Employer's Annual Federal Unemployment Tax Return in San Antonio, Texas (2026)
Failing to file your Employer’s Annual Federal Unemployment Tax Return risks IRS penalties, including fines and interest on unpaid taxes, even if you paid your state unemployment contributions in San Antonio. This federal form, issued by the IRS, is a mandatory annual reconciliation of your Federal Unemployment Tax Act (FUTA) liability, also called the FUTA Form 940. Key facts:
- 97 fields — ApronPrep auto-fills 81
- $0–$0 government filing fees
- Varies processing timeline after submission
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
The Employer's Annual Federal Unemployment Tax Return (Form 940) is a direct federal requirement administered by the Internal Revenue Service (IRS) and the Texas Workforce Commission (TWC) for San Antonio businesses. Its authority stems from the Federal Unemployment Tax Act (FUTA), codified in the Internal Revenue Code (Title 26), Subtitle C, Chapter 23. This tax funds unemployment benefits for workers who lose their jobs. Every employer who paid wages of $1,500 or more in any calendar quarter or had at least one employee for part of a day in any 20 or more different weeks during the year must file this return, regardless of your restaurant's specific city location within Texas. The filing consolidates your federal unemployment tax liability for the entire year, which is separate from the Texas state unemployment taxes you report to the TWC.
Failing to file or pay this federal tax correctly triggers automatic penalties and increases your risk of a payroll audit. Based on the IRS's published penalty schedule, the consequences include:
- Failure-to-file penalty: 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25%.
- Failure-to-pay penalty: 0.5% of the unpaid tax for each month or part of a month the tax is not paid, also up to a maximum of 25%.
- Interest charges: Compounded daily on all unpaid taxes and penalties from the original due date until paid.
- Operational & financial risk: Persistent non-compliance can lead to IRS liens on your business assets, garnishment of bank accounts, and disqualification from certain business licenses or loans that require proof of tax compliance. In cases of willful fraud or evasion, criminal prosecution is possible.
Legal code: Internal Revenue Code (Title 26)
Recent update: For the 2026 tax year, the IRS has confirmed that the FUTA tax rate remains 6.0% on the first $7,000 of each employee's wages, but employers who pay state unemployment taxes (SUTA) on time typically receive a 5.4% credit, making the effective federal rate 0.6%.
Who Needs a Employer's Annual Federal Unemployment Tax Return?
| Type | Required | Notes |
|---|---|---|
| Restaurant (Full-Service) | Required | Applies because it paid $1,500 or more in wages to employees during any calendar quarter in 2025 or 2026, or had at least one employee for at least part of a day in 20 different weeks. |
| Bar / Nightclub | Required | Applies because it met the FUTA tax liability threshold, generally by paying $1,500 or more in wages in a quarter or employing workers for 20 weeks. |
| Food Truck | Required | Applies as an employer, unless it is a sole proprietorship with no employees; it must file if it paid wages subject to FUTA (federal unemployment tax). |
| Coffee Shop / Café | Required | Applies under the FUTA rules for employers, triggered by paying $1,500 or more in wages in a calendar quarter. |
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 (April, May, June). Calculate this from your payroll records: it's 0.6% of the first $7,000 paid to each employee.
COMMON MISTAKE: Entering the full taxable wages instead of the calculated 0.6% tax liability, or entering a negative amount.
Q2 Tax Liability - Cents (Line 16b)
textEnter the cents portion (the two digits after the decimal) of your Q2 FUTA tax liability.
COMMON MISTAKE: Leaving this field blank if the liability is a round dollar amount; it must be filled with '00' in that case.
Q3 Tax Liability - Dollars (Line 16c)
textEnter the whole dollar amount of your FUTA tax liability for the third quarter (July, August, September).
COMMON MISTAKE: Copying the Q2 amount without recalculating for Q3 payroll, or entering $0 if you had no payroll but still must file.
Q3 Tax Liability - Cents (Line 16c)
textEnter the cents portion (the two digits after the decimal) of your Q3 FUTA tax liability.
COMMON MISTAKE: Incorrectly rounding cents; the IRS expects the exact calculation carried through.
Q4 Tax Liability - Dollars (Line 16d)
textEnter the whole dollar amount of your FUTA tax liability for the fourth quarter (October, November, December).
COMMON MISTAKE: Forgetting to account for the annual wage base limit per employee ($7,000), causing over-reported liability.
Q4 Tax Liability - Cents (Line 16d)
textEnter the cents portion (the two digits after the decimal) of your Q4 FUTA tax liability.
COMMON MISTAKE: Leaving this field blank if the liability is a round dollar amount; it must be filled with '00'.
Other Third Party Filer
checkboxCheck this box ONLY if you are a third-party preparer (like a payroll service) filing on behalf of the employer and you do NOT fit the CPEO or Section 3504 Agent categories.
COMMON MISTAKE: The employer incorrectly checking this box themselves; it is for the preparer, not the business owner.
Certified Professional Employer Organization
checkboxCheck this box ONLY if you are a Certified Professional Employer Organization filing a consolidated return for client employers under IRS regulations.
COMMON MISTAKE: A regular employer or payroll service checking this box without the required CPEO certification from the IRS.
Section 3504 Agent
checkboxCheck this box ONLY if you have a formal agreement under IRS Code Section 3504 to be treated as the employer for tax purposes.
COMMON MISTAKE: Confusing this with being a power of attorney or a standard payroll service; it requires specific IRS authorization.
Account Type: Checking (Line 15d)
checkboxCheck this box if you are requesting a refund via direct deposit and the bank account provided is a checking account.
COMMON MISTAKE: Checking both 'Checking' and 'Savings' boxes, which will cause an IRS rejection of 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. Failing to File When You Owe $0 or Less Than $500
Many businesses think they don't need to file IRS Form 940 if their annual FUTA tax liability is $0 or under $500. This is incorrect. The IRS requires an annual filing regardless of the tax due if you paid wages subject to unemployment taxes. Failing to file because you owe little or nothing triggers automatic penalties and interest from the IRS, which adds 2–3 weeks of back-and-forth to resolve. Always file Form 940 by the deadline if you had employees, even if Line 10 shows $0.
2. Miscalculating Wages Subject to FUTA
A common error is including wages that are exempt from FUTA, such as payments to independent contractors, certain fringe benefits, or wages over the $7,000 per-employee annual limit. For example, if you paid an employee $10,000, only the first $7,000 is subject to the 0.6% tax. Including the full $10,000 overstates your liability. This mistake leads to an overpayment that requires filing an amended return (Form 940-X) to get a refund, a process that typically takes the IRS 8–12 weeks to process.
3. Incorrectly Reporting State Unemployment Tax (SUTA) Payments
The credit reduction calculation on Form 940, Schedule A, is a major source of errors. Businesses often enter the total SUTA tax they paid to the Texas Workforce Commission, not just the amount paid by the filing deadline that applies to the credit. If you made a SUTA payment in January for the previous year, it may not count for the federal credit. Entering the wrong figure here reduces your allowable credit, increasing your federal tax bill and likely triggering an IRS notice demanding payment plus interest.
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 Texas
| City | Fee Range | Timeline |
|---|---|---|
| Dallas | ||
| Houston | ||
| San Antonio |
Annual Filing Process for Federal Unemployment Tax
Gather Wage & Tax Data for the Year
Compile your total wages paid to each employee for the year (from W-2 forms) and track the $7,000 FUTA wage base per employee. You'll need your Employer Identification Number (EIN), state unemployment tax (SUTA) account number, and records of any SUTA payments made. Missing accurate quarterly wage totals is a common cause of calculation errors on the form. Use your payroll software's annual summary or a payroll register.
Calculate Net FUTA Tax Liability
Apply the 6.0% federal tax rate to the first $7,000 paid to each employee. Then, subtract credits for timely paid state unemployment taxes (up to 5.4%). The net tax owed is typically 0.6%. This calculation is done on IRS Form 940. Miscalculating the credit, especially if you paid SUTA late or to a non-certified state fund, is the top reason for IRS notices and penalties.
Complete and File IRS Form 940
Fill out the 4-part Form 940 for the applicable tax year. Key sections include Part 1 (FUTA tax calculation), Part 2 (deposit schedule), Part 3 (record of federal tax liability), and Part 4 (signature). File electronically through the IRS e-file system for businesses or by mail to the IRS address for your region. Electronic filing is required if you have 10 or more employees and reduces processing errors. The form is due by January 31.
Other Requirements You'll Need
This is one of 13 requirements for opening a restaurant in Texas.
ADA Compliance Self-Certification
federal
Alarm System Permit/Registration
local
Alcoholic Beverage License Posting/Display Requirement
state
Application for Employer Identification Number
federal
See all co-required forms and how they connect to your compliance dossier.
See All RequirementsProcessing times vary significantly based on submission method and any issues with your tax data. The IRS does not publish a standard processing timeline for Form 940. Most employers complete their filing within 30-45 minutes, but you should allow several weeks for IRS system processing and for any potential correspondence. Contact the IRS or your tax professional to confirm expected timelines for your specific filing year.
There are $0–$0 in direct government filing fees to submit Form 940 to the IRS. The cost is the tax liability itself, which is calculated based on employee wages. You must also be enrolled in the EFTPS Enrollment (Electronic Federal Tax Payment System) to make payments. Not legal advice — verify tax calculations with the IRS or a qualified tax preparer.
No, Form 940 is not transferable. It is an annual federal tax return tied to your Employer Identification Number (EIN). If you move your business, you must file Form 940 using the updated business address. A location change may also trigger new local requirements, such as a City Business License/Registration with the City of San Antonio. Always update your address with the IRS and state/local authorities.
You must file Form 940 annually, by January 31 of the following year. There is no "renewal"—each year requires a new return. If you have deposited all FUTA tax when due, you have until February 10 to file. This annual requirement is separate from quarterly payroll filings and is a key part of maintaining your business's federal tax compliance.
There is no physical inspection for Form 940. The "inspection" is an IRS review of your submitted tax data for accuracy and completeness. The IRS may audit your payroll records to verify wage reports and tax calculations. Ensuring your initial Application for Employer Identification Number and payroll records are accurate is the best way to prepare for this type of review.
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 Texas specifically, we have analyzed compliance dossiers for 3 cities (Dallas, Houston, San Antonio), 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)
This Form Is One of 60+ Requirements.
ApronPrep discovers every permit your city requires — including the ones generic checklists miss. Pick your city for the complete package.