how to pay and report futa taxes
there are two components to futa depositing futa taxes and filing the appropriate tax form companies that owe 500 or more of futa in a calendar year must make at least one quarterly payment the irs permits any single quarterly tax liability of less than 500 to be rolled to the next period 2futa must usually be deposited at the end of the month after quarter end for example with the first quarter ending march 31 futa taxes in q1 are due for deposit by april 30 the irs also requires all federal tax deposits to be made via electronic funds transfer 2the tax form is often due in full early in the calendar year form 940 is considered to be on time as long as it is properly addressed and postmarked before the due date 2futa can be reported via form 940 electronically using the irs electronic filing platform taxpayers wanting to mail in a paper form will have varying mailing addresses based on the state they are in 4if the due date for filing falls on a saturday sunday or a legal holiday irs guidelines mandate that the return is subsequently due the next business day 2federal unemployment tax act futa vs state unemployment tax act suta many states collect an additional unemployment tax from employers as per the state unemployment tax act the suta taxes range from 0 to 18 78 of an employee s wages 5paying suta taxes can lessen the burden of futa taxes as noted above employers can take a tax credit of up to 5 4 of taxable income if they pay state unemployment taxes in full and on time this amount is deducted from the amount of employee federal unemployment taxes owed 1an employer that qualifies for the highest credit will have a net tax rate of 0 6 calculated as 6 minus 5 4 thus the minimum amount an employer can pay in futa tax is 42 per employee however companies that are exempt from state unemployment taxes do not qualify for the futa credit 1federal unemployment tax act futa vs federal insurance contribution act fica while futa is used to fund unemployment benefits federal insurance contribution act fica taxes are different in several ways fica taxes are paid by both the employer and the employee the tax is split evenly between the two though self employed individuals are usually responsible for both portions fica is intended to fund different government programs these taxes are used to provide social security and medicare benefits it is automatically deducted from employee paychecks and federal law dictates that it is furnished by workers and their employers special considerationswages that an employer pays to their spouse a child under the age of 21 or parents do not count as futa wages payments such as fringe benefits group term life insurance benefits and employer contributions to employee retirement accounts are not included in the tax calculation for the federal unemployment tax form 940 can be amended for a previous year when the prior year s information needs to be updated the irs requests using the subsequent year to reflect the change various authorized personnel are allowed to sign form 940 and remit the reporting of futa taxes in general a business owner president vice president principal officer fiduciary overseeing an estate authorized partner or officer knowing the affairs of a company may be allowed to sign the form 