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Guide · 2026 rules

Form 940: federal unemployment tax on your S-corp salary

Once your S corporation pays you a salary, it is an employer, and employers pay federal unemployment tax, called FUTA. Form 940 is the yearly return for it. For a one-owner business the amount is usually small, but the form is still due every year.

Updated October 24, 20267 official sources

In short

  • FUTA applies to the first $7,000 of each employee’s wages a year, including yours.
  • The rate is 6.0%, but most employers get a 5.4% credit for state unemployment tax, so they pay 0.6%: at most $42 a year for one person.
  • If your wages are outside your state’s unemployment tax, FUTA can be the full 6.0%.
  • Form 940 is due January 31. For 2026 wages, the date is February 1, 2027.

Who files Form 940

An employer files Form 940 if, in the current or the prior year, it paid $1,500 or more in wages in any calendar quarter, or had an employee for at least part of a day in any 20 weeks. Once you hire someone else, FUTA is one of several payroll taxes; Hiring your first employee lists them all. An S corporation that pays its owner a salary through the year meets the test, so expect to file it every year.

How much it is

FUTA applies to the first $7,000 you pay each employee in a calendar year. The tax rate is 6.0%, but employers who pay state unemployment tax get a credit of up to 5.4%, which leaves a net 0.6%. On one owner’s salary, that comes to at most $42 a year.

Two things can raise it:

  • Wages outside state unemployment tax. If wages subject to FUTA aren’t subject to your state’s unemployment tax, FUTA can be the full 6.0%. In some states a corporate officer’s wages are outside state unemployment insurance. The calculator applies your state’s rule.
  • Credit reduction states. When a state has an outstanding federal unemployment advance (a loan), its employers get a smaller credit. For 2025 that applied to California and the U.S. Virgin Islands. The 2026 list is set on November 10, 2026.

Deposits

If your FUTA tax is more than $500 for the year, you must deposit at least one quarterly payment. If it is $500 or less in a quarter, it carries over to the next quarter. If the amount still owed at year end is $500 or less, you can deposit it or pay it with Form 940. At $42 a year, a one-owner S corporation with the full credit is in that case.

When it’s due

Form 940 is due January 31 for the year before. If you deposited all the tax on time, you have until February 10. For 2026 wages, the due date is February 1, 2027, because January 31, 2027 is a Sunday.

A payroll service usually files Form 940 for you along with your W-2. S-corp payroll costs compares what the common services charge, and the setup checklist shows where Form 940 sits in the first-year calendar.

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Sources

Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.

An explanation of public rules, not tax advice.

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