 Hello, in this lecture we will define Federal Unemployment Tax Act or FUTA. According to Fundamental Accounting Principles, Wild 22nd Edition, the definition of Federal Unemployment Tax Act FUTA is, Payroll taxes on employers assessed by the federal government to support its unemployment insurance program. When we're thinking about FUTA, we are thinking about a form of payroll taxes. However, we're not talking about payroll taxes that are going to be withheld from the employees. These are payroll taxes that only the employer pay. However, they pay those taxes, the FUTA tax, based on employee wages. So what we're going to do is we're going to calculate the employee wages. And then we're typically going to have a cap that is fairly low, meaning all wages for all employees up to the cap of 7,000 for each employee or a cap thereabouts, which is low enough.