Form 940 and FUTA compliance FAQs

Form 940 is the IRS annual return employers file to report Federal Unemployment Tax Act (FUTA) liability. Most employers with wages of $1,500+ in any quarter or at least one employee for 20+ weeks must file. Deposits are required quarterly when liability exceeds $500; the annual return is due January 31.

See how Viventium handles Form 940 for post-acute care. Viventium's payroll platform tracks FUTA liability quarter by quarter, schedules deposits when the $500 threshold is crossed, and prepares Form 940 for e-file, purpose-built for home care, hospice, skilled nursing, and ABA therapy operators. Request a demo.

Applicability, who files and what businesses

Who is required to file Form 940?

Most private-sector employers must file Form 940 if they paid wages of $1,500 or more in any calendar quarter, or had at least one employee for some part of a day in 20 or more different weeks during the year. This includes home care agencies, hospices, skilled nursing facilities, and ABA therapy practices. See the IRS rules for who must file.

What type of business files a Form 940?

Almost every for-profit and many nonprofit employers file once the $1,500 quarterly wage or 20-week employment test is met. In post-acute care, that includes home care agencies, hospice providers, skilled nursing facilities (SNFs), and ABA therapy organizations, often across multiple entities and states. Section 501(c)(3) organizations are FUTA-exempt, but their payroll teams still confirm that exemption annually.

Do household employers or agricultural employers file Form 940?

No, most do not file the standard Form 940. Household employers who pay domestic workers report FUTA on Schedule H, filed with their personal Form 1040. Agricultural employers file Form 943 and, when applicable, report FUTA under special farmworker thresholds. Home care agencies that place W-2 caregivers in private homes are not household employers; they file Form 940 like other private-sector businesses.

Does a new home care agency have to file Form 940 in its first year?

Yes, if it meets the IRS applicability test in that first year. Any quarter with $1,500 or more in wages, or 20 different weeks with at least one employee, triggers Form 940 obligations, even for an agency that opened mid-year. Many new home care and ABA therapy operators cross this threshold within their first hiring cycle, so first-year filers should confirm deposit timing early.

Calculation, how FUTA liability is determined

How is FUTA tax calculated?

FUTA tax is calculated at 6.0% on the first $7,000 of each employee's wages per year. Employers who pay state unemployment taxes on time in a non-credit-reduction state receive a 5.4% credit, reducing the effective FUTA rate to 0.6%, a maximum of $42 per employee annually. For more detail, see the IRS Form 940 instructions.

What wages are subject to FUTA tax?

FUTA applies to the first $7,000 of wages paid to each employee during the calendar year. Wages above the $7,000 per-employee base are excluded. FUTA-taxable wages typically include salaries, hourly pay, shift differentials, bonuses, and most taxable fringe benefits, while excluding items like employer contributions to qualified retirement plans and Section 125 pre-tax health premiums. Multi-rate caregiver pay counts toward the $7,000 base at gross value.

How does the state unemployment tax credit reduce FUTA liability?

Employers who pay state unemployment (SUTA) taxes on time and in full receive a credit of up to 5.4% against the 6.0% FUTA rate, producing an effective rate of 0.6%. That drops the maximum FUTA cost per employee from $420 to $42 per year. Late SUTA payments or operating in a credit-reduction state reduces the credit.

How is Form 940 calculated when an employer operates in multiple states?

Multi-state employers complete Schedule A and aggregate FUTA-taxable wages by state, tracking the $7,000 per-employee wage base separately for each jurisdiction. If any operating state is a credit-reduction state, the reduced credit is applied to wages paid there, increasing overall liability. Post-acute operators running home care or hospice offices in several states should review the IRS Schedule A instructions annually.

Deposit cadence, quarterly thresholds and timing

Is FUTA paid quarterly or annually?

Form 940 is an annual return, filed once per year, not quarterly. However, FUTA tax deposits may be required quarterly if cumulative undeposited liability exceeds $500 at the end of any quarter. The annual Form 940 reconciles all deposits made throughout the year. See the Form 940 instructions for the deposit schedule.

What is the minimum FUTA liability that requires a quarterly deposit?

The IRS requires a FUTA deposit when cumulative undeposited liability exceeds $500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31). If total annual FUTA liability is $500 or less, no quarterly deposit is required, and the full amount is paid with Form 940. Payroll teams should monitor cumulative liability to catch the crossing point.

When are FUTA deposits due?

FUTA deposits are due by the last day of the month following the end of a quarter in which cumulative undeposited FUTA liability exceeds $500. For example, if liability exceeds $500 by March 31, the deposit is due April 30. If liability stays at or below $500, it carries forward.

What happens if FUTA liability never exceeds $500 in any quarter?

If cumulative FUTA liability does not exceed $500 in any quarter, no quarterly deposit is required. The full liability carries forward and is paid when Form 940 is filed by January 31. This scenario is common for small home care agencies or ABA therapy practices with limited payroll in early quarters. Reaching the threshold late in the year concentrates payment into Q4 and the annual filing.

How often do post-acute care employers typically need to make FUTA deposits?

Because FUTA applies to only the first $7,000 of wages per employee, liability tends to build early in the year as caregivers pass the wage base. Many post-acute care employers cross the $500 threshold in Q1 and, depending on hiring patterns, again in Q2. Home care and ABA therapy operators with variable headcounts should model expected quarterly crossing points to plan deposit timing.

Annual filing logistics, deadlines, submission, and mailing

Is Form 940 an annual return?

Yes. The return is filed once per year and reconciles FUTA wages, tax due, and deposits already made. The standard filing deadline is January 31. A 10-day extension to February 10 applies only when all required FUTA deposits were made on time and in full throughout the year.

What is the due date for Form 940 for 2025?

Form 940 is due January 31 of the year following the tax year. If all FUTA deposits were made on time and in full, the IRS grants a 10-day filing extension, moving the deadline to February 10. For 2025 tax-year returns, the standard deadline is January 31, 2026, or February 10, 2026 if every quarterly deposit posted on time.

Where do I file Form 940 without a payment?

The mailing address for Form 940 without payment depends on your state and whether you are including a Schedule A. The IRS publishes a state-by-state mailing address table in the Form 940 instructions. Most post-acute care employers in the continental U.S. mail to either the Cincinnati or Ogden IRS processing centers. Confirm the current-year routing table before mailing; it changes periodically.

Can Form 940 be filed electronically?

Yes. The IRS strongly encourages electronic filing of Form 940 through EFTPS or an authorized e-file provider. Employers who file 10 or more information returns are generally required to e-file under current IRS thresholds; check the latest rules before filing. Viventium's payroll platform supports electronic Form 940 preparation and submission for post-acute care organizations, along with EFTPS deposit scheduling throughout the year.

What are the Form 940 instructions employers should review before filing?

Payroll teams should review the current-year Form 940 instructions, IRS Publication 15 (Circular E), Schedule A instructions if operating in multiple states, and internal deposit records for the year. A pre-filing review helps reconcile wages, deposits, credit-reduction state amounts, and Schedule A entries before submission. Viventium provides a post-acute reconciliation checklist covering the same steps.

Schedule a and credit reduction states

What is schedule a on Form 940 and who needs to complete it?

Schedule A (Form 940) is used by employers in credit-reduction states, states that have borrowed from the federal unemployment fund and not repaid it. Employers in these states receive a reduced FUTA credit, increasing their effective FUTA rate above 0.6%. Schedule A calculates the additional tax owed per state. Multi-state employers file Schedule A regardless of credit-reduction status. Review Schedule A rules each fall.

How do credit-reduction states affect FUTA liability for multi-site post-acute operators?

Credit-reduction states increase the effective FUTA rate above 0.6% by disallowing part of the standard 5.4% credit. Multi-site post-acute operators calculate the additional tax per state on Schedule A, then add it to base FUTA on Form 940. The IRS typically publishes the annual credit-reduction state list in November, when payroll teams running home care or SNF locations across state lines should re-forecast Q4 liability.

Penalties, corrections, and edge cases

What penalties apply for late FUTA deposits or a late Form 940 filing?

The IRS failure-to-deposit penalty under §6656 is tiered: 2% for deposits 1–5 days late, 5% for 6–15 days, 10% for more than 15 days, and 15% once notice is issued. The failure-to-file penalty on Form 940 is generally 5% of unpaid tax per month, capped at 25%. The IRS assessed over $1.5 billion in employment tax penalties in a recent fiscal year, with deposit timing violations among the most common triggers. See IRS Form 940 guidance.

How does an employer correct a Form 940 error after filing?

Employers correct a filed Form 940 by submitting an amended Form 940, checking the "Amended" box on a new Form 940 for the affected year, to adjust wage totals, deposit amounts, or Schedule A entries. Include a written explanation of each change and pay any additional tax owed with the amendment. Do not file a duplicate original Form 940 to correct an error; the IRS processes corrections through the amended return. FUTA compliance depends on quarterly $500 threshold monitoring, Schedule A review in November, and EFTPS deposit reconciliation before January 31. Viventium's payroll platform helps post-acute care teams track liability, schedule deposits, and prepare Form 940. As the healthcare industry's ally for Payroll, HR, and compliance, Viventium is purpose-built for post-acute care. Request a demo, and explore the resources below.