Build IRS Form 940 E-File (94x MeF XML)
Skill: Convert annual FUTA wage data into a Form 940 MeF XML return
Region: United States Category: Employment Tax Does: Takes a calendar year's payroll and unemployment-tax data and maps it onto the IRS 94x Modernized e-File (MeF) XML schema for Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, including Schedule A for multi-state employers and credit-reduction states. System: IRS 94x MeF (Modernized e-File)
Form 940 is annual, in the same 94x MeF family as 941/943/944/945. The list of credit-reduction states changes every year and directly affects the tax — always pull the current-year Schedule A. Element names below track Form 940 line numbers, not verbatim XSD names; map onto the current-year schema.
When e-filing applies
- Form 940 covers the calendar year; due January 31 (rolls to next business day on weekend/holiday). If all FUTA tax was deposited on time, the deadline extends to February 10.
- An employer owes FUTA if it paid $1,500+ in wages in any calendar quarter, or had an employee for some part of a day in any 20+ weeks. (Household/agricultural employers have separate tests.)
- Same MeF signature mechanics as the rest of the 94x family (94x PIN / Form 8453-EMP).
Input data required
| Group | Fields |
|---|---|
| Filer | EIN, name, address, tax year; single-state vs. multi-state flag |
| Wages | total payments to all employees (Line 3) |
| Exempt | payments exempt from FUTA by type — fringe, group-term life, retirement, dependent care, other (Line 4 + codes 4a–4e) |
| Over-$7,000 | wages paid to each employee over the $7,000 FUTA wage base (Line 5) |
| Schedule A | per-state taxable wages + any credit-reduction state(s) and rate(s) |
| Deposits | FUTA deposited during the year (Line 13) |
Line structure (Form 940 → XML)
Line 3 Total payments to all employees
Line 4 Payments exempt from FUTA (+ 4a–4e reason checkboxes)
Line 5 Payments to each employee over $7,000
Line 6 Subtotal (4 + 5)
Line 7 Total taxable FUTA wages (3 − 6)
Line 8 FUTA tax before adjustments = Line 7 × 0.006
Line 9 Adjustment — all wages excluded from state UI (× 0.054)
Line 10 Adjustment — partial / late state UI (worksheet)
Line 11 Credit-reduction amount (from Schedule A)
Line 12 Total FUTA tax after adjustments
Line 13 FUTA tax deposited for the year
Line 14 Balance due (12 > 13; pay if > $500)
Line 15 Overpayment (13 > 12)
Line 16 Quarterly FUTA liability (16a–16d) — required if Line 12 > $500
Calculation rules
- FUTA base rate is 6.0% on the first $7,000 of each employee's annual wages. Employers who paid state unemployment tax on time get a credit of up to 5.4%, giving a net 0.6% (Line 8 uses 0.006).
- Credit-reduction states: when a state has an unpaid federal UI loan, employers there lose part of the 5.4% credit. Schedule A computes the extra tax per affected state at the published reduction rate; the total flows to Line 11.
- Deposit rule: deposit FUTA when accumulated liability exceeds $500 in a quarter; otherwise carry forward. If Line 12 > $500, Line 16 quarterly breakdown is required and must sum to Line 12.
- Money is dollars-and-cents decimal amounts.
Worked example (single-state, no credit reduction)
5 employees, total wages $200,000, each earned over $7,000; state UI paid timely; no credit-reduction state:
Line 3 200000.00
Line 5 165000.00 (wages over $7,000 per employee)
Line 6 165000.00
Line 7 35000.00 (= 5 × $7,000 taxable base)
Line 8 210.00 (35000 × 0.006)
Line 12 210.00
Line 13 210.00
Line 15 0.00
Because Line 12 ($210) ≤ $500, no quarterly Line 16 breakdown is required and the remaining tax could have been paid with the return. The figures are emitted as the IRS940 element set within the 94x MeF ReturnData (with Schedule A only if multi-state/credit-reduction).
Validation checklist
- Tax year correct; current-year 94x MeF + Schedule A used (credit-reduction list verified)
- Line 7 = Line 3 − Line 6; only first $7,000 per employee counted in Line 5
- Line 8 = Line 7 × 0.006 (full credit) — adjust via Lines 9–10 if state UI not fully/timely paid
- Schedule A completed for every state with employees; credit-reduction amounts on Line 11
- Line 12 = 8 + 9 + 10 + 11; deposits (13) reconcile to balance/overpayment
- Line 16 quarterly liabilities sum to Line 12 when Line 12 > $500
- Signature (94x PIN / 8453-EMP) and approved MeF channel; deadline Jan 31 / Feb 10
- Multi-state and single-state flags set consistently with Schedule A
Last updated: 2026-05-31 — the FUTA credit-reduction state list and Schedule A change yearly; confirm element names, the current credit-reduction states/rates, deposit threshold, and deadlines against current IRS 94x MeF / Form 940 instructions before use.