Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
When You May Pay FUTA Taxes with Form 940
How it Works
If during any quarter during the calendar year the FUTA tax liability is $500 or less, carry the amount over to the following quarter. Then, add the amount carried over to the current quarter's FUTA tax liability. Continue this carry over process each quarter. If the accumulated amount for all four quarters totals $500 or less, you may pay the tax with your timely filed Form 940.
Only when the accumulated liability exceeds $500 (i.e. $501 or more) in any quarter are you required to make a tax deposit. The deposit must be made by the last day of the month following the month the liability exceeded $500. For example, if the $500 liability exceeded $500 during June (Q2), a deposit would be required by July 31.
Example:
- Q1: FUTA liability: $30
- Q2: FUTA liability: $40 + $30 (Q1) = $70
- Q3: FUTA liability: $50 + $30 (Q1) + $40 (Q2) = $120
- Q4: FUTA liability: $60 + $30 (Q1) + $40 (Q2) + $50 (Q3) = $180
The example shows that the accumulated FUTA tax liability for the entire calendar year is $180. Since the $500 threshold was not exceeded in any quarter, no deposit was required. You may pay the tax by mailing your payment along with Form 940.
FUTA Tax Rate
For most employers, the FUTA rate, after the maximum 5.4% credit offset is applied, is 0.6% (.006). Only the first $7,000 of gross wages paid to each employee is subject to FUTA tax. This means, the maximum FUTA tax per employee, after reducing the standard rate of 6.0% by the 5.4% credit, is $42 (.006 x $7,000).
For example, if you have two employees, and one employee's gross wages for the year is $30,000, the maximum FUTA tax for that employee would be $42 (.006 x $7,000). If the other employee's gross wages for the year is $5,000, the FUTA tax for that employee would be $30 (.006 x $5,000). Therefore, your total FUTA tax liability would be $72, which you may pay with Form 940.
Credit Reduction States
The funds from the FUTA tax create the Federal Unemployment Trust Fund, administered by the United States Department of Labor (DOL). States may sometimes have to borrow funds from the Trust Fund to meet its state unemployment benefits. If the state does not repay the loan within a certain time frame, that state becomes what is called a credit reduction state. This means, the 5.4% credit that is normally allowed to the state is reduced by a certain percentage. This results in the affected state having to pay a higher FUTA tax, which is used to pay down the amount borrowed from the Trust Fund.
Pay FUTA Taxes Online
You can also pay FUTA taxes online and get confirmation of your payment using the IRS Electronic Federal Tax Payment System (EFTPS). To enroll in EFTPS, call 1-800-555-4477 or visit the EFTPS website at www.eftps.gov. If your business is new, the IRS will automatically pre-enroll you in EFTPS when you apply for an Employee Identification Number (EIN) . Getting your EIN online is quick, easy, and you can download it immediately. Keep the printout for your records.
To make your EFTPS payment on time, make sure you initiate the transaction at least one business day before the deposit due date.