(FUTA) Federal Unemployment Tax Act is a tax. Employers pay this tax and the money goes into a fund to cover benefits if an employee should lose his or her job through involuntary causes.
Employers report and pay this tax to the IRS and in some cases they must pay in quarterly installments. The form for filing FUTA tax is FORM 940. During periods of high unemployment the states may borrow from the fund to pay for the unemployment benefits the workers have earned.
What is the Tax Rate?
For each worker per year the tax is 6.2% for the first $7,000 of gross earnings. Now once that particular worker has reached the $7,000 point, the employer no longer pays the tax for that person for that year.
Some wages are exempt from the FUTA tax. For example, a parent who pays their child who is under 21 years of age, services performed outside of the United States and wages paid to an intern by a hospital. Those examples are just a few mentioned here but, there are many more.
Unemployment Compensation
If you have lost your job and are going to start collecting unemployment benefits then, I have some good news for you. The time period of collecting benefits has been extended and you will receive $25 more a week.
Depending on what state you live in, you may be able to collect unemployment benefits for 59 weeks. I know that sounds unbelievable but, the weeks are determined by the unemployment rate for the state you live in.
Some More Good News
In addition to a longer period of collecting and a $25 increase in benefits, $2,400 of benefits will not be taxed. Check with your state for information on handling unemployment tax rules because each state will be a little different. The states will not necessarily follow the federal unemployment tax rules.
Need More Information?
If you would like more information concerning unemployment federal taxes then, I suggest you visit TurboTax Online. The tax experts sure do have a handle on all of the recently changed tax laws. Who has time to keep up with all the changes?
I trust their expertise when it comes to filing my taxes because their company has been rated #1 for years from companies we respect and trust. If you want your tax return to be error free, accurate, and know you have not missed one deduction you’re entitled to then, visit their web site today!
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