bookmark icon   print icon Print

Filing Year-End Forms: Preparing Your Federal Form 940

Federal Form 940, the Employer's Annual Federal Unemployment Tax Return, reports your federal unemployment tax (FUTA) liability for the calendar year. Use these tips to help you prepare this form.

Install the Latest QuickBooks Software Update Before Preparing Form 940 (QuickBooks 2004, 2003, and 2002)

The federal government updated Form 940 near the end of 2004. A QuickBooks software update released in December includes the necessary updates to the Form 940 interview.

For instructions on how to get and install QuickBooks software updates, see the QuickBooks Product Updates page on at

Install the Latest Payroll Updates Before Preparing Your Form 940 (All Versions of QuickBooks)

The federal government updated Form 940 near the end of 2004. Installing the latest payroll update before preparing your Form 940 ensures you have the most recent version of the form.

For instructions on how to get and install payroll updates, see How Do I Update My Payroll Tax Tables? If you have the disk delivery option of QuickBooks Payroll, see How Do I Install a Payroll Update from a Disk?

Install the Latest Payroll Updates If the Top of Your Form Says "2003"

If your form says "2003," you still have last year's form in your copy of QuickBooks. Install the latest payroll updates to get the 2004 version of the form.

Pay Your State Unemployment Taxes Before Preparing Your Federal Form 940

If you have not recorded your state unemployment tax payments in QuickBooks before you prepare your Form 940, QuickBooks assumes that you do not receive the FUTA credit and calculates your FUTA tax at the higher rate, even if you have been using the lower rate on paychecks.

Note: If your FUTA tax liability by quarter is significantly higher than you expected, it is likely that QuickBooks was not set up to give you credit for contributions to state unemployment tax, and you probably paid too much FUTA tax during the year. Consult your tax professional for guidance on how to resolve this issue.

Learn About the 2004 FUTA Credit Reduction for New York Employers

In November 2004, the federal government reduced the amount of FUTA credit it grants to New York employers. If you are a New York employer, you might need to pay additional FUTA taxes for 2004. For complete details, including instructions on what you need to do, see this alert on

Using the Form 940-EZ

Form 940-EZ, a simplified version of Form 940, is available in QuickBooks 2005 only. If you have QuickBooks 2004, 2003, or 2002 and want to file Form 940-EZ, you can still file a Form 940-EZ by preparing a Form 940 and then manually transferring the appropriate amounts onto a Form 940-EZ provided by the IRS. Note: You can download copies of all tax forms from the IRS Web site at

The information contained in the QuickBooks Payroll Bulletin is meant to provide general information about the payroll process and is not intended to provide tax or legal advice. Always consult your tax professional when preparing tax documents.