Form 940, Form 941 and FUTA: the payroll tax returns a restaurant files by 1 February 2027

Form 940 is the return most restaurant owners sign without reading: one line of federal unemployment tax, about $42 a head in Texas. In California this year the same line may cost three to ten times as much, and it is billed in one go with the January deposit.

Form 941 for October to December 2026 and Form 940 for the 2026 year are both due Monday 1 February 2027. If you made every deposit on time, Form 941 can wait until Wednesday 10 February, and by our reading Form 940 can too. Form 941 reports withheld income tax, Social Security and Medicare, including on tips. Form 940 reports federal unemployment tax (FUTA): normally 0.6% of the first $7,000 paid to each employee, more in a credit reduction state. Last checked: 5 November 2026.

When are Forms 940 and 941 due?

Both are due on 1 February 2027, because the usual 31 January falls on a Sunday. The IRS employment tax due dates page (last reviewed 21 April 2026) gives filers who deposited all their tax on time "10 additional calendar days". For Form 941 the instructions fix the date: "the 10th day of the 2nd month that follows the end of the quarter", so 10 February 2027. For Form 940 it is our reading: the 2025 Form 940 instructions gave 10 February 2026 when the main date had rolled to 2 February, and the 2026 instructions were not published when we checked.

The full January calendar, including W-2s and 1099s, is in our filing deadlines guide.

What does Form 941 report for a restaurant?

Each quarter's wages, tips and payroll taxes. The lines restaurants get wrong are the tip lines. From the Form 941 instructions (March 2026):

• Line 5b, taxable Social Security tips: "all tips your employees reported to you during the quarter", until an employee's wages and tips reach the 2026 Social Security wage base of $184,500.
• Line 5c, taxable Medicare wages and tips: all of them, with no cap.
• Line 5f: tax due under a Section 3121(q) Notice and Demand, the letter the IRS sends when it thinks staff under-reported tips. You owe the employer share from the date on the notice.
• Uncollected employee tax. If a server's cash wages are too small to cover the Social Security and Medicare due on their tips by the 10th of the following month, you stop trying to collect it, report the tips in full, and adjust.

The employer share of Social Security and Medicare on tips is 7.65%, the same as on wages. Many restaurants claim part of it back as the FICA tip credit on Form 8846, which our tip credit guide explains. The tips on line 5b should match the code TP totals on your W-2s, covered in our no tax on tips guide, and a large tipped restaurant reconciles them again on Form 8027.

Deposits. Most restaurants pay through the quarter, not with the return. Publication 15 sets the schedule from a lookback period (1 July 2024 to 30 June 2025 for 2026): $50,000 or less of reported tax makes you a monthly depositor, due by the 15th of the next month; more makes you a semiweekly depositor, and semiweekly depositors also file Schedule B with each Form 941 to show their tax liability day by day. If a quarter's total tax is under $2,500, you can pay it with the return instead. A day on which you build up $100,000 or more means depositing the next business day.

How is FUTA worked out?

Gross FUTA is 6.0% of the first $7,000 you pay each employee in the year. You get a credit of up to 5.4% for paying state unemployment tax, so the usual net rate is 0.6%, or $42 per employee. Two things raise it:

1. Paying state unemployment tax late. The 940 instructions tie the full credit to state tax paid by the 940 due date. Pay late and the credit shrinks.
2. A credit reduction state. When a state has owed the federal government unemployment loans for two years and has not repaid them by 10 November, employers there lose part of the credit. You pay the extra on Schedule A of Form 940, with the fourth-quarter deposit.

If your FUTA for the year (or carried over from earlier quarters) is more than $500, you deposit it; at $500 or less, you can carry it forward and pay it with the return.

The $7,000 base is per employee, not per job. In a business with high turnover that matters. This is our analysis of the Bureau of Labor Statistics' JOLTS and CES series (JTU720000000000000HIL and CEU7072000001, retrieved 5 November 2026): accommodation and food services made 9.41 million hires in 2025 against average employment of 14.20 million, about 66 hires for every 100 jobs. Method: the sum of the 12 monthly hires figures for 2025, divided by the 2025 annual average of employees in the same sector. Every new hire starts a fresh $7,000.

Which states are credit reduction states for 2026?

The Department of Labor publishes the final list after 10 November 2026. When we checked on 5 November, its FUTA credit reductions page (updated 11 September 2026) still showed only the potential list, dated 15 January 2026. We will update this table when the final list is out.

Source: DOL spreadsheets of actual reductions for 2010 to 2025 and potential reductions for 2026. California's 5.3% includes an estimated "benefit cost rate" add-on of 3.8%. Its footnotes say states may qualify for relief from that add-on, and in 2025 California did, paying 1.2% rather than a larger figure. The 1.5% base is the likelier outcome, but it is not settled until the DOL says so.

Worked example: FUTA for a 25-person restaurant in Texas and California

Take a full-service restaurant with 25 jobs. At the 2025 industry hiring rate it hires about 17 people during the year, so it issues 42 W-2s. Say 30 of those people earn $7,000 or more, and the 12 who left early average $3,000.

FUTA wages: 30 × $7,000 + 12 × $3,000 = $246,000.

Two lessons for an owner:

• In California, set money aside now. The credit reduction is paid with the fourth-quarter deposit due 1 February 2027, and it is billed on the whole year's FUTA wages at once. At 1.5% the extra is $3,690 on this payroll.
• Turnover has a tax cost. Turnover adds $71,000 of FUTA wages here: $426 of FUTA in Texas and up to $4,189 in California at the full potential rate, before state unemployment tax, hiring and training.

Form 940 and 941 checklist for January

FORMS 940 AND 941: JANUARY 2027 CHECKLIST

Form 941 (October to December 2026)
[ ] Wages, tips and withholding agree with the payroll register.
[ ] Line 5b tips match the tips staff reported (and code TP
    totals on the W-2s).
[ ] Quarter's deposits agree with your tax account (IRS business
    tax account or EFTPS history).
[ ] Total of four 941s for 2026 agrees with the W-3.

Form 940 (2026)
[ ] Count of employees paid in 2026, including leavers.
[ ] FUTA wages: each person's pay capped at $7,000.
[ ] State unemployment tax for 2026 paid in full, on time.
[ ] Worked in a credit reduction state? Fill in Schedule A
    once the DOL final list is out.
[ ] Fourth-quarter FUTA plus any credit reduction deposited
    by Mon 1 February 2027 (if over $500).

Timing
[ ] Every deposit on time? File Form 941 by Wed 10 February
    2027 (Form 940 too, by our reading). Otherwise file both
    by Mon 1 February 2027.

This guide is general information, so check with your payroll provider or accountant for your situation.

Can TablePort handle this for you?

TablePort does not file payroll returns or calculate payroll tax. It keeps the hours and tips your payroll provider needs to get Forms 941 and 940 right.

1. Staff clock in on the till with a PIN, matched to their shifts. Approve each week's timesheets and export hours as a CSV or in a format ready for Xero.
2. At close, cash, voids, comps and tips reconcile on one screen, and the daily report shows tips per staff member, so the tips behind line 5b start from a checked total.
3. Use the accounting exports to send daily sales, tips and tax to your accountant.

One honest limit: your payroll provider deposits the tax and files the returns, and FUTA rates are theirs to apply. See the staff rota page.