FUTA Tax Rates for 2011, 2012

This is otherwise known as the Federal Unemployment Tax Act

The employer pays the FUTA tax based on a percentage system. We are talking about the federal branch of unemployment. There is also a state branch of unemployment tax, which is a whole different article. This article will discuss the federal unemployment tax rate.

FUTA Tax Rates

The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, will receive an offset credit of up to 5.4%. The net FUTA tax rate is generally 0.8% (6.2% - 5.4%).

FUTA tax is filed annually using tax form 940. There is a limit on the total amount due and if you owe more than the limit you will have to pay a penalty and interest charges. To avoid penalties and interest charges the business will have to submit deposit payments in advance. This is where payroll accounting software comes in handy.

How to Calculate Futa Tax Rates.

Empoyers: Try using the payroll withholding tax calculator by Quickbooks. Federal & State unemployment withholding taxes are calculated for you. They offer a 30-day free trial.

Employees: Try using the new w-4 tax calculator by TurboTax to calculate your futa withholdings amount.

Employer's Annual Federal Unemployment Form 940

Use form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax. Do not collect or deduct FUTA tax from your employees' wages.

Available Resources for FUTA Tax Rates

Online tax preparation software can really help you out here. You can use the tax calculator to estimate withholding and get all sorts of help with your business taxes. You can click on the support tab of such a company, such as TurboTax Online, enter FUTA tax rates in the search box and have a whole award winning tax library at your fingertips. As an employer, you probably have enough to take care of already.

Take a look at TurboTax 2011 today to discover what you have been missing! A complicated tax subject can really get messy if you don’t know what you’re doing. Get help from the tax experts today and gain all of the knowledge you will need about the FUTA tax rates.