1. What is Quarterly FUTA Tax?

The Federal Unemployment Tax Act (FUTA) tax is a payroll tax paid by employers to fund unemployment benefits. Employers must file Form 940 annually and pay FUTA tax quarterly if their liability exceeds $500.

2. How Does the Calculator Work?

The calculator uses the FUTA tax formula:

Where:

• Taxable Wages — Wages subject to FUTA tax (first $7,000 per employee per year)
• 6% — Standard FUTA tax rate
• 4 — Number of quarters in a year

Explanation: The standard FUTA tax rate is 6% of the first $7,000 paid to each employee annually. This calculator divides the annual tax by 4 for quarterly payment estimation.

3. Importance of FUTA Tax Calculation

Details: Accurate FUTA tax calculation ensures compliance with federal regulations and avoids penalties for underpayment. Employers must track wages carefully as only the first $7,000 paid to each employee is subject to FUTA tax each year.

4. Using the Calculator

Tips: Enter the total taxable wages for the quarter (sum of wages subject to FUTA tax for all employees, up to $7,000 per employee). The calculator will estimate your quarterly FUTA tax liability.

5. Frequently Asked Questions (FAQ)

Q1: What's the FUTA tax rate?
A: The standard rate is 6%, but most employers qualify for a 5.4% credit, effectively reducing the rate to 0.6%.

Q2: When are FUTA tax payments due?
A: Quarterly payments are due by April 30, July 31, October 31, and January 31 if liability exceeds $500.

Q3: What wages are subject to FUTA tax?
A: The first $7,000 paid to each employee annually in wages, salaries, bonuses, and commissions.

Q4: How is this different from SUTA tax?
A: FUTA is federal unemployment tax while SUTA (State Unemployment Tax Act) is state-level unemployment tax.

Q5: Can I pay FUTA tax annually instead of quarterly?
A: Yes, if your total FUTA tax for the year is $500 or less, you can pay it with your Form 940 by January 31.