The FUTA (Federal Unemployment Tax Act) tax is a tax which is every employer is liable to pay for all of the employees. This tax serves as an employer’s compensation to those who have lost their jobs.
So, if you want to know how to calculate the FUTA taxes, then this is how you do it:
- Got to the official website of IRS. Click on the “Business” button.
- Click on the “Employment Taxes” button and select “Publication 15, (Circular E), Employers Tax Guide.
- Calculate the gross wages of your employees. This should include their salaries, yearly bonus and commissions.
- Now you can calculate the FUTA taxes for your employees. The FUTA tax rate for this year is 6% of the employees’ wages.
- You are only liable to pay the FUTA tax of those employees whose earnings reach $7000 in a year.