How much does FUTA cost?
Federal unemployment tax is figured on the first $7,000 in wages paid to each employee every year. This equals a maximum FUTA payment of $56 per employee (earning over $7,000) per year.

Federal unemployment tax is an employer paid assessment. You may not collect or deduct this from your employee's pay.

The rate for FUTA is 6.2% for all employers. A credit of up to 5.4% is given for timely payment of state unemployment taxes. This brings the effective tax rate for most taxpayers to .8%.

The federal unemployment tax is reported on Form 940. This is an annual return, and is due on or before January 31 for the previous year. You may have to make deposits during the year depending on the amount that you owe at the end of each quarter.

Deposit due dates are based on the amount calculated at the end of the quarter. If less than $500 is owed at the end of a quarter, then no deposit is required. If $500 or more is owed, then the full amount is due by the last day of the month following the end of the quarter. Businesses shouldn't forget to add any unpaid amounts from previous quarters when determining if they have reached the $500.

Form 940 deposits are made on an 8109 coupon or via EFTPS. Simply follow the directions for completion, and bring the coupon to an authorized financial institution, or make an automated payment in accordance with the EFTPS guidelines.