Unemployment Tax

Federal and state unemployment taxes fund unemployment benefits paid to workers (Caregivers) who have lost their jobs. Each state has a different method for determining your unemployment taxes and tax rate. If you pay state unemployment taxes, this is considered a legal deduction and you can get a credit toward federal unemployment taxes.

A Careseeker must pay unemployment taxes for their Caregivers based on FUTA (Federal Unemployment Tax Act). You owe federal unemployment taxes if you paid at least $1500 in wages during any calendar quarter in the current or previous year. Employees do not pay FUTA taxes.

The FUTA rate is 6.0% and employers can take a credit of up to 5.4% of taxable income if they pay state unemployment taxes. This amount is deducted from the amount of employee federal unemployment taxes you owe. Most states have their own State Unemployment Insurance Tax Act (SUTA or SUI). If you qualify for the highest credit, then the minimum FUTA rate is .6%. Each state has its own new employer rate for new businesses. The length of time that new employers are subject to this rate also varies. Contact your state unemployment office for information on new employer rates.

**For help with this please contact The Nanny Tax Company (www.nannytaxprep.com); (800) 747-9826.