The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay.
Which form do I file?
Report federal unemployment tax on Form 940,
Employer's Annual Federal Unemployment
(FUTA) Tax Return (pdf). Or, if you qualify, you
can use the simpler Form 940-EZ (pdf)
instead. See Publication 15 to find out if you can use this form.
Information courtesy of the Internal Revenue Service.
