Certified Payroll Professional Practice Exam 2025 - Free CPP Practice Questions and Study Guide

Employers must use Form 940 to report federal unemployment taxes. This form specifically addresses the Federal Unemployment Tax Act (FUTA), which provides the framework for unemployment compensation for workers who have lost their jobs. Each calendar year, employers are required to file Form 940 to report their annual FUTA tax obligation. It summarizes the wages subject to this tax, the tax rate applied, and the total amount of tax due.

Form W-2 is primarily used to report wages paid to employees and the taxes withheld from those wages, which is separate from unemployment taxes. Form 1065 is utilized by partnerships to report their income, deductions, and profits, while Form 941 is used for reporting income taxes, Social Security tax, and Medicare tax withheld from employee paychecks, as well as the employer's portion of these taxes. None of these forms are designated specifically for the reporting of federal unemployment taxes, making Form 940 the correct answer.