Browse U.S. Payroll

Form 940

Us-Payroll Payroll-Tax

What Form 940 means in U.S. payroll, how it relates to FUTA, and why it matters to employer payroll reporting.

On this page

Form 940

Form 940 is the U.S. employer payroll tax return used to report federal unemployment tax activity.

From a payroll perspective, the key point is that Form 940 belongs to the employer side of payroll. It is tied to unemployment-tax reporting, not to employee paycheck withholding.

Why Form 940 Matters

Form 940 matters because it affects:

  • employer unemployment-tax reporting
  • the connection between payroll wages and FUTA reporting
  • year-end payroll tax documentation
  • employer follow-up after payroll has been processed

It matters because employers often understand withholding better than unemployment-tax reporting, even though payroll records still have to support both.

Where It Appears In Payroll Workflow

Form 940 appears after payroll runs have created the wage records used for unemployment-tax reporting. In practice, payroll teams may:

  • review the wage base relevant to FUTA
  • confirm the employer’s unemployment-tax figures
  • prepare Form 940 from payroll records
  • retain the return with payroll reporting documentation

That makes Form 940 a reporting form built from payroll history rather than a payroll-run input.

Simple Example

An employer processes payroll all year and tracks the wages relevant to federal unemployment tax.

At reporting time, payroll uses those records to prepare Form 940. The form reflects employer-side unemployment-tax reporting, not employee withholding.

Common Confusion

Form 940 is often confused with:

  • FUTA, which is the tax concept rather than the reporting form itself
  • Form 941, which is a different U.S. payroll return
  • SUTA, which is the state unemployment payroll concept rather than the federal return
  • W-2, which is a year-end wage statement for employees

Knowledge Check

  1. Is Form 940 used to report employee withholding? No. It is tied to employer federal unemployment-tax reporting.
  2. Does Form 940 belong on the employer side of payroll workflow? Yes. It is an employer payroll reporting form.
  3. Is Form 940 the same as FUTA? No. FUTA is the tax concept, while Form 940 is the reporting form.
FICA
Form 941