- According to the Internal Revenue Service, an employer must pay FUTA tax if it pays more than $1,500 in a calendar quarter or employed at least one worker for at least for some part of the day in any more than 20 or more different calendar weeks. Employers pay 6.2 percent on the first $7,000 of each employee's wages. After July 1, the payment goes to 6 percent. Being self-employed means you have to pay FUTA tax under the scenarios mentioned. Employees are not subject to FUTA tax.
- Use Form 940 to file FUTA taxes annually. However, the IRS requires you to pay FUTA tax before you file your return. If the FUTA tax is greater than $500 for the calendar year, the IRS requires that you make at least one quarterly payment. If your liability is less than $500 for the quarter, carry this amount into the new quarter. Continue to carry the liability until it accumulates to $500, after which you must make a deposit.
- The IRS established the Electronic Federal Tax Payment System (EFTPS) for making federal tax deposits. If you do not have access to the system, contact the IRS to set up an account. If you established a new business, the IRS automatically enrolls you in EFTPS.
- The IRS assesses penalties and interest for failing to deposit the proper amount for FUTA taxes and untimely filing of Form 940. Before you file Form 940, check it for accuracy.
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