Tax preparation expert Frank Ellis Jr. discusses the changes to the FUTA Tax and Form 940 to go into effect in 2017.
March 9, 2017 Ė Frank Ellis Jr. reveals how the FUTA, or Federal Unemployment Tax, has changed in 2017. A new article on Nationaltaxreports.com explains what the tax and its related Form 940 are, who needs to pay, and how to figure out what must be paid. The FUTA tax applies to companies who pay employees
they fire, at least in part, until they find another job. They must pay a portion of unemployment payments in taxes.
Form 940 provides a record of annual payments made. Employers must pay 6% for the first $7,000 earned by employees, the author says. The exact amount paid depends on the unemployment tax paid in the state a business is located in.
As for who needs to pay, the article says that anyone who paid out over $1,500 in wages, during the calendar year, must pay the FUTA tax
. Companies that paid employees during 20 different weeks in 2016 must pay. It applies to all workers except for independent contractors, who handle their own taxes and donít receive any work benefits.
The article reveals what the theoretical maximum payout is, but other state unemployment taxes also apply. Payments for SUTA taxes depend on the state. They should be paid before the FUTA payment is due so relevant amounts can be deducted. QuickBooks
can do all of this for you. The author also reveals the credit offset against SUTA thatís available. A business in a relevant state (and not all states have this arrangement) reduces the amount paid to the FUTA at $42 per employee.
To learn more about how the FUTA works, read the new National Tax Reports article at http://nationaltaxreports.com/futa-tax-form-940-changing-employers/
About Frank Ellis:
Frank Ellis is a small business QuickBooks expert and published author. He is a graduate of the University of Michigan with a Major in Accounting and has worked for various high profile accounting firms, to include KPMG in the Cayman Islands. He has written accounting, tax and finance related articles for over 10 years and has published over 800 articles on the Internet.
Frank Ellis, MBA
National Tax Reports
Address: 123 Napa Ridge Way, Naples, FL 34119