What is the purpose of the 940 tax form?

Employers use the 940 tax form for their annual federal unemployment tax return, states the Internal Revenue Service. As of 2014, the FUTA tax rate is 6 percent and applies to the first $7,000 an employer pays each employee in annual wages. The rules differ for household and agricultural employees.

Generally, employers must file Form 940 if they paid at least $1,500 in wages to employees in any calendar

quarter during the previous two years. They must also use it if they had one or more employees for part of a day in any 20 or more different weeks in at least one of the two prior years. The count includes all temporary, part-time and full-time employees, explains the IRS.