Federal Unemployment Tax Act (FUTA)

The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides 

for payments of unemployment compensation to workers who have lost their jobs. Most 

employers pay both a Federal and a state unemployment tax. A list of state unemployment 

tax agencies, including addresses and phone numbers, is available in Publication 926, 

Household Employer's Tax Guide. Only the employer pays FUTA tax; it is not deducted 

from the employee's wages. For more information, refer to the Instructions for Form 940 

(PDF).

Use Form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Together 

with state unemployment tax systems, the FUTA tax provides funds for paying 

unemployment compensation to workers who have lost their jobs. Only employers pay 

FUTA tax. Most employers pay both federal and state unemployment tax.

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