Question

When ERs are determining their quarterly FUTA tax liability for the first three calendar quarter, what should they assume?

A. 6.0% of their FUTA taxable wages will be due each quarter
B. 5.4% of their FUTA taxable wages will be due each quarter
C. No deposits should be made until 4th quarter when they file their annual 940
D. 0.6% of their FUTA taxable wages will be due each quarter

Answer 1

Employers should calculate their quarterly FUTA tax liability at a rate of 6.0% of FUTA taxable wages for the first three calendar quarters, with adjustments such as credits applied later that may reduce this liability.

Step-by-step explanation:

When employers are determining their quarterly FUTA tax liability for the first three calendar quarters, they should assume that 6.0% of their FUTA taxable wages will be due each quarter. This rate is the standard FUTA tax rate before any credits, such as the state unemployment tax credit, are applied. However, employers who are entitled to the maximum credit of 5.4% for state unemployment tax contributions will ultimately pay a FUTA tax rate of 0.6%. Deposits are generally required each quarter if the tax due is more than $500. If it is less, the amount can be carried over to the next quarter until the cumulative deposit exceeds $500, at which point a deposit is required.