When must an employer file a Form 940?

The correct answer is that an employer must file a Form 940 if employees were employed on any day in any 20 weeks in the current or preceding calendar year. This requirement is based on the significance of measuring employment over a specified timeframe rather than on a daily or singular basis.

Form 940 is used for reporting and paying federal unemployment tax (FUTA). Employers who have 20 or more employees for any part of a week within a 20-week period are liable for this tax. This helps to ensure that employers who have a consistent level of employee engagement, and thus a reliable tax obligation, are accounted for when it comes to contributing to federal unemployment benefits.

This means that even if an employer has sporadic employees throughout the year but reaches that threshold within a 20-week window, they must fulfill their filing obligation. Therefore, the answer reflects the importance of continuous employment rather than a simple count of employees on specific days.