Taxable Wage Base for FUTA

$7,000 is the taxable wage base for FUTA tax. Wages up to $7,000 per employee is taxed at 6% and a credit is allowed up to 5.4% contingent on participation in the employer’s state unemployment program.

Time for Those W-2’s

W-2's

For us accountants January brings the greatest payroll function of the year; printing the year end payroll reports. These include the W-2’s, W-3 and Form 940. They all must tie to the combined total of the quarterly 941 reports and the deposits made to the Internal Revenue Service.

FUTA – An Explanation to the Federal Unemployment Tax Act

FUTA

Federal Unemployment Tax Act or FUTA for short is a part of the Internal Revenue Code and is an employer tax on wages paid to employees.  It is used to fund unemployment benefits. The tax is paid on the first $7,000 of wages paid to every employee. It is reported via Form 940 https://businessecon.org/resources/. The Form must be filed and all taxes paid by January 31, 2021.

Year-End Preparation

W-2's

I dread January of every year. I have to spend so much time preparing the year-end payroll reports prior to the January 31 deadline. Not only must your quarterly’s and monthly’s tie together, but it has to match the general ledger at year-end.

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