Employers deal with two main federal payroll taxes each year. One is FUTA, which funds unemployment benefits. The other is the payroll taxes reported on Form 941: federal income tax withholding, plus Social Security and Medicare taxes (FICA). FICA is only Social Security and Medicare\u2014federal income tax withholding is separate.<\/p>\n
Although both come out of payroll, they are treated as separate taxes and follow different rules and filing schedules.<\/p>\n
The IRS forms used to report these obligations are Form 940 and Form 941. Most businesses are confused by their reporting requirements, deadlines, and deposit rules. This IRS form comparison guide presents a clean, structured comparison of both forms and provides real scenarios to help employers remain compliant.<\/p>\n
Form 940 is the IRS\u2019s annual FUTA return. It reports the employer\u2019s federal unemployment tax on up to the first $7,000 of wages per employee (after removing FUTA-excluded payments).<\/p>\n
You generally have a Form 940 filing obligation if either of these is true:<\/p>\n
Most household employers report household employment taxes on Schedule H (Form 1040) rather than Form 940. But if you also have non-household employees, you may choose to report FUTA for your household employees on Form 940\u2014and if you do, you must also file Form 941, 943, or 944 to report the Social Security and Medicare taxes and any federal income tax withholding for those household employees.<\/p>\n
FUTA helps fund the unemployment system, and Form 940 is where the employer calculates the final annual FUTA tax. Employers can usually reduce the effective FUTA rate by claiming the credit for timely state unemployment tax payments (up to 5.4%), which is why many employers end up at an effective 0.6% rate (subject to credit-reduction rules). However, employers in a FUTA credit reduction state may owe additional FUTA tax because the normal state credit is reduced.<\/p>\n
FUTA isn\u2019t deposited with every payroll. You must deposit FUTA tax when your undeposited FUTA liability is more than $500 at the end of a quarter (including any amount carried forward from earlier quarters). If it\u2019s $500 or less, carry it forward until the total is more than $500. Deposits are due by the last day of the month after the quarter ends and must be made by electronic funds transfer (EFT).<\/p>\n
Typical FUTA adjustments come from FUTA-excluded payments and credit-reduction state rules (which increase FUTA due). The IRS instructions outline the categories and where they flow in the calculation.<\/p>\n
Form 941 is the IRS\u2019s quarterly payroll tax return. It reports:<\/p>\n
Most employers file Form 941 each quarter if they pay wages subject to federal income tax withholding or Social Security\/Medicare taxes. After you file your first Form 941, you generally must keep filing every quarter (even for quarters with no taxes to report) unless you qualify as a seasonal employer or you file a final return.<\/p>\n
Form 941 is how the IRS reconciles what you reported for the quarter with your required deposits. If reported liability doesn\u2019t line up with deposit timing (and, when required, the liability schedule), you can trigger deposit penalties and IRS correspondence\u2014especially for larger or higher-frequency depositors.<\/p>\n
Social Security tax:<\/b> For 2025, Social Security is withheld at 6.2% from the employee and matched with another 6.2% by the employer. That Social Security portion only applies to each employee\u2019s wages up to $176,100 for the year.<\/p>\n
Medicare tax:<\/b> Medicare is withheld at 1.45% from the employee and matched with 1.45% by the employer. Unlike Social Security, there\u2019s no annual wage limit for Medicare.<\/p>\n
Additional Medicare Tax:<\/b> Employers must withhold an extra 0.9% from the employee\u2019s pay once that employee\u2019s wages go over $200,000 (this additional amount is employee-only\u2014the employer doesn\u2019t match it).<\/p>\nSpecial Note on Third-Party Sick Pay<\/h3>\n
Third-party sick pay reporting depends on whether the third party transfers liability under IRS rules. If liability is not transferred, the third party reports and deposits the related taxes under its EIN, and the employer generally has no employment tax responsibilities for that sick pay. But, if liability is transferred, the employer reports the wages on Form 941 (using the required sick pay adjustment mechanics), and the employer includes those sick pay wages in FUTA reporting on Form 940, as applicable.<\/p>\n
| Key characteristic<\/th>\n | IRS Form 940 (Annual)<\/th>\n | IRS Form 941 (Quarterly)<\/th>\n<\/tr>\n<\/thead>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Primary taxes reported<\/td>\n | FUTA (Federal Unemployment Tax)<\/td>\n | Federal income tax withholding plus Social Security and Medicare taxes<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Who pays the tax<\/td>\n | Employer-only (FUTA is not withheld from employees)<\/td>\n | Both: employee amounts are withheld, and the employer matches Social Security and Medicare<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Filing frequency<\/td>\n | Annually (once per year)<\/td>\n | Quarterly (four times per year)<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wage base \/ limits<\/td>\n | FUTA generally applies to the first $7,000 of wages per employee per year<\/td>\n | Social Security applies up to the annual wage base (2025: $176,100; 2026: $184,500). Medicare has no wage cap. Additional Medicare Tax applies once wages exceed $200,000.<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Standard rates<\/td>\n | 6.0% statutory FUTA rate; typically reduced to 0.6% after maximum state credit (credit-reduction states increase the net rate)<\/td>\n | Social Security: 6.2% employee + 6.2% employer (up to wage base). Medicare: 1.45% employee + 1.45% employer. Additional Medicare: 0.9% employee-only<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit trigger \/ schedule<\/td>\n | Deposit required when undeposited FUTA liability exceeds $500; due by the last day of the month after quarter-end<\/td>\n | Monthly or semiweekly schedule based on lookback period; $100,000 next-day deposit rule can override<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Standard filing due dates<\/td>\n | Usually January 31. For TY 2025: Feb 2, 2026 (or Feb 10, 2026 if all FUTA deposits were made on time)<\/td>\n | Last day of the month after quarter-end (Apr 30, Jul 31, Oct 31, Jan 31). If deposits are timely, may file by the 10th day of the following month<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common supporting schedules<\/td>\n | Schedule A (credit reduction \/ multi-state), Schedule R (aggregate filers)<\/td>\n | Schedule B (semiweekly \/ $100k rule), Schedule R (aggregate filers)<\/td>\n<\/tr>\n | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| What the tax funds<\/td>\n | Federal unemployment program funding framework<\/td>\n | Social Security and Medicare trust funds, plus federal income tax remitted to the Treasury<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nDeadlines & Deposit Rules Made Easy<\/h2>\nHere\u2019s a simple reference for FUTA (Form 940) and payroll tax (Form 941) deposit timing and filing deadlines.<\/p>\n Form 940 Deadline & Deposit Schedule<\/h3>\n
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