The Federal Unemployment Tax Act (FUTA) rate for 2018 is 6.0 percent. This is a decrease from the FUTA rate of 6.2 percent that was in effect for 2017. The FUTA rate is applied to the first $7000 of an individual’s wages. The FUTA rate is used to fund unemployment compensation programs at the state level.
The decrease in the FUTA rate for 2018 is due to the fact that the unemployment rate has been falling in recent years. The unemployment rate was 4.4 percent in April of 2018 which is down from 4.8 percent in 2016. The FUTA rate is set by Congress and is based on the unemployment rate. When the unemployment rate is low the FUTA rate is decreased.
The FUTA rate is not to be confused with the Federal Insurance Contributions Act (FICA) tax. The FICA tax is a separate tax that is used to fund Social Security and Medicare. The FICA tax rate for 2018 is 7.65 percent. The FICA tax is applied to all wages up to a maximum of $128400.
The FUTA rate is only applied to the first $7000 of an individual’s wages. This means that the maximum FUTA tax liability for an individual in 2018 is $420. The FUTA tax is usually paid by the employer. However if the employer does not pay the FUTA tax the employee is responsible for paying the tax.
The FUTA tax is used to fund unemployment compensation programs at the state level. These programs provide financial assistance to individuals who have lost their jobs. The programs help individuals to cover their living expenses while they are looking for new employment.
The FUTA rate is subject to change on an annual basis. Congress sets the FUTA rate based on the unemployment rate. The FUTA rate can be increased or decreased depending on the unemployment rate.
What is the Federal Unemployment Tax Act (FUTA) rate for 2018?
Answer: 6.
0%
How is the FUTA tax rate calculated?
Answer: The FUTA tax rate is 6.
0% of the first $7000 that an employee earns in a year.
Does every employer have to pay FUTA taxes?
Answer: No employers who pay state unemployment taxes are exempt from FUTA taxes.
How often are FUTA taxes paid?
Answer: FUTA taxes are paid quarterly on the last day of each calendar quarter.
Where do I send my FUTA tax payment?
Answer: FUTA tax payments should be sent to the Internal Revenue Service.
When are FUTA tax payments due?
Answer: FUTA tax payments are due on the last day of each calendar quarter.
What happens if I don’t pay my FUTA taxes?
Answer: Employers who don’t pay their FUTA taxes may be subject to interest and penalties.
How do I report my FUTA taxes?
Answer: FUTA taxes are reported on Form 940.
I just hired my first employee.
Do I have to pay FUTA taxes?
Answer: Yes all employers who pay wages are responsible for paying FUTA taxes.
I only have one employee.
Do I have to pay FUTA taxes?
Answer: Yes all employers who pay wages are responsible for paying FUTA taxes.
I’m self-employed.
Do I have to pay FUTA taxes?
Answer: No self-employed individuals are not required to pay FUTA taxes.
I’m a farmer.
Do I have to pay FUTA taxes?
Answer: No farmers are exempt from FUTA taxes.
I’m a household employer.
Do I have to pay FUTA taxes?
Answer: No household employers are exempt from FUTA taxes.
I’m a non-profit organization.
Do I have to pay FUTA taxes?
Answer: Yes all employers who pay wages are responsible for paying FUTA taxes.
I’m a state or local government entity.
Do I have to pay FUTA taxes?
Answer: No state and local government entities are exempt from FUTA taxes.
