As an employer, you may have to file a federal unemployment tax return, Form 940 or Form 940-EZ, after the close of the year. Refer to Topic 760 for filing information. If you are required to file Form 940 or Form 940-EZ, it generally is due by January 31st each year. However, you may have to make deposits of this tax quarterly before you file the return.

Only the first $7,000 paid to each employee during each calendar year is used to figure the tax. To determine if you owe a deposit of federal unemployment tax at the end of each calendar quarter, first figure the amount of wages you paid during the quarter that are subject to both federal and state unemployment tax. Next, multiply the taxable wages you have just figured by eight tenths of one percent, that is, .008. Please note: If any part of the amounts paid are exempt from state unemployment tax, a higher rate may be required. If the amount due is $100 or less, you do not have to make a deposit. Add this amount to the tax you figure for wages subject to unemployment tax at the end of the next quarter. If the amount you get is more than $100, a deposit is due.

If a deposit is due, you must make it by the last day of the month following the end of the quarter. For example: if your tax at the end of the first quarter, March 3lst, is $60, you do not have to make a deposit. If your tax for the second quarter, which ends on June 30th, is $70, your total liability through the end of June is now $130. You must deposit $130 by July 31st.

When making quarterly deposits take federal tax deposit coupons, Form 8109, with the payment to an authorized financial institution or Federal Reserve bank to make deposits. Be sure the coupon shows the correct employer identification number, name, type of tax, and tax year. The authorized financial institution or Federal Reserve bank cannot accept payment without a deposit coupon. To see if you must deposit federal unemployment tax for the last quarter of the year, subtract the amounts previously deposited for the year from the tax reportable on Form 940 or Form 940-EZ. If the result is more than $100, deposit it by January 31st. If it is $100 or less, you may either deposit it by January 31st or pay it with your Form 940 or Form 940-EZ. If you pay it with Form 940 or Form 940-EZ, you must use the payment voucher at the bottom of the return. Where you file the form depends on whether or not you are including a payment.

Get the Instructions for Form 940 (or 940-EZ) to see if you must make your deposits using the Electronic Federal Tax Payment System (EFTPS).

When you fill out Form 940 or Form 940-EZ, you must complete the Record of Quarterly Federal Unemployment Tax Liability if your total tax is over $100. This part of the form shows the IRS whether you deposited your tax on time. Refer to Publication 15, Employer's Tax Guide, for Late Deposit Penalties and Publication 566, Electronic Federal Tax Payment System. Publications can be downloaded from this site, or ordered by calling 1-800-829-3676.

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