Form 941 vs Form 940: quarterly and annual federal payroll returns

The short answer

Form 941 is the quarterly return for the taxes you withhold from paychecks plus your share of Social Security and Medicare. Form 940 is the annual return for federal unemployment tax (FUTA), which only the employer pays. Most employers with even one employee file both: four 941s and one 940 a year.

Form 941: every quarter

Every employer that withholds federal income tax, Social Security or Medicare files Form 941 each quarter, even in a quarter with no payroll, until it files a final return. The main lines are:

• Line 1: the number of employees paid for the pay period that includes the 12th day of the quarter's last month.
• Lines 2 and 3: total wages, tips and other compensation, and federal income tax withheld.
• Lines 5a to 5d: Social Security wages and tips, Medicare wages, and wages subject to Additional Medicare (over $200,000 for an employee in the year).
• Line 12: total taxes after adjustments, such as rounding cents.
• Line 16: your deposit schedule and, for monthly depositors, the liability for each month. Semiweekly depositors attach Schedule B instead.

Very small employers may be told by the IRS to file Form 944 once a year instead. It applies if you expect $1,000 or less of these taxes for the year, and only after the IRS notifies you in writing. Without that notice, file 941s.

Deposits come first

The return reports the tax; the money is usually due earlier, through deposits by electronic funds transfer (EFTPS, IRS Direct Pay or your IRS business tax account). Your schedule depends on the taxes you reported in the lookback period: July 1 to June 30 of the two years before. For 2027 that is July 1, 2025 to June 30, 2026.

• Monthly depositor ($50,000 or less in the lookback period): deposit each month's taxes by the 15th of the next month. New employers are monthly depositors for their first calendar year.
• Semiweekly depositor (more than $50,000): wages paid Wednesday to Friday are deposited by the following Wednesday; wages paid Saturday to Tuesday by the following Friday.
• $100,000 next-day rule: if you build up $100,000 or more on any day, deposit by the next business day.
• Small quarters: if the quarter's total tax (line 12) is under $2,500 for the current or prior quarter and you don't trigger the next-day rule, you may pay with the return.

Late deposits cost 2% (1 to 5 days late), 5% (6 to 15 days), 10% (16 days or more) and 15% if still unpaid 10 days after an IRS notice. Withheld taxes are trust fund money: owners and others responsible for paying them can be personally liable for 100% of what was not paid.

Form 940: once a year

You file Form 940 for 2026 if you paid wages of $1,500 or more in any calendar quarter of 2025 or 2026, or had an employee for at least part of a day in 20 or more different weeks in either year. Household and farm employers have their own tests.

• The tax: 6.0% on the first $7,000 of each employee's wages. Pay state unemployment tax in full and on time and you get a credit of up to 5.4%, leaving 0.6% (at most $42 per employee).
• Credit reduction states: where a state has not repaid federal unemployment loans, the credit is smaller and you owe more, calculated on Schedule A. For 2025, California (1.2%) and the US Virgin Islands (4.5%) were on the list; the 2026 list is published in November. See what changed in US payroll for 2026.
• Deposits: if the undeposited FUTA tax is more than $500 at the end of a quarter, deposit it by the last day of the following month. $500 or less carries forward to the next quarter.

Due dates for the next year

A return filed by the due date is on time; if the date falls on a weekend or legal holiday, the next business day counts. If you deposited every tax in full and on time, you get 10 more days to file.

January 31, 2027 is a Sunday, July 31 a Saturday and October 31 a Sunday, which is why those dates move. The IRS has not yet published its 2027 tax calendar; these dates follow the rules in Publication 15. For every other federal date in the year, see the 2027 US small business tax calendar.

Keep the returns and the books in step

1. The four 941s for the year should add up to the W-2 totals on Form W-3. The SSA and IRS compare them, and a mismatch brings a letter. See W-2 and 1099 deadlines.
2. Each quarter, compare the 941 figures with your payroll liability accounts and the deposits you actually made. The liability account should be zero, or equal to the deposit not yet due.
3. Check FUTA wages: once an employee passes $7,000 for the year, no more FUTA is due on them.
4. Keep payroll tax records for at least four years after the tax is due or paid.

New to running payroll? The payroll guide walks through the whole cycle, and the paycheck calculator shows the 2026 withholding on a single check.