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

Instructions and Help about Fill 940 Schedule Reduction Rates

Hi everybody my name's Tim and today I'm going to talk to you a little bit about the federal unemployment tax act or a food or for short is how we abbreviate most businesses participate in state on a state unemployment tax program so they get a credit for four pay map four before they pay federal unemployment tax but the point is is that the net food array almost always is 0.8 percent which is the same thing as 0.0 zero also the maximum amount of an individual's wages that are going to be taxable to the employer is going to be seven thousand so the most any any employer is going to pay for federal unemployment taxes is fifty-six dollars per year I'd like to take you for a brief example let's say an individual earns eight hundred dollars a week federal unemployment taxes are paid on a quarterly quarterly basis and that amounts to thirteen weeks if we take the $800 a week times four thirteen weeks we get a total wages for the quarter for this individual of ten thousand four hundred dollars the maximum taxable for food ax is seven thousand dollars and we will pay tax on that and that means that $3,400 of the wages are not taxable so here's what we get for an individual in this example we get seven thousand times point zero zero eight or fifty-six dollars that we have to pay in food or taxes for this individual let's take that second example and again here we are we're looking at at quarters here first quarter second quarter and third quarter and taking the example of a part-time individual who gets paid $200 a week again the quarter is 13 weeks so this person has earned a total of $2,600 for the quarter we multiply that times point zero zero eight and we get a total of 20 dollars and 80 cents that we have to pay in food taxes for the first quarter during the second quarter we get a similar computation and once again we have to pay twenty dollars and 80 cents on federal unemployment taxes for this individual in the third quarter we're going to hit the ceiling or the maximum amount taxable for futa the maximum recalled with maximum is seven thousand dollars well this person has already paid taxes on a total of 5,200 dollars and we subtract that from the seven that means that we have 1800 dollars that are taxable for this individual in the third quarter we multiply this times point zero zero eight and we get 1440 that we have to pay in federal unemployment taxes for the third quarter and as you can see if we take that twenty eighty twenty eight and the 1440 add it up we get a total of $56 that we paid for this individual in fruit of taxes for the year.

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