This Form 940 2026 guide explains the IRS Employer's Annual Federal Unemployment (FUTA) Tax Return. Form 940 calculates annual federal unemployment tax using the applicable wage, exemption and credit rules. It is distinct from the quarterly return used for federal income tax withholding and Social Security and Medicare taxes. State unemployment tax payments can be relevant to the federal calculation.
Reviewed October 31, 2026. This is an independent guide. The version and availability information below identifies the IRS documents used for this page.
What Form 940 2026 does and who prepares it
An employer that falls within the federal unemployment tax rules files the annual employer return.
For the connected reporting route, see Form 940 (Schedule A). Keep the role of that document separate from the task explained on this page.
| Official form | Form 940 |
|---|---|
| IRS title | Employer's Annual Federal Unemployment (FUTA) Tax Return |
| Guide period | 2026 |
| Target version | 2026 |
| Availability | Draft — not for filing |
| Last checked | October 31, 2026 |
Get the Form 940 2026 PDF and check its status
Use the IRS source to confirm the document before completing a real filing. The download link is a reference to the official file; it is not a statement that every copy inside the PDF may be printed and submitted. Follow any instructions about electronic filing, scannable copies, recipient copies or attachments.
Which version of Form 940 2026 should you use?
The 2026 in the title identifies the tax year or calendar-year information addressed by this guide. For a 2026 income reporting document, the preparation or filing activity may occur in 2027. Do not change the income year simply because the calendar has changed. The exact filing or furnishing date comes from the instructions for this form and the filer circumstances. The linked target PDF is a draft. It may be used to understand the proposed layout, but it is not a form to file. Amounts or instructions still subject to completion must be checked again when the final version is released.
Records to gather for Form 940 2026
- Annual payroll register.
- State unemployment tax records.
- Taxable and exempt wage details.
- Prior deposits.
- Multistate employment records.
Keep a working reconciliation with these records. It should show the source of each reported item, any correction made before filing and the reason a different amount appears on a connected form. This is especially useful when a statement is corrected or a prior-year balance continues into the current calculation.
How to work through Form 940 2026
- Confirm applicability. Start with the purpose, filer category and version of the form. Complete any eligibility or applicability question before spending time on the numerical calculation.
- Prepare the source workpapers. Gather the records listed below and reconcile their totals. Keep prior-year balances, current-year transactions and estimated payments separate where they serve different purposes.
- Complete dependent calculations first. When a line refers to another form, schedule or worksheet, finish that supporting calculation first. Preserve any classification, limitation and carryforward information.
- Follow the line sequence. Use the actual line labels and arithmetic in the applicable form. A line number from an older version may refer to something different after a revision.
- Reconcile the filing package. Check names, identifying numbers, tax periods, totals and required attachments. Then use the filing method, signature process and deadline that apply to this filer and form.
Form-specific IRS instructions and reporting details
The following points retain the operative wording of the IRS documents linked above. Read each point with its stated conditions and the applicable form version. References to another form or section describe a connected requirement; they do not mean that every reader must file every referenced document.
General Instructions Purpose of Form 940 Use Form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax. Don’t collect or deduct FUTA tax from your employees’ wages. The FUTA tax applies to the first $7,000 you pay to each employee during a calendar year after subtracting any payments exempt from FUTA tax.
FUTA taxes for your household employees on Form 940 instead of filing Schedule H (Form 1040). If you choose to include household employees on your Form 940, you must also file Form 941, Employer’s QUARTERLY Federal Tax Return; Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees; or Form 944, Employer’s ANNUAL Federal Tax Return, to report social security, Medicare, and any withheld federal income taxes for your household employees. See Pub. 926 for more information.
Services rendered by employees of a federally recognized Indian tribal government employer (including any subdivision, subsidiary, or business enterprise wholly owned by the tribe) are exempt from FUTA tax and no Form 940 is required. However, the tribe must have participated in the state unemployment system for the full year and be in compliance with applicable state unemployment law. For more information, see section 3309(d).
Additional reporting conditions
Disregarded entities. A disregarded entity is required to file Form 940 using its name and EIN, not the name and EIN of its owner. An entity that has a single owner and is disregarded as separate from its owner for federal income tax purposes is treated as a separate entity for purposes of payment and reporting federal employment taxes. If the entity doesn’t currently have an EIN, it must apply for one using one of the methods under Employer identification number (EIN), earlier.
Disregarded entities include single-owner limited liability companies (LLCs) that haven’t elected to be taxed as a corporation for federal income tax purposes, QSubs, and certain foreign entities treated as disregarded entities for U.S. income tax purposes. Although a disregarded entity is treated as a separate entity for employment tax purposes, it isn’t subject to FUTA tax if it is owned by a tax-exempt organization under section 501(c)(3) and isn’t required to file Form 940. For more information, see Disregarded entities and qualified subchapter S subsidiaries in the Introduction section of Pub. 15.
1a. One state only. Enter the two-letter USPS abbreviation for the state where you were required to pay your state unemployment tax on line 1a. For a list of state abbreviations, see the Schedule A (Form 940) instructions or go to the website for the U.S. Postal Service at USPS.com. 1b. More than one state (you’re a multi-state employ er). Check the box on line 1b. Then, fill out Schedule A (Form 940) and attach it to your Form 940.
Calculations and supporting information
2. If You Paid Wages in a State That Is Subject to Credit Reduction A state that hasn’t repaid money it borrowed from the federal government to pay unemployment benefits is called a credit reduction state. The U.S. Department of Labor determines which states are credit reduction states. If you paid wages that are subject to the unemployment tax laws of a credit reduction state, you may have to pay more FUTA tax when filing your Form 940. For tax year 2026, there are credit reduction states.
If you paid wages subject to the unemployment tax laws of these states, check the box on line 2 and fill out Schedule A (Form 940). See the instructions for line 9 before completing Schedule A (Form 940).
Exceptions and related reporting
If you weren’t required to pay state unemployment tax because all of the wages you paid were excluded from state unemployment tax, you must pay FUTA tax at the 6.0% (0.060) rate. For example, if your state unemployment tax law excludes wages paid to corporate officers or employees in specific occupations, and the only wages you paid were to corporate officers or employees in those specific occupations, you must pay FUTA tax on those wages at the full FUTA rate of 6.0% (0.060).
When you figured the FUTA tax before adjustments on line 8, it was based on the maximum allowable credit (5.4%) for state unemployment tax payments. Because you didn’t pay state unemployment tax, you don’t have a credit and must figure this adjustment. If line 9 applies to you, lines 10 and 11 don’t apply to you. Therefore, leave lines 10 and 11 blank. Don’t fill out the worksheet in these instructions. Complete Schedule A (Form 940) only if you’re a multi-state employer.
Further form details
Some of the wages you paid were excluded from state unemployment tax, OR You paid any state unemployment tax late. For this worksheet, don’t round your figures.
Before you can properly fill out this worksheet, you must gather the following information. ■ Taxable FUTA wages (Form 940, line 7). ■ Taxable state unemployment wages. ■ The experience rates assigned to you by the states where you paid wages. ■ The amount of state unemployment taxes you paid on time. “On time” means that you paid the state unemployment taxes by the due date for filing Form 940.
Include any state unemployment taxes you paid on nonemployees who were treated as employees by your state unemployment agency. ■ The amount of state unemployment taxes you paid late. “Late” means after the due date for filing Form 940. 1. Maximum allowable credit — Enter Form 940, line 7 (Form 940, line 7 x 0.054 = line 1).
If you paid FUTA taxable wages that were also subject to state unemployment taxes in any states that are subject to credit reduction, enter the total amount from Schedule A (Form 940) on Form 940, line 11. However, if you entered an amount on line 9 because all the FUTA taxable wages you paid were excluded from state unemployment tax, skip line 11 and go to line 12.
Reading the lines and boxes
These selected labels come from the linked target PDF. They are a reading aid, not a replacement for the full line instructions or a completed calculation. Match the label and document version before transferring any amount.
| Line or box | Label in the source form | What to check |
|---|---|---|
| 1a | If you had to pay state unemployment tax in one state only, enter the state abbreviation . | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 1b | If you had to pay state unemployment tax in more than one state, you are a multi-state | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 2 | If you paid wages in a state that is subject to CREDIT REDUCTION | Reconcile the relevant payment or withholding record with the tax period and category requested here. A reported payment is not necessarily the final tax liability. |
| 3 | Total payments to all employees | Follow the stated arithmetic and line references in sequence. Complete the referenced inputs first and retain the worksheet supporting the result. |
| 4 | Payments exempt from FUTA tax | Reconcile the relevant payment or withholding record with the tax period and category requested here. A reported payment is not necessarily the final tax liability. |
Further selected fields
| Line or box | Label in the source form | What to check |
|---|---|---|
| 5 | Total of payments made to each employee in excess of | Follow the stated arithmetic and line references in sequence. Complete the referenced inputs first and retain the worksheet supporting the result. |
| 6 | Subtotal (line 4 + line 5 = line 6) | Follow the stated arithmetic and line references in sequence. Complete the referenced inputs first and retain the worksheet supporting the result. |
| 7 | Total taxable FUTA wages (line 3 – line 6 = line 7). See instructions | Follow the stated arithmetic and line references in sequence. Complete the referenced inputs first and retain the worksheet supporting the result. |
| 8 | FUTA tax before adjustments (line 7 x 0.006 = line 8) | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 9 | If ALL of the taxable FUTA wages you paid were excluded from state unemployment tax, | Reconcile the relevant payment or withholding record with the tax period and category requested here. A reported payment is not necessarily the final tax liability. |
A practical example
An employer operates in more than one state. It groups payroll and state unemployment payments before preparing the annual federal return and checks whether the allocation or credit-reduction schedule is needed. The quarterly payroll return remains a separate filing.
This example illustrates the order of the review. It does not assume an unverified deduction, exemption, treaty rate or final tax amount. The applicable form instructions and the actual records determine the result.
Common mistakes to avoid with Form 940 2026
- Do not transfer a total payroll figure without identifying FUTA treatment.
- Check credit-reduction and state-payment rules.
- The annual filing deadline and deposit obligations are different requirements.
Questions about Form 940 2026
Does receiving or downloading this form mean I must file it?
An employer that falls within the federal unemployment tax rules files the annual employer return. The form purpose and the applicable filing or furnishing conditions determine the action. Downloading a blank PDF does not itself create a filing obligation or establish eligibility for a tax benefit.
Can I file the draft PDF?
No. The linked target is marked as a draft. Use it to understand the proposed layout and prepare records, but wait for the applicable final filing version. Check the IRS source again before using any year-specific amount, worksheet or filing instruction.
What should I do if the underlying information is wrong?
Do not transfer a total payroll figure without identifying FUTA treatment. Keep the original record and the correction trail. The issuer correction process, an amended return and an updated certificate can be different procedures. Choose the process that matches the document and the actual error.
Which records should I keep with the completed form?
Retain the source documents, applicable worksheets, submitted version and filing or furnishing confirmations. For this form, the working file should include annual payroll register, state unemployment tax records, taxable and exempt wage details. Keep continuing balances and prior-year support for as long as they remain relevant under the applicable recordkeeping rules.
Related forms and next steps
Use these guides when the connected issue applies to your records. Each page has its own purpose, reporting year and availability status.