10. Federal Unemployment (FUTA) Tax The Federal Unemployment Tax Act (FUTA), with state unemploymentsystems, provides for payments of unemployment compensation to workerswho have lost their jobs. Most employers pay both a Federal and astate unemployment tax. Only the employer pays FUTA tax; it is notdeducted from the employees' wages. For information, see theInstructions for Form 940. For 1999, you must file Form 940 or 940-EZ,Employer's Annual Federal Unemployment (FUTA) Tax Return, ifyou: Paid cash wages of $20,000 or more to farmworkers in anycalendar quarter in 1998 or 1999, or Employed 10 or more farmworkers during at least some part ofa day (whether or not at the same time) during any 20 or moredifferent weeks in 1998 or 20 or more different weeks in 1999. To determine whether you meet either test above, you must countwages paid to aliens admitted on a temporary basis to theUnited States to perform farmwork, also known as H-2(A) visaworkers. However, wages paid to H-2(A) workers are not subjectto the FUTA tax. Farmworkers supplied by a crew leader are considered employees ofthe farm operator for purposes of the FUTA tax unless (1) the crewleader is registered under the Migrant and Seasonal AgriculturalWorker Protection Act or (2) substantially all the workers supplied bythe crew leader operate or maintain tractors, harvesting orcropdusting machines, or other machines provided by the crew leader.If (1) or (2) applies, the farmworkers are employees of the crewleader. You must deposit FUTA tax with an authorized financial institutionor the FRB that serves your area. (If you are subject to theelectronic deposit requirements, you must use the EFTPS system. Seesection 7.) The deposit rules for FUTA tax are different fromthose for income, social security, and Medicare taxes. SeeDeposit rules for FUTA tax below. FUTA tax rate.For 1999 and 2000, the FUTA tax rate is 6.2% on the first $7,000 ofcash wages you pay each employee. You may receive a credit of up to5.4% of FUTA wages for the state unemployment tax you pay. If yourstate tax rate (experience rate) is less than 5.4%, you are stillallowed the full 5.4% credit. Therefore, your net FUTA tax rate may beas low as 0.8% (.008). FUTA tax applies, however, even if you areexempt from state unemployment tax or your employees are ineligiblefor unemployment compensation benefits. Forms 940 and 940-EZ takestate credits into account. Deposit rules for FUTA tax.Generally, deposit FUTA tax quarterly. To figure your FUTA tax,multiply .008 times the amount of wages paid to each employee duringthe quarter. When an employee's wages reach $7,000, do not figure anyadditional FUTA tax for that employee. If the FUTA tax for the quarter(plus any undeposited FUTA tax from prior quarters) is more than $100,deposit the FUTA tax with an authorized financial institution or aFederal Reserve bank, or by using EFTPS, explained in section 7, bythe last day of the month following the close of the quarter. If theamount is $100 or less, you do not have to deposit it, but you mustadd it to the amount subject to deposit for the next quarter. To helpensure proper crediting to your account, write your employeridentification number, "Form 940," and the tax period the depositapplies to on your check or money order. Form 940 or 940-EZ.By January 31, file Form 940 or 940-EZ. If you make deposits ontime in full payment of the tax due for the year, you may file Form940 or 940-EZ by February 10. Poznan cheap hotelsForm 940-EZ is a simpler version of Form 940. You can generally useForm 940-EZ if: You pay state unemployment taxes (contributions) to only onestate; You make the payments to the state by the due date of Form940 or 940-EZ; and All wages subject to FUTA tax are also subject to stateunemployment tax. If you do not meet these conditions, file Form 940 instead. If the FUTA tax reported on Form 940 or 940-EZ minus the amountsdeposited for the first three quarters is more than $100, deposit thewhole amount by January 31. If the tax (minus any deposits) is $100 orless, you may either deposit the tax or pay it with the return byJanuary 31. Once you have filed a Form 940 or 940-EZ, you will receive apreaddressed form near the end of each calendar year. If you do notreceive a form, request one by calling 1-800-TAX-FORM in time toreceive it and file when due. Note:Reservar Hoteles ArendalIf you have acquired a business from someone else, you may beable to claim a special credit as a successor employer. See theInstructions for Form 940. Magnetic tape filing of Form 940.Reporting agents filing Forms 940 for groups of taxpayers can filethem on magnetic tape. See Rev. Proc. 96-18, 1996-1 C.B. 637.