FEDERAL UNEMPLOYMENT TAXES
Filing Requirements The FUTA tax return is prepared once per year and is generally due one month after the year ends. A FUTA tax return must be filed by any employer who meets any one of the following tests: • The employer pays $1,500 or more in wages in any one calendar quarter for the reporting year, or; • The employer had one or more employees for some part of a day in any of 20 different weeks during the reporting year. For this test, all regular, temporary, and part-time employees are counted. Note: Partners of a partnership, and sole proprietors and their spouses, parents, and minor children are not counted for this purpose. (This test is known as the “general” test), or; • The employer paid cash wages of $20,000 or more to farm workers during any calendar quarter for the reporting year, or; • The employer had 10 or more farm workers for some part of a day in each of 20 different weeks in the reporting year. Aliens admitted to the United States on a temporary basis to perform farm labor are counted for this purpose. (This test is known as the “farm workers” test), or; • The employer paid cash wages of $1,000 in any calendar quarter in the reporting year for household work done in a private home, local college club, or local chapter of a fraternity or sorority. (This test is known as the “household employees” test). Figuring the Tax The federal unemployment tax is figured on the first $7,000 in wages paid (“wage base”) to each employee during the year. The federal unemployment tax rate is 6.0 percent of the wage base (Note: The wage base and tax rate are subject to change annually); however, the employer is given a credit of up to 5.4 percent if the state unemployment insurance tax payments were timely. Therefore, the tax rate can be as low as 0.6 percent (6.0 percent minus the 5.4 percentage point credit). An employer may not take FUTA credit for any state taxes the employer did not actually pay. In computing the employee wage base for FUTA, an employer who takes over the business of another employer who was subject to the federal unemployment tax may count wages paid by the first employer to those employees who continue to work for the second employer. Additionally, wages paid to an owner/officer who owns 25 percent or more of a corporation or Limited Liability Company (LLC), and has not opted to be covered under the Minnesota Unemployment Insurance Program (i.e. wages on which no Minnesota unemployment insurance tax has been paid), are not eligible for the 5.4 percentage point FUTA credit. For more information on this topic, see the section entitled “Coverage” under STATE UNEMPLOYMENT INSURANCE TAXES below.
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