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The Federal Unemployment Tax Act (FUTA) is legislation that imposes a payroll tax on any business with employees; the revenue raised is used to fund unemployment benefits. As of 2021, the FUTA tax rate is 6% of the first $7,000 paid to each employee annually.
How is FUTA Tax calculated? For 2022, the Form 940 FUTA tax rate is 6%. The amount of FUTA tax owed is calculated using the first $7,000 that you paid an employee for wages during the quarter.
As of 2021, the FUTA tax rate is 6% of the first $7,000 paid to each employee annually. Though FUTA payroll tax is based on employees wages, it is imposed on employers only, not their employees.
How to compute FUTA tax liability Subtract the maximum allowable credit rate from the FUTA tax rate (6.2% 5.4% = . 8%). Multiply each employees wages up to the wage base ($7,000) paid in the quarter by .8% Add up the totals, and the resulting figure is the net quarterly FUTA tax liability.
Under the general test, youre subject to FUTA tax on the wages you pay employees who arent household or agricultural employees and must file Form 940, Employers Annual Federal Unemployment (FUTA) Tax Return for 2022 if: You paid wages of $1,500 or more to employees in any calendar quarter during 2021 or 2022, or.
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Employers whove paid $1,500 or more to any W-2 employee OR had at least 1 employee for 20 or more weeks of the year must file Form 940.

form 940 2022