Am I responsible, as an employer, to pay FUTA?

Question

I have one employee with wages about $10,000.

Answer 1

The following comes from the Irs.gov website. It was the best way I could think of explaining it to you. We have our own business, and we have been paying ours every quarter.

Unlike other payroll taxes, this tax is the sole responsibility of the employer.

It is not deducted from the employee's paycheck.

You are an employer for FUTA tax purposes and must file and pay FUTA tax if in the current year or last year you paid wages of $1500 or more in any calendar quarter to employees.

Or had one or more employees at any time in each of the 20 or more weeks.

The 20 weeks don't have to be full weeks or consecutive.

Count all regular, temporary, and part time employees.

Including employees on vacation or sick leave.

Not all employee wages are subject to FUTA, there are exceptions for certain employers, as well as certain types of employees.

Refer to the table in Publication 15 entitled Special Rules for Various Types of Services and Payments for further detail.

You are subject to FUTA tax only if you paid total cash wages of $1000 or more for all household employees in any calendar quarter in the current or prior year.

A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter.

You are subject to FUTA tax on the wages you pay to farm workers if you paid cash wages of $20,000 or more to farm workers during any calendar quarter in the current or prior year, or you employed ten or more farm workers during at least some or part of the day, whether or not at the same time, during any 20 or more different weeks in the current or prior year.

The FUTA tax is figured on the first $7000 in wages paid to each employee during the year.

The tax is imposed on you as the employer, do not collect it or deduct it from your employee's wages.

The current FUTA tax rate is 6.2%.

Answer 2

The only thing I would add to the above is that if you file your state unemployment taxes on time and pay in full, you get a discount of 5.4% on your FUTA, bringing the rate down to 0.8%.

Keep up with your employment taxes - it costs you a fortune in penalties if you are late.