Employers pay Federal Unemployment Tax and file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Only employers pay this tax. It is not deducted from the employee's wages. For more information, refer to the Instructions for Form 940, and to Publication 15 (Circular E), Employer’s Tax Guide.
Wages paid to aliens employed in the United States are generally subject to FUTA tax under the same conditions that would apply to U.S. citizens. However, certain types of services are exempt from FUTA taxes. Examples of exempt services include:
- Compensation paid to agricultural workers, including foreign agricultural workers in H-2A nonimmigrant status;
- Compensation paid to household employees, including au pairs who are resident aliens in J-1 nonimmigrant status unless the compensation exceeds $1,000 during any calendar quarter of the current year or prior year;
- Compensation paid to employees of religious, charitable, educational, or certain other tax-exempt organizations;
- Compensation paid to nonresident aliens temporarily present in the United States in F-1, J-1, M-1, Q-1, or Q-2 nonimmigrant status, including:
- Nonresident alien students in F-1, J-1, M-1, or Q-1 nonimmigrant status
- Nonresident alien teachers and researchers in J-1 or Q-1 nonimmigrant status
- All other Nonresident alien Exchange Visitors and Cultural Exchange Visitors in J-1, Q-1, or Q-2 nonimmigrant status.
Caution! Wages paid to aliens in F-1, J-1, M-1, Q-1, or Q-2 nonimmigrant status who have become resident aliens for tax purposes are subject to FUTA tax under the same conditions that would apply to U.S. Citizens.
For a list of other exempt services, refer to Publication 15 (Circular E), Employer’s Tax Guide.
- Federal Unemployment Tax
- Internal Revenue Code Section 3306
- Income Tax Regulation 31.3301-1 et seq.
- Publication 15 (Circular E), Employer’s Tax Guide
- Publication 51, Circular A, Agricultural Workers Tax Guide
- Publication 926, Household Employer's Tax Guide
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.