTA tax rate for 2022 is 6.0% on the first $7,000 of wages paid to each employee. Employers that paid state unemployment tax on time generally get a credit of up to 5.4%, for a net rate of 0.6%, unless they paid wages in a credit reduction state.

Which states had a credit reduction in 2022?

California, Connecticut, Illinois, New York, and the U.S. Virgin Islands had a credit reduction in 2022. Employers that paid wages subject to unemployment tax in those states figure the additional FUTA tax on Schedule A (Form 940).

What is Schedule A, and when is it required?

Schedule A is required when employers paid wages subject to state unemployment tax in more than one state or in a credit reduction state. It helps manage FUTA calculations and ensures proper reporting to the federal government.

How do employers pay the FUTA tax owed for 2022?

Employers generally must deposit FUTA tax electronically; if the FUTA tax for the fourth quarter (plus any undeposited amount from earlier quarters) is $500 or less, it can be deposited or paid with Form 940. Late payments incur the failure-to-pay penalty and interest.