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Video instructions and help with filling out and completing 940 Schedule A Credit Reduction Rates

Instructions and Help about 940 Schedule A Credit Reduction Rates

Hi welcome to easy payroll guide my name is Karen Hutchinson and in this video we're going to be talking about how to calculate your federal unemployment liability the federal unemployment is also known as futa which stands for federal unemployment tax Act so you'll hear these two terms being used synonymously we're going to be calculating our federal unemployment liability in preparation for completion of the IRS form 940 which is the federal unemployment form a few things that we need to know about few de you must make a deposit for your federal unemployment tax accountability once your liability reaches $500 now what this means is you need to keep track of your food a liability once it reaches $500 you must make a deposit if your liability doesn't reach $500 throughout the entire calendar year then you can wait and make your deposit with your 940 form which would be at the beginning of the new year so you're going to be calculating your 940 for the entire year which will be due in January of the following year and that's when you can pay your liability if it doesn't reach $500 what you need to know is that the federal unemployment tax is paid on the first $7,000 of each employees wages this is a tax that is paid by the employer it is not withheld from the employees paycheck and it is only paid on the first $7,000 in wages the current federal unemployment rate is 6% however most states are eligible for a credit which will reduce it to 6 tenths of a percent the federal unemployment tax act is in place to oversee the state's unemployment agencies so the majority of your unemployment tax is going to go to the state however because...