How to fill out Form 940 (2026 FUTA): line by line, due date, penalties

Tax forms › Form 940 · Last reviewed October 25, 2026 · General information, not tax advice

Form 940 at a glance

What it reports	Federal unemployment tax: 6.0% of the first $7,000 of each employee's wages, usually 0.6% after the state credit
Who pays	The employer only; nothing is withheld from employees
How often	Once a year, with quarterly deposits when more than $500 is owed
Due for 2026	Mon, Feb 1, 2027 (Feb 10 if all FUTA tax was deposited on time)
File with	IRS, by e-file or paper

What Form 940 is

Form 940 reports federal unemployment tax (FUTA). It funds the federal share of unemployment benefits and is paid by the employer alone.

The tax is 6.0% of the first $7,000 you pay each employee in the year. If you paid your state unemployment tax in full and on time, you get a credit of up to 5.4%, so most employers pay 0.6%, at most $42 per employee. In a credit reduction state the credit is smaller and you owe more.

Who has to file

You file for 2026 if you paid wages of $1,500 or more in any calendar quarter of 2025 or 2026, or had at least one employee for some part of a day in 20 or more different weeks in either year.
Household employers and farm employers have their own tests; household employers usually report FUTA on Schedule H.
Tax-exempt 501(c)(3) organizations do not pay FUTA.

Due dates

What	Due
Form 940 for 2026	Mon, Feb 1, 2027 (Jan 31 is a Sunday)
If all FUTA tax was deposited on time	Wed, Feb 10, 2027
Quarterly FUTA deposits for 2027 (when more than $500 is owed)	Apr 30, Aug 2 and Nov 1, 2027; the fourth quarter's balance by Jan 31, 2028

If the FUTA tax you owe at the end of a quarter is $500 or less, carry it forward to the next quarter. Deposit by electronic funds transfer.

Penalties for filing late or wrong

Filing late: 5% of the unpaid tax for each month or part of a month late, up to 25%.
Paying late: 0.5% per month of the unpaid tax, up to 25%, plus interest.
Depositing late: the same 2%, 5%, 10% and 15% tiers as for Form 941 deposits.

Form 940 line by line

Line	What goes there	Where it comes from in your books
1a / 1b	The state where you paid state unemployment tax, or tick 1b and attach Schedule A if more than one	Your state unemployment registrations
2	Tick if you paid wages in a credit reduction state (Schedule A)	The IRS list of credit reduction states, published each November
3	Total payments to all employees in the year	All gross pay for the year, including amounts exempt from FUTA
4	Payments exempt from FUTA, with boxes 4a to 4e for the type (fringe benefits, retirement, dependent care and others)	Pre-tax benefit deductions and other exempt pay
5	Total of payments made to each employee above $7,000	For each employee: year's FUTA wages minus $7,000, if positive
6	Subtotal (line 4 + line 5)	Calculated
7	Total taxable FUTA wages (line 3 − line 6)	Should equal the first $7,000 of each employee's FUTA wages, added up
8	FUTA tax before adjustments (line 7 × 0.006)	Calculated
9	If ALL FUTA wages were excluded from state unemployment tax: line 7 × 0.054	Rare: wages your state does not tax
10	If SOME wages were excluded or you paid state tax late, from the worksheet	Late state unemployment payments
11	Credit reduction, from Schedule A	Wages paid in a credit reduction state × that state's reduction
12	Total FUTA tax after adjustments	Calculated
13	FUTA tax deposited for the year	Your FUTA deposits
14 / 15	Balance due, or overpayment	Calculated
16a to 16d	FUTA liability for each quarter (required if line 12 is more than $500)	0.6% of the FUTA wages paid in each quarter
17	Total liability for the year; must equal line 12	Calculated

Common mistakes

Applying the $7,000 limit to the whole payroll instead of to each employee.
Leaving out exempt payments on line 4, which overstates the tax.
Forgetting Schedule A in a credit reduction state. For 2025, California (1.2%) and the US Virgin Islands (4.5%) were on the list.
Line 16 quarters that do not add up to line 12.
Paying state unemployment tax late and still claiming the full 5.4% credit.

How to file Form 940

Total FUTA wages per employee. For each employee, take the year's wages subject to FUTA and cap them at $7,000. Add them up; that is line 7.
Check your state credit. Confirm you paid all state unemployment tax on time, and check the IRS credit reduction list for any state you paid wages in.
Complete lines 1 to 17. Fill in the state, total payments, exempt payments and the amount over $7,000, then the tax, adjustments, deposits and quarterly liabilities.
File by the due date. E-file through an IRS-authorized provider or tax software, or mail the paper form to the address in the instructions for your state.
Pay any balance. Pay a balance of $500 or less with the return or electronically; more than that should already have been deposited.

How AcboBooks fills it in

In AcboBooks 0.2.1, Payroll → Payroll Tax Forms → Form 940 works from the year's non-voided paychecks.

Total payments to employees: the year's gross pay (line 3).
FUTA wages: the first $7,000 of each employee's gross pay, added up (line 7 when nothing is exempt).
FUTA tax at 0.6% (line 8).

What it leaves to you

It is a simplified worksheet: it assumes no exempt payments (line 4), the full state credit and no credit reduction (line 11), and it does not split the liability by quarter (line 16).
AcboBooks prepares the figures; it does not file returns or make deposits for you. You file through the IRS or SSA and pay through EFTPS or your IRS business tax account.

The Run Payroll screen in AcboBooks, US edition — Run Payroll in AcboBooks (US edition), with the W-4 filing status and the Pub 15-T estimate. The form worksheets are built from these paychecks.

Described as of AcboBooks 0.2.1. See US payroll in AcboBooks

Questions

When is Form 940 for 2026 due?

Monday, February 1, 2027, because January 31 is a Sunday. If you deposited all your FUTA tax in full and on time, you have until Wednesday, February 10, 2027.

What is the FUTA rate for 2026?

6.0% of the first $7,000 of each employee's wages. With the full 5.4% credit for state unemployment tax paid on time, the net rate is 0.6%, or $42 per employee. Credit reduction states pay more.

Do I have to deposit FUTA tax during the year?

Only when the FUTA tax you owe, including any amount carried forward, is more than $500 at the end of a quarter. Then deposit it by the last day of the following month.

Which states are credit reduction states for 2026?

The Department of Labor and the IRS publish the 2026 list in November 2026. For 2025, California (1.2%) and the US Virgin Islands (4.5%) were on it.

Do sole proprietors pay FUTA on their own earnings?

No. FUTA applies to wages paid to employees. Owners of a sole proprietorship or partnership are not employees of their own business.

Sources

Checked against these sources on October 25, 2026. Dates assume a calendar year and apply the next-business-day rule for weekends and holidays.

General information, not tax or legal advice. Forms, thresholds and dates change; confirm with the IRS and SSA or a tax professional before you file.

How to fill out Form 940