Starting Your Own Business ? Hints & Tips Entrepreneurial Advice Suzie's Blogs ...

Federal Unemployment Tax FUTA The Federal Unemployment Tax Act (FUTA), together with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only the employer pays FUTA tax; it is not deducted from the employee’s wages. Generally, employers can take a credit against FUTA tax for amounts paid into state unemployment funds. This credit cannot be more than 5.4% of taxable wages. Those entitled to the maximum 5.4% credit have an effective FUTA tax rate of 0.8% after the credit. The IRS has tests to determine whether a particular business must pay FUTA tax. Quite alot to digest but I know you can do it. See you here tomorrow. Suzie Posted: Monday 16th May 2005, 1:42 AM

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