FUTA apparently stands for "F U TAxpayer!".
Since I'm a single employee business, namely myself, I get the joy of paying not just state unemployment taxes, which I can't claim or ever use as it is not like I can fire or lay myself off.
I also have to pay annually to the Feds the FUTA tax, which is short for the Federal Unemployment Tax Act, a tax the Feds use to buttress states that need more unemployment funds. Yep, you don't know it if you're an employee but your employer is, on top of everything else in terms of taxes and deductions, sending in at last $42 and possibly more depending on their state, for each and every employee.
The FUTA calculation is quite convoluted, starting at 6% of the first $7,000 of an employees wages or $420, and it gets credited down in general to .6% or $42 per employee depending on the calculations - and that's where the fun begins. Of course they can't do a simple form with (total number of employees x total amount of employee $wage up to 7,000 per employee) x .006. That would be too easy.
The form to do so instead is Form 940. Get a load of that beautiful form, and the lengthy instructions.
It's a great cure for insomnia.
The problem is if you follow the rather convoluted instructions and the form itself you will likely pay more tax than you should.
In short, after tearing my hair out as the numbers wouldn't work when following the instructions, I broke down and called an accountant friend and asked about it, as applying the credit calculations for prompt payment of state unemployment taxes etc led me to paying more tax which is kinda counter-intuitive.
In short, for a single member company you basically ignore the instructions and steps on the form and just enter in the baseline $42 for a single employee and don't even try and apply any credits or calculations.
Sheesh. Hours spent in frustration just to comply with a rather stupid requirement to send them a check for $42.00.
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