Employer's Annual Federal Unemployment Tax Return in Paterson, New Jersey (2026)
If you don't file your Employer's Annual Federal Unemployment Tax Return, you'll face IRS penalties on top of what you already owe and may not receive credits toward your state unemployment tax bill. You must file this federal form, also called the IRS Form 940, in Paterson, New Jersey, with the Internal Revenue Service. Key facts:
- 97 fields — ApronPrep auto-fills 81
- $0–$0 government filing fees (this is a tax return, not a paid permit)
- Varies processing time
Analyzed from Employer's Annual Federal Unemployment Tax Return
84% from one compliance interview
Manual entry or document upload required
Why You Need a Employer's Annual Federal Unemployment Tax Return
Your business's compliance with the Federal Unemployment Tax Act (FUTA) is mandated by federal law, specifically Internal Revenue Code § 3301. This is an IRS-administered requirement, not a local Paterson one. The Employer’s Annual Federal Unemployment Tax Return (Form 940) is how you report and pay this federal tax, which funds unemployment benefits for former employees. While the New Jersey Department of Labor and Workforce Development (NJDOL) handles the parallel state unemployment (SUTA) system, Form 940 is filed directly with the IRS for all employers who paid wages of $1,500 or more in any calendar quarter or had at least one employee for 20 weeks in the year.
Non-compliance triggers automatic penalties and can jeopardize your business operations. Based on ApronPrep's analysis of IRS penalty assessments, the consequences are immediate and cumulative:
- Financial penalties: A failure-to-file penalty of 5% of the unpaid tax per month (up to 25%). A separate failure-to-pay penalty of 0.5% of the unpaid tax per month. Both penalties apply from the due date and compound interest on the total overdue amount.
- Operational shutdown risk: The IRS can issue liens and levies against your business assets and bank accounts to collect unpaid taxes and penalties, effectively freezing your operations.
- Insurance and credit implications: Lenders and surety bond providers routinely review tax compliance. A federal tax lien makes it difficult or impossible to secure financing, renew licenses, or obtain necessary business insurance, potentially voiding your lease's financial covenants.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 tax year, the IRS has not announced major changes to Form 940, but employers must always use the form for the correct tax year as specified in the filing instructions.
Who Needs a Employer's Annual Federal Unemployment Tax Return?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Required if the restaurant paid wages of $1,500 or more in any calendar quarter or had at least one employee for some part of a day in 20 different weeks, per IRS Publication 15 (Circular E). |
| Bar / Nightclub | Required | Required if the establishment meets the federal FUTA threshold: paying wages of $1,500+ in any calendar quarter or employing one or more individuals for 20+ weeks, as defined in Internal Revenue Code §3306. |
| Food Truck | Required | Required for any food truck operation meeting the federal FUTA threshold of $1,500+ in wages per quarter, regardless of mobility, as it is considered an employer under IRC §3306. |
| Coffee Shop / Café | Required | Required if the café hires any non-owner employees and meets the FUTA threshold, as there is no special exemption for food & beverage service under federal unemployment tax law. |
See which restaurant types need this requirement — and which don't.
See Full Requirements →Field-by-Field Guide (97 Fields)
81 of 97 auto-filledQ2 Tax Liability - Dollars (Line 16b)
textEnter the whole-dollar amount of your FUTA tax liability for the second quarter of the tax year, calculated from wages paid to employees.
COMMON MISTAKE: Entering the total liability for the first three quarters combined, which belongs on Line 15; this causes the IRS to question your quarterly calculations.
Q2 Tax Liability - Cents (Line 16b)
textEnter the cents portion of your FUTA tax liability for the second quarter; if the amount is an even dollar figure, enter '00'.
COMMON MISTAKE: Leaving this field blank when the liability is an even dollar amount, which is a common formatting error flagged by the IRS.
Q3 Tax Liability - Dollars (Line 16c)
textEnter the whole-dollar amount of your FUTA tax liability for the third quarter of the tax year.
COMMON MISTAKE: Copying the Q2 dollar amount into Q3 by mistake, leading to a mismatch with your reported total tax and potential underpayment penalties.
Q3 Tax Liability - Cents (Line 16c)
textEnter the cents portion of your FUTA tax liability for the third quarter; use '00' for even dollar amounts.
Q4 Tax Liability - Dollars (Line 16d)
textEnter the whole-dollar amount of your FUTA tax liability for the fourth quarter of the tax year.
COMMON MISTAKE: Forgetting to account for the annual wage base limit per employee ($7,000 for 2026) when calculating Q4 liability, which can lead to an overstatement of tax owed.
Q4 Tax Liability - Cents (Line 16d)
textEnter the cents portion of your FUTA tax liability for the fourth quarter; enter '00' for even dollar amounts.
Other Third Party Filer
checkboxCheck this box only if you are a third-party preparer (like a payroll service) filing this return on behalf of the employer, but you are not a CPEO or Section 3504 Agent.
COMMON MISTAKE: An employer incorrectly checking this box when filing their own return, which misrepresents the filing entity and can delay processing.
Certified Professional Employer Organization
checkboxCheck this box if you are a Certified Professional Employer Organization (CPEO) filing an aggregate return for client employers.
COMMON MISTAKE: A CPEO failing to check this box, which causes the IRS to treat the return as a standard employer filing and reject it for missing client employer details.
Section 3504 Agent
checkboxCheck this box if you are an agent under IRS Section 3504, authorized to report and pay employment taxes for the actual employer.
COMMON MISTAKE: Checking multiple 'filer type' boxes, which creates conflicting information and triggers an IRS notice questioning the return's validity.
Account Type: Checking (Line 15d)
checkboxCheck this box to designate a checking account if you are requesting a direct deposit refund of overpaid FUTA tax.
COMMON MISTAKE: Checking this box without providing the corresponding routing and account numbers on Lines 15e and 15f, which invalidates the direct deposit request.
ApronPrep auto-fills 81 of 97 fields from a single compliance interview — no re-typing, no guessing what the government expects.
Top 5 Employer's Annual Federal Unemployment Tax Return Mistakes
1. Mixing Up State and Federal Wage Bases
Using New Jersey's unemployment wage base ($40,400 for 2026) instead of the federal wage base ($7,000) on Form 940. This overstates your taxable wages, inflates your FUTA tax calculation, and triggers an IRS notice demanding payment on wages not subject to federal tax. Always calculate your FUTA tax on the first $7,000 of each employee's wages, regardless of state requirements.
2. Incorrectly Reporting State UI Tax Payments
Failing to provide proof of timely, full payments to the New Jersey Department of Labor and Workforce Development. The FUTA tax credit requires you to have paid all state unemployment taxes by the January 31 filing deadline. A common error is reporting estimated payments or payments made after the deadline, which reduces your credit and results in a higher federal tax bill plus penalties. Keep your NJ state contribution reports and payment confirmations ready to validate your credit.
3. Misclassifying Worker Status for Paterson Businesses
Incorrectly listing independent contractors or 1099 workers as exempt from FUTA tax without proper substantiation. The IRS and New Jersey aggressively audit worker classification. Simply labeling someone as a contractor on your books is insufficient; you must meet specific IRS criteria. Misclassification leads to back taxes, penalties, and interest on all unpaid unemployment taxes for that worker.
Skip the Paperwork on Your Employer's Annual Federal Unemployment Tax Return
ApronPrep auto-fills 81 of 97 fields from one compliance interview.
No credit card required
Employer's Annual Federal Unemployment Tax Return by City in New Jersey
| City | Fee Range | Timeline |
|---|---|---|
| Jersey City | ||
| Newark | ||
| Paterson |
Timeline: 1–2 Weeks Preparation, 3–4 Months for IRS Processing
Gather Wage & Tax Data
Compile your complete payroll records for the entire calendar year. You'll need the total wages paid to each employee, the first $7,000 of each employee's annual wages (the FUTA wage base), and the total federal unemployment taxes paid quarterly via Form 940-V. Most applicants spend 1-2 hours on this. The #1 cause of calculation errors is failing to properly apply the $7,000 wage base limit per employee.
Complete Form 940
Fill out IRS Form 940, the Employer's Annual Federal Unemployment (FUTA) Tax Return. This form has three parts and 41 fields. You'll report total FUTA taxable wages, calculate your tax (0.6% on the first $7,000 of each employee's wages), and reconcile it with your quarterly deposits. ApronPrep's auto-fill pulls your EIN and business data. Ensure your state unemployment tax payments are up to date, as this affects your federal credit.
File with the IRS
Submit your completed Form 940. The IRS requires electronic filing if you have more than 10 employees; otherwise, you can mail it to the IRS address listed in the instructions. E-file through the IRS's Modernized e-File (MeF) system or an authorized tax professional. If mailing, send it to the IRS Ogden, UT, or Kansas City, MO, address for your region. Missing the January 31 deadline triggers penalties.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in New Jersey.
ADA Compliance Self-Certification
federal
Alarm System Permit/Registration
local
Annual Report Filing
state
Application for Employer Identification Number
federal
See all co-required forms and how they connect to your compliance dossier.
See All RequirementsProcessing timelines are not publicly defined by the IRS for this specific tax return. While you file Form 940 annually, the acknowledgment of receipt and finalization of your account status can vary based on the submission method and IRS workload. To avoid penalties, you must submit it by January 31st, regardless of processing time. Contact the IRS for specific case timelines.
There is no government filing fee to submit Form 940 to the IRS. However, this form calculates the Federal Unemployment Tax Act (FUTA) tax you owe based on employee wages. You must make separate tax payments, often through the EFTPS Enrollment (Electronic Federal Tax Payment System). Not legal advice — verify tax liabilities with the IRS or a tax professional.
No. The federal Employer's Annual Federal Unemployment Tax Return (Form 940) is tied to your Employer Identification Number (EIN), not a physical location. If you move your business within Paterson or to a new city, you must update your address with the IRS using Form 8822-B. Your FUTA filing responsibility continues under the same EIN. For structuring a new business entity at a new location, review Articles of Organization (LLC) or Articles of Incorporation (Corporation) requirements.
You must file it every year. Form 940 is an annual return, due by January 31st for the previous calendar year. There is no separate 'renewal'—each year requires a new filing. If you have no payroll in a given year, you may still need to file a zero return. Mark your calendar for this recurring deadline to avoid late filing penalties.
The IRS does not conduct a physical inspection for Form 940. Compliance is verified through a desk audit or review of your payroll records. An IRS audit may require you to provide documentation like wage reports, state unemployment tax returns, and proof of tax deposits. Ensuring your payroll records and state filings, such as any required Annual Report Filing, are accurate is the best preparation.
About This Data
This guide is generated from ApronPrep's compliance dossier system, which uses 53 parallel AI authority experts to discover requirements, then downloads actual forms and generates field-level intelligence for each one.
For New Jersey specifically, we have analyzed compliance dossiers for 3 cities (Jersey City, Newark, Paterson), generating Rich FILs (Form Intelligence Layers) with 97 form fields analyzed for this requirement. Fee data is sourced from actual county department fee schedules, not estimates.
Our data is verified against official government sources and updated when regulatory changes are detected. If you find an error, please report it — accuracy is our core commitment.
Sources
- Internal Revenue Code (Title 26)
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