Payments Exempt from FUTA Tax

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10 Oddball Tax Deductions

Updated for 2012

Certain types of payments are exempt from FUTA tax, including:

1) Fringe benefits, such as:

Meals and lodging
Contributions to accident or health insurance plans for employees, including certain employer payments to a Health Savings Account or an Archer MSA.
Payment for benefits excluded under section 125 (cafeteria plans).
- A Cafeteria Plan is a plan that offers flexible benefits under IRC section 125. Employees choose their benefits from a menu of cash and benefits, some of which can be paid for with pretax deductions from wages.
Employer reimbursements for qualified moving expenses, to the extent that these expenses would otherwise be deductible by the employee.

2) Group term life insurance.

3) Retirement/Pension contributions by the employer on behalf of employees to a qualified plan are exempt from FUTA tax. Such plan include:

A SIMPLE retirement account (other than elective salary reduction contributions. These are the contributions the employee makes out his/her gross pay).
A 401(K) plan.

4) Dependent care, such as:

Payments up to $5,000, per employee, ($2,500 if married filing separately) for a qualifying person's care.

5) Payments made under workers' compensation law because of a work-related injury or sickness.

6) Other payments exempt from FUTA tax:

All non-cash payments and certain cash payments for agricultural labor, and all payments to H-2(A)visa workers.
- See Publication 51, Agricultural Employer's Tax Guide
Payments for domestic services if you did not pay cash wages of $1,000 or more (for all domestic employees) in any calendar quarter in 2007 or 2008.
- See Publication 926, Household Employer's Tax Guide.
Payments for services provided to you by your parent, spouse, or child under the age of 21.
- See section 3 of Pub. 15 (Circular E), Employer's Tax Guide.
Payments for certain fishing activities.
- See Publication 926, Household Employer's Tax Guide
Payments to certain statutory employees.
- See section 1 of Pub. 15-A, Employer's Supplemental Tax Guide.
Payments to nonemployees who are treated as your employees by the state unemployment tax agency.