Learn More About FUTA
Many are the times that business owners receive a sudden notice from the government for failing to pay taxes. It is not also abnormal to find out that some business owners think they are doing everything right. This can be traced back to lack of adequate information. It is therefore not surprising that you have never had about the FUTA act before. This means that you are looking for more information about the FUTA act. Here is a complete guide on everything that you should know about the federal unemployment tax act.
Defining the federal unemployment tax act is the number one thing in this article. FUTA is the acronym of the federal unemployment tax act. According to this act, the government is required to collect taxes from the employers. The government to fund the state unemployment agencies, uses the collected funds. On the other hand, the state unemployment agencies use the allocated funds to pay unemployed people who qualify for unemployment authority.
Apart from that, it is essential to know how often you are required to pay the FUTA tax as well as who should pay it. To begin with, you need to know that the tax should be paid quarterly or annually. It is prudent to begin by noting that the employees do not pay this tax. Instead, the tax proceeds come from the employers. Even so, your tax amount will depend on the amount of money that you spend on salaries and wages.
Apart from that, you ought to know how you can calculate the FUTA tax. The FUTA tax act requires that you pay %of the first seven thousand dollars that you will pay as salary and wages to your employees. As such, you will have to make tax returns of $420.
Determining the companies that need to pay the FUTA tax is the next thing that you should know. The employers that need to pay the FUTA tax include employers who pay more than $ 1, 500 in salaries within a calendar quarter and during the year. The FUTA tax act requires that you pay the FUTA tax on the first quarter of the year on the IRS form.
It is also essential to find out if all employers are obliged by law to pay the FUTA tax. Well, some business receive special consideration. Among the business that are exempted from the FUTA tax include family owned business. In addition to that, you will be exempted from the FUTA tax if you are paying salaries for spouses and children younger than 21 and patients.
To conclude, you will be glad to know that your business can qualify for a discount. Your state will determine whether you qualify for a discount.