 In this presentation, we will take a look at Federal and State Unemployment Tax Calculations. When considering Federal and State Unemployment Tax Calculations, we are considering types of taxes that are Employer Taxes. We're focusing in here on Employer Type Taxes. FUTA is going to be something Federal Unemployment Tax is going to be something that is not an Employee Tax at all, unlike the FICA Taxes of Social Security and Medicare, which have an Employer and Employee Component. The FUTA Tax is a pure Employer Tax. It has no Employee Component to it, meaning when we look at our paycheck and the pay stub, the calculation of our net pay, it doesn't have any FUTA removed from it. FUTA is a payroll tax that will be an expense on the corporations or the business books as a payroll tax and not part of the wages paid for the employee. So the FUTA tax then is going to be on the first 7,000. Now, this could change, and this is something that's really kind of confusing to look at, meaning we're going to take each employee and we're only going to pay FUTA tax. The Employer is paying the FUTA tax based on the first 7,000 of wages for the employee. That means that after they make, you know, $7,001, we don't pay any more tax on FUTA after that for that next dollar. So that kind of is a little unusual in some ways, meaning that means that if we have more employees than we're going to have rather than paying employees more money, we're going to end up paying more FUTA because most likely an employee, even part-time employees, if they're employed by us for the entire year, will earn more than $7,000. So for each employee, if they're employed for the entire year, then we're probably going to be paying more than $7,000, and we're going to have to pay, you know, the maximum FUTA tax per employee. But the FUTA tax is fairly small as well. So that's another area that's really a bit confusing. If you have test questions on it, it's a bit confusing. If in practice, it's more straightforward. So the way you'll see this is that it'll say that the FUTA tax is 6%. And remember, when we talk about these percentages in these caps, that they could change over time. But if these ones are more stable than other things we've talked about, but the types of taxes that we're talking about are going to be types of applicable standards. So once anything changes, we want to just go back and make sure that we are checking the correct rate and apply it and use the same principles that we're using to calculate the tax. So the rate, the way the law set it up is basically saying that the rate is going to be 6%. However, we're going to try to mandate the states in some way to implement their own FUTA, and therefore we're going to say, hey, the federal tax is 6%, but you get a 5.4 rate reduction if the state complies with FUTA requirements in accordance with the FUTA law. So within the FUTA law, the federal income tax law, the feds basically said, if you states put together a SUTA, a state unemployment tax act, that complies with this A, B, and C, then we'll give you a 5.4 discount or deduction, which means that the net tax, the actual FUTA tax, and for all practical purposes is 0.6. Now note this is pretty low tax rate, 0.6 for the FUTA tax. So again, if you look at it and they ask you what's the FUTA tax rate, what's the federal unemployment tax rate, it's really 6% with this deduction, which basically almost every state complies with, and therefore the real application rate, the one you're actually going to use most likely to calculate, is going to be this 0.6%. So from an application purpose, for all practical purposes, most of the time, we're going to have a FUTA rate that we're going to use at 0.6%, but the wording of it's going to be 6% if the state complies with it from the 5.2, I mean the 5.4, and the deduction given us to that 0.6%. Now note this isn't 6%, it's 0.6, so if we were to convert this to a decimal moving it two places to the left, it would be 0.006. So it's 0.006 of the first $7,000 earned for each employee for FUTA tax, which is an employer tax that's going to be paid, meaning it's not coming out of the paycheck. And then the State Unemployment Tax Act will vary. We've noted here that all states typically have some type of State Unemployment, and the State Unemployment will typically meet the minimum so that they qualify for this 5.4. In other words, the state would rather set up their own system and collect the 5.4% rather than have the Fed take it at the 6%, so if the state has to impose the tax, they would rather take the tax typically. So they're usually going to comply here, but that would be kind of like a minimum standard, and they could add some more standards to it and vary the tax in some way for the suit to tax. But oftentimes it'll mimic the same type of calculation, some type of low cap here like $7,000 would be for the first $7,000 or $8,000 or something like that and then have a similar type of rate up to that point. So reporting period and tax deposits notes that there's going to be different requirements for when in essence we have to pay the deposits for our payroll, and it really depends on how large our payroll is. So the laws is going to try to give more flexibility to payroll periods that have less employees and less total payroll. So in essence, you know, the larger the payroll is, the more frequently we have to pay. So we could end up paying, you know, our payroll periods and taxes could be monthly, semi-monthly, or the next business day. And we won't get into a lot of detail in terms of what those pay periods, you know, exactly what the dollar amounts are because those could change and vary. Just be aware that as we report the payroll, we need to make the deposits as we go. And so if we're, if we're doing payroll weekly or bi-weekly or semi-monthly or monthly, once we process the payroll, there's a question asked to how long can we wait until we give the money to the government, meaning after every payroll period we're taking money out of the employees' wages for the withholdings, how long do we have until we have to remit the money and to the government pay that government out, pay that money to the government. And of course, they want their payment sooner rather than later. And so we make those payments as we go. And then we verify the reporting, kind of like we do with a 1040 for individual income taxes. That's what the quarterly reports will do. The 941s are not there to calculate and pay the tax. The 941s are there to report and verify the tax owed and the payments that theoretically and should have actually physically been made by that time. So when we do the 1040, I mean, when we do the 941s at the end of the quarter for payroll taxes, the quarterly reports at the 940 at the end of the year for FUTA, we should not be paying at that point, kind of like your 1040 at the end of the year. We shouldn't owe money on the 1040 at the end of the year if everything was done right. We should have actually overpaid on the 1040 and get money back. For the same thing is true for payroll taxes, that we should be paying as we process payroll and we have some time period after payroll processing to make that payment. And then we're just going to report that we have paid and the liability on the 940s quarterly and the 941 at the end of the year. Note two that unlike the 1040, we're not thinking that we're going to get money back because it's not a complicated, it's not a system that is more complicated like the income tax meaning it's more flat tax. The calculation should be exact. We should know exactly how much we owe and we should have paid exactly what we owe. So if we did it all correctly, we can conceivably make it exact and it should be as opposed to income taxes, which that's an impossibility. You're always going to be off and hopefully there's a bit of a refund because that makes things easier at the end of the year.