Unemployment taxes are paid by employers to fund federal and state unemployment tax funds, which provide payments to employees who have been terminated or laid off from their employment. Employment taxes payments are based on employee wages and salaries, up to a maximum of $7000 of wages per year per employee, at a rate of 0.8 percent.
Federal unemployment taxes (FUTA Tax) are reported annually on Form 940 and paid either quarterly or annually, depending on the amount of the tax.
If your FUTA Tax liability in any one quarter is more than $500, you must make a deposit by the last day of the month after the end of the quarter. For example, if your liability in Quarter 1 (ending March 31) is $350, you do not need to make a deposit. but if your liability in Quarter 2 (ending June 30) is $200, your liability is $550, and you must make a deposit by July 31. Since you have made a deposit for Quarters 1 and 2, if your tax liability for Quarter 3 (ending September 30) is under $500, you do not need to make a deposit for the 3rd Quarter.
If your unemployment tax liability at the end of the year is over $500, you must make a deposit by January 31 of the following year or with your Annual Unemployment Tax Report on Form 940.
If your FUTA tax for any of the first three quarters of the year (plus any undeposited amount from an earlier quarter) is over $500, deposit it by the last day of the month after the end of the quarter. If it is $500 or less, carry it to the next quarter; a deposit is not required.
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