IRS Issues Final Regulations - FUTA Tax
The Internal Revenue Service has increased the minimum threshold for Federal Unemployment Tax Act (FUTA) deposits, a move that reduces burden for more than 4 million tax small entitles. Under the new rules effective January 1, 2005, employers are required to make a quarterly deposit for unemployment taxes if the accumulated tax exceeds $500. The current threshold is $100, which was established in 1970.
The maximum amount the IRS collects from employers per employee is $56 per year, if the employer timely made state unemployment tax payments. The current $100 threshold requires most employers with two or more employees to make at least one federal tax deposit per year. Raising the requirement to $500 will reduce burden for employers with eight employees or less by eliminating their requirement to make up to four FUTA tax deposits yearly.