The Federal Unemployment Tax Act (FUTA) is a U.S. law requiring employers to pay a payroll tax to fund unemployment benefits, with credits for state contributions.
- What is the Federal Unemployment Tax Act (FUTA)?
Answer: It is a law requiring employers to pay a tax for unemployment benefits. - What is the FUTA tax rate?
Answer: The gross rate is 6.0%, with a credit reducing it to 0.6% if state taxes are paid. - Who pays FUTA tax?
Answer: Employers with one or more employees for 20 weeks or more pay it. - What is the purpose of FUTA?
Answer: It funds unemployment compensation for eligible workers. - How is FUTA reported?
Answer: It is reported annually on Form 940.
