The amount of federal income tax withheld from employees’ paychecks depends on their marital status, the number of withholding allowances (exemptions) they claim on Form W-4, and their projected annual income Q: What is Federal Unemployment Tax (FUTA)?
The Federal Unemployment Tax Act (FUTA), along with the state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. For 2007, the effective FUTA tax rate is 0.8%. The tax applies to the first $7,000 employers pay to each employee as wages during the year, so your maximum FUTA liability per employee is $56.00 per year.However, if any of your employees are exempt from State Unemployment Insurance (for example, they are Directors or Officers), your FUTA tax may be higher. Also, if your state has borrowed funds from the federal government to cover shortfalls in its unemployment insurance program, all employers in your state may be subject to additional tax liability at the end of the year to repay those loans.
Related Questions
- Can employees change their Forms W-4 in mid-year to increase their withholding exemptions, even though their marital status and number of dependents have not changed?
- I am a military retiree. How do I change my federal tax status, or Federal Income Tax Withholding (FITW)?
- How Do I Calculate Federal Income Tax Withholding from Employee Paychecks?
