Do I pay Federal Unemployment Tax?
Together, federal and state unemployment systems provide benefits to workers who have lost their jobs. Most employers pay both state and federal unemployment tax, but are occasionally subject to only one. The federal unemployment dollars are used to fund state employment agency programs.
Typically, you are subject to federal unemployment tax on wages paid to non-farm or household workers if:
| In any quarter the wages you paid to employees in this category were $1,500 or more. |
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| You had at least one employee in any day or part of a day in 20 weeks of the calendar year. The weeks do not have to be consecutive and individuals on sick leave or vacation are counted as employees. |
Farm workers and domestic employees are subject to other rules for FUTA coverage.
There are several categories of workers whose wages may be exempted from taxation. Employees at qualified summer camps and foreign workers admitted to the United States under certain conditions are two examples of exempt categories.
Additional information is available in both the Circular E and the
Circular A.
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