How to Pay Your Form 940 Taxes Online

Online payment through the Electronic Federal Tax Payment System (EFTPS) stands out as a widely used and convenient option. This system allows employers to fulfill their obligations for federal unemployment taxes, which are reported on IRS Form 940, the Employer’s Annual Federal Unemployment (FUTA) Tax Return. These taxes play a role in funding unemployment compensation for workers across the nation.

Essential Preparations for Online Payment

First, a valid Employer Identification Number (EIN) is a mandatory requirement for all businesses that pay federal taxes, including FUTA. This unique nine-digit number, assigned by the IRS, identifies a business entity for tax purposes.

Enrolling in EFTPS is the next step, which can be done directly through the EFTPS website. During the enrollment process, businesses will need to provide their EIN, the legal business name, physical address, and bank account details, including both the account number and routing number, from which tax payments will be debited. After successful online enrollment, a Personal Identification Number (PIN) will be mailed to the business’s address of record, typically arriving within five to seven business days. This PIN is an important security credential and is required to activate the EFTPS account and begin scheduling payments. Upon receiving the PIN, users will also be prompted to create an internet password for their EFTPS account.

Gather specific payment information prior to logging into the EFTPS system. This includes the precise FUTA tax amount due for the relevant tax period, which for Form 940 is typically an annual amount, though deposits may be required quarterly. Employers are generally subject to FUTA tax on the first $7,000 paid in wages to each employee during a calendar year. While the federal FUTA tax rate is 6.0% on this wage base, most employers receive a credit of up to 5.4% for timely state unemployment tax payments, effectively reducing their net federal FUTA tax rate to 0.6%. Having the correct tax period, such as “Annual” for Form 940, and the accurate bank account and routing numbers readily available ensures efficiency when making the payment.

Steps to Make Your EFTPS Payment

To begin, navigate to the official EFTPS website and log in using your Employer Identification Number (EIN), the Personal Identification Number (PIN) received by mail, and your established internet password. This secure login provides access to your tax payment portal.

Once logged in, locate the option for making a payment. Select “Form 940 FUTA” or a similar designation for federal unemployment tax. You will then need to enter the tax period for which the payment is being made, which is usually “Annual” for FUTA tax liabilities. Accurately input the FUTA tax amount you intend to pay, ensuring it matches your calculated liability.

EFTPS allows you to schedule payments in advance; select the desired payment date, ensuring submission by 8:00 p.m. Eastern Time at least one calendar day prior to the tax due date. Review the bank account details displayed, and before finalizing, a summary of your payment details will be presented for review. After verifying all information, submit the payment. Immediately upon submission, the system will provide an EFT Acknowledgment Number, which serves as your official receipt and proof of payment, and you should record this number for your records.

Confirming and Documenting Your Payment

After successfully submitting your FUTA tax payment through EFTPS, it is important to confirm its status and maintain proper documentation. The EFTPS system allows users to verify the status of their submitted payments by navigating to the “Payment History” or “Payment Status” section within their account. While an immediate acknowledgment number is provided, it may take one to two business days for the payment status to update from “pending” to “processed” as the transaction clears through the banking system.

For record-keeping purposes, it is advisable to print or save a digital copy of the payment confirmation page, which prominently displays the EFT Acknowledgment Number. This number is a unique identifier for your transaction and serves as crucial proof of payment for tax purposes and any future inquiries from the IRS. Retaining these records helps in reconciling your tax liabilities and demonstrates compliance.

It is important to remember that paying your FUTA taxes through EFTPS is a separate process from filing Form 940 itself. The payment addresses the tax liability, while the form reports the wages and calculates the final tax owed. The payment details you provide through EFTPS will be reconciled with the information reported on your Form 940 when it is filed.