The Federal Government requires your business to comply with the federal unemployment tax act (FUTA). For you to know whether you are in compliance with the FUTA then you need to understand what it is, why you need to pay it, and when it is due. These are the different aspects of your business operation that you need to have at your fingertips so that you don't run into problems with the Federal Government. Read more about Federal Unemployment Tax Act . This article will help you understand in a brevity about the federal unemployment tax act and how you can comply with it. When you follow this link you will discover much more information especially on how to calculate your tax liability we regard to the act and when you can pay it.
What is FUTA?
The federal unemployment tax act gives the government the legal authority so that they can collect taxis from any business that has employees. Revenue collected from the unemployment tax helps fund state unemployment agencies. The federal unemployment trust fund is used for that purpose. All the people who are out of work and they qualify for the unemployment insurance is paid out of this federal unemployment trust fund.
When to pay FUTA Revenue
FUTA revenue is paid by employers as a payroll tax either quarterly or annually. FUTA revenue does not come from the employee, it comes from the employer. See page on Federal Unemployment Tax Act. It measures the amount due upon every worker’s income. Businesses are only required to pay FUTA Revenue when they pay their employees an amount of 1500 or more dollars during the Quarter of the calendar year. FUTA tax is reported on the internal revenue service form 940 first calendar quarter of the year.
Employers that are exempted from FUTA taxes on employees
Family operated businesses do not have to pay for the Taxes on the salaries of their children who are younger than 21 years, their spouses and the parents who work for the company. When your business uses independent contractors it is exempted from FUTA tax since the staff of the contractor is not your employee. All the religious organizations and nonprofit groups are exempted from the FUTA tax. This notwithstanding it's absolutely necessary that you very fine your status will the state tax agency in the particular state that your business is registered and operates. This will help you be on the safe side of the loan but with the state government and the Federal Government. Learn more from https://en.wikipedia.org/wiki/Federal_Unemployment_Tax_Act.