If you fail to meet due dates, you may face penalties from the IRS. This is a 90% reduction in the FUTA tax and a huge incentive to meet all tax filing deadlines during the year. Meet all filing deadlines: Your company can potentially earn a 5.4% tax credit if you submit SUTA taxes on time.To help you stay in compliance, here are some best practices for handling your FUTA taxes: Missing deadlines or making mistakes can result in costly fees that hurt your company’s bottom line. If you run a small business, it’s important to stay on top of your FUTA taxes. Every employer is responsible for FUTA payments FUTA is never deducted from an employee’s wages.What: FUTA serves as a safety net and factors into the true cost of paying an employee, and helps fund unemployment insurance for those who lose their jobs.
The federal government also enacted the Social Security system to serve as a safeguard against any future financial turmoil.Before this, no such safeguards existed in the U.S. Why: FUTA was actually a product of the Great Depression, as more than a quarter of all workers in the U.S.When: Passed in 1939, FUTA provides federal and state governments with money for programs, such as unemployment insurance and employment services.The revenue made from these payroll taxes then goes toward funding unemployment benefits. However, the tax is applied only to employees, meaning that the tax will only be calculated pertaining to the number of part-time or full-time employees. The Federal Unemployment Tax Act (FUTA) establishes a payroll tax that employers must pay, also known as federal unemployment withholdings.
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