In the U.S., layoffs in any industry or business organization are common. Major reasons for such layoffs are overhiring, inflation, high interest rates, etc. To help those unemployees, the Federal government has introduced the FUTA taxes. Unemployed workers receive payments from the FUTA when they lose their jobs. Employers must take complete responsibility for FUTA taxes.
Let's read more to know about the ins and outs of FUTA taxes.
Table of Content:
Key Takeways:
- One of the main federal payroll tax forms for employers is FUTA(Federal Unemployment Tax Act).
- FUTA tax is used to help the unemployed who lost their job without any fault on them.
- FUTA tax rate is 6% on the first $7000 paid to each employee.
- Employers who pay SUTA can claim a credit of 5.4%, which results in a 0.6% FUTA tax rate.
- FUTA taxes are paid quarterly and reported annually using Form 940(Employer's annual Federal unemployment tax return).
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