- Employers bear the sole responsibility for paying the FUTA tax; it’s not an obligation for employees.
- To trigger the FUTA tax requirement, a business must either pay $1,500 or more in wages in any quarter of the year or have at least one employee working part of a day in 20 different weeks.
- The tax applies to the first $7,000 of each employee’s annual wages.
- Employers calculate and remit their tax liability quarterly if their total owed exceeds $500 for the year; otherwise, they can opt for an annual payment.
- Annually, employers must file Form 940 to report their FUTA tax to the IRS.
- The revenue collected from this tax supports individuals who have lost their jobs by providing unemployment benefits, aiding them during their job search.
- Importantly, employees do not contribute to this tax nor are they required to report it.
Federal Unemployment Tax Act (FUTA): Meaning, Responsibility & Reporting Guide
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