FUTA is paid for by the employer on the first $7,000 you paid in wages to each employee during the year.
When you the employer paid FUTA on the first $7,000 you paid an employee, then you do not continue paying FUTA tax on the wages you paid that employee for the rest of the year.
You should track your payroll by employee to know when you reach that $7,000 wages threshold for each employee to stop paying FUTA on these employees’ wages.
FUTA tax is unemployment tax. You do not withhold unemployment tax from the employees’ wages. You, the employer, pays up to 6% on the first $7,000 paid to each employee during the year.
You should check with your state Workforce department to find out about your state unemployment tax requirements. When you pay unemployment tax to your state, you could be eligible to pay less than 6% unemployment tax to IRS when you file Form 940 Employer’s Annual Federal Unemployment Tax Return FUTA.
Conclusion: Is FUTA paid for by employer or employee?
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