Unemployment Insurance Tax? Ya Must Need a Doctor's Degree

by Pappy
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I pulled this directly from the main site.

Unemployment Insurance Tax Topic: Unemployment Insurance Taxes

Unemployment Insurance (UI) is a federal-state program jointly financed through federal and state employer payroll taxes (federal/state UI tax). Generally, employers must pay both state and federal unemployment taxes if: (1) they pay wages to employees totaling $1,500, or more, in any quarter of a calendar year; or, (2) they had at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive.

However, some state laws differ from the federal law and employers should contact their state workforce agencies to learn the exact requirements.

Federal Unemployment Tax Act

The Federal Unemployment Tax Act (FUTA), authorizes the Internal Revenue Service to collect a federal employer tax used to fund state workforce agencies. Employers pay this tax annually by filing IRS Form 940. FUTA covers the costs of administering the UI and Job Service programs in all states. In addition, FUTA pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits.

Federal Tax Rate

The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% - 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00). State law determines individual state unemployment insurance tax rates.

State Unemployment Tax

The state unemployment tax, paid to state workforce agencies, is used solely for the payment of benefits to eligible unemployed workers. Domestic Employers Coverage employers of domestic employees must pay state and federal unemployment taxes if they pay cash wages to household workers totaling $1,000, or more, in any calendar quarter of the current or preceding year. A household worker is an employee who performs domestic services in a private home. Examples of household employees are: babysitters, caretakers, cleaning people, drivers, nannies, health aides, yard workers and private nurses.

Employers of Agricultural Employees

Employers must pay federal unemployment taxes if: (1) they pay cash wages to employees of $20,000, or more, in any calendar quarter; or, (2) in each of 20 different calendar weeks in the current or preceding calendar year, there was at least 1 day in which they had 10 or more employees performing service in agricultural labor. The 20 weeks do not have to be consecutive weeks, nor must they be the same 10 employees, nor must all employees be working at the same time of the day.

Generally, agricultural employers are also subject to state unemployment taxes, and employers should contact their state workforce agencies to learn the exact requirements.


So...If I'm reading this Correctly every employer pays what amounts to another wage for each employee to the government.

Sooo... - If that be the case...Where does all that money go when unemployement is low?

If there is a surplus of unemployement insurance during times of low unemployment then there should be plenty when unemployement is high, right??

I'm unemployed now. Before this I worked more than 20 years without ever drawing unemployment. Where's all that money?

wait....what?....56 bucks a year?

...looks like you gotta be a lawyer to understand this crap....damn this confusing political bullshit...

....maybe I'm reading this wrong....

Can anyone else splain to me what all this about?

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