# How to Create IRS Payroll Form 940 Step by Step ![quickbookss](https://hackmd.io/_uploads/B1jLRLdDZx.png) If you’re an employer who pays wages, you may be wondering: **how can I create my Payroll Form 940 correctly and on time?** Payroll Form 940 is an annual IRS tax form used to report **Federal Unemployment Tax (FUTA)**. Creating Form 940 accurately is important to avoid penalties, late fees, or IRS notices. In this guide, you’ll learn **what Payroll Form 940 is**, who needs to file it, how to create Form 940 using payroll software like QuickBooks, and how to fix common issues. ## What Is Payroll Form 940? **Payroll Form 940**, officially known as **IRS Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return**, is used to report: * FUTA taxable wages * Federal unemployment tax liability * State unemployment tax credits * FUTA payments made during the year Form 940 is filed **once per year**, unlike Form 941, which is filed quarterly. ## Who Needs to Create Payroll Form 940? You must create and file **Form 940** if: * You paid **$1,500 or more in wages** in any calendar quarter, or * You had **one or more employees** for at least **20 weeks** during the year Even if no FUTA tax is owed, Form 940 may still be required. ## Information You Need Before Creating Payroll Form 940 Before you create **Payroll Form 940**, gather the following: * Employer Identification Number (EIN) * Total employee wages * FUTA taxable wages * State unemployment tax paid * Payroll reports for the year Having accurate payroll data ensures your **Form 940 calculations** are correct. ## How Can I Create My Payroll Form 940 Using Payroll Software? Most businesses use payroll software such as **QuickBooks Payroll** to create Form 940 easily. ### Step 1: Update Payroll Tax Tables To avoid calculation errors: * Install the latest payroll updates * Ensure FUTA tax rates are current Outdated payroll data is one of the top causes of **Form 940 errors**. ### Step 2: Verify Payroll & Employee Setup Check: * Employee wages and classifications * State unemployment settings * FUTA tax applicability * Payroll adjustments Incorrect setup can lead to **incorrect FUTA tax on Form 940**. ### Step 3: Generate Payroll Form 940 1. Open your payroll software 2. Go to **Payroll Tax Forms** 3. Select **Annual Form 940** 4. Choose the correct tax year 5. Review all FUTA calculations The system will automatically populate **Form 940** using your payroll records. ### Step 4: Review the Form Carefully Before filing: * Match Form 940 totals with payroll summary reports * Verify state tax credits * Check employer details and EIN This helps prevent **Form 940 rejection** by the IRS. ### Step 5: File Payroll Form 940 You can: * **E-file Form 940** (recommended) * Print and mail Form 940 to the IRS E-filing is faster, more secure, and reduces errors. ## How to E-File Payroll Form 940 To e-file **Form 940**: 1. Select **E-File** in your payroll system 2. Enter your IRS e-file PIN 3. Submit the form 4. Save IRS confirmation If your **Form 940 e-file is rejected**, review the error message and correct the issue before resubmitting. ## Common Issues When Creating Payroll Form 940 Many employers run into problems when creating Form 940. Here are the most common ones: ### 1. Payroll Form 940 Not Showing **Causes:** * Payroll not updated * Incorrect tax year selected * Inactive payroll subscription ### 2. Incorrect FUTA Amounts **Causes:** * Wage base exceeded * Incorrect state unemployment credits * Manual payroll changes ### 3. Form 940 Rejected by IRS **Causes:** * Invalid EIN or PIN * Missing employer details * Incorrect tax calculations Fixing these issues early prevents penalties. ## How to Amend Payroll Form 940 If you find errors after filing, you must submit an **amended Form 940**. ### Steps to Amend: * Create a corrected Form 940 * Update FUTA amounts * Resubmit the amended return Amending Form 940 incorrectly can trigger IRS notices, so accuracy is critical. ## Payroll Form 940 Due Date **Form 940 filing deadline:** 📅 **January 31** each year If FUTA deposits were made on time, the IRS may allow filing by **February 10**. Late filing can result in: * Penalties * Interest charges * IRS notices ## Best Practices for Creating Payroll Form 940 To avoid errors when creating **Payroll Form 940**: * Keep payroll software updated * Review FUTA liability reports monthly * Reconcile payroll records regularly * Back up payroll data * File early ## FAQs – Creating Payroll Form 940 ### Q1. How can I create my Payroll Form 940 easily? You can create Form 940 using payroll software like QuickBooks by generating the annual tax form from payroll records. ### Q2. Can I create Payroll Form 940 manually? Yes, but manual filing increases the risk of errors. Payroll software is recommended for accuracy. ### Q3. What if my Payroll Form 940 is incorrect? You must file an amended Form 940 with corrected FUTA amounts. ### Q4. Do I need to file Form 940 if I had no employees? Generally, no—but exceptions may apply depending on payroll history. ### Q5. Is Form 940 required every year? Yes, eligible employers must file Form 940 annually, even if FUTA tax is minimal. ## Final Thoughts Understanding **how can I create my Payroll Form 940** is essential for staying compliant with federal payroll tax laws. With accurate payroll data and updated tax tables, creating Form 940 becomes straightforward. Using payroll software reduces errors, speeds up filing, and helps you avoid penalties. If you’re unsure about FUTA calculations, filing requirements, or corrections, professional payroll support can help ensure everything is done correctly.