It is common for business owners to receive a 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. Lack of adequate information is behind this phenomenon. 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.
First off, it is essential to understand what the federal unemployment tax act is. FUTA is the acronym of the federal unemployment tax act. This act gives the government the legal mandate to collect taxes from businesses that have employees. The government to fund the state unemployment agencies, uses the collected funds. People who are not working then receive the fund from the state unemployment agencies.
The next agenda on line is the number of times you are required to pay the FUTA tax and whether you are required to pay it by law. According to the FUTA tax act, it is mandatory to pay the FUTA tax years or quarterly. Unlike the other taxes, the FUTA tax does not come from the employees. 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. Well, the common rate is 6%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.
It is also essential to know which business are required to pay the FUTA tax. 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. It is required by law that you submit the FUTA tax by 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. The truth of the matter is that some employees do not have to pay the FUTA tax. Among the business that are exempted from the FUTA tax include family owned business. The other way that you will be exempted include spouses and children younger than 21 and patients.
The last but not least thing that you ought to know is that you can qualify for a reduction. Your state will determine whether you qualify for a discount.