The Federal Unemployment Tax Act (FUTA) requires most employers to pay unemployment taxes on their team members’ wages. These taxes are used to provide temporary financial security to workers who lose their jobs.
You will not withhold these from your employees’ paychecks, but, as the employer, you will need to pay both FUTA taxes and state unemployment insurance (SUI) taxes. You’ll report your FUTA taxes each year using Form 940 at the end of each tax year.
Read also: All About Federal Unemployment Tax (FUTA)
When do I pay FUTA taxes?
Your quarterly FUTA tax liability dictates your deposit schedule.
- If your FUTA tax liability is $500 or less in a calendar quarter, you can carry your balance to the next quarter. Continue doing so until your tax liability is more than $500.
- Once your FUTA tax liability is greater than $500, you must remit your taxes by the last day of the month following the end of the quarter. In other words, taxes accumulated between
- January 1 and March 31 are due by April 30
- April 1 and June 30 are due by July 31
- July 1 and September 30 are due by October 31
- October 1 and December 31 are due by January 31 of the previous year
- You will need to pay all outstanding FUTA taxes by January 31
How do I pay FUTA taxes?
Typically, you will need to remit your taxes by electronic funds transfer (EFT) using the Electronic Federal Tax Payment System (EFTPS). The IRS will automatically pre-enroll you in EFTPS when you first apply for your EIN and send you instructions on completing your enrollment.
If your tax liability is $500 or less at the end of the fourth quarter, however, you can include a check with your Form 940.