 In this presentation, we will calculate FUTA and SUTA, focusing primarily on FUTA, Federal Unemployment Tax Act. And SUTA is going to be in some ways related to FUTA, meaning the calculation of FUTA is in some ways based on SUTA. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course, each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources, such as Excel practice problems, PDF files, and more, like QuickBooks backup files, when applicable. So once again, click the link below for a free month membership to our website and all the content on it. And therefore, the state tax is standardized mainly from state to state, more so than other types of state taxes. In other words, there's usually going to be a limit or a ground floor type of SUTA regulation that needs to be in place in order to lower FUTA tax. Therefore, most of the states have met those requirements and could have more SUTA or difference within the regulation. So in other words, the states could be different for the SUTA tax, but they typically have the minimum standards in order to comply with the FUTA tax to give the lower rate on the FUTA tax. Therefore, we'll take a look at a variation of an example of a type of SUTA tax as well. So we're we have here currently, and we're in the earnings records, note that the FUTA tax is an employee or tax and not necessarily part of the earnings records. However, it will be, we're going to use it as a worksheet in order to calculate the FUTA tax because it will be based on payroll. So we currently have Bill and Pam, our two employees, we've calculated over here the total earnings, we currently have the total earnings here. And then we have the withholdings or the wages for the FIT wages, the OASDI wages, and the HI wages. Now note, it's important to note that these could differ, the total wages could differ from the FIT wages based on if there's a retirement plan or a qualified cafeteria plan. The OASDI could differ from total wages based on if there's a cafeteria plan, typically. The FUTA wages will not be affected generally by a cafeteria plan or a retirement plan, but have a cap of 7000. So we need to look at these earnings and see if they hit the cap. Now it's common to look at these earnings and say, yeah, that one hasn't hit the cap, it's only 765. But remember, this is only one pay period. So we're saying here, if I scroll over to the left, this is pay period 10 or week 10, we pay weekly. So if we scroll back over, we don't know what the total wages are here as of this time period for cumulative earnings. In order to get that, we're going to have to go to the earnings records. Now note that 7000 is pretty low for a cap. So most employees will get there at some point, typically in the first quarter of operations. So we're in like week 10, 10 pay periods, and we're going to see if we hit the cap there. So we're going to go to the earnings record to do this. This will be broken out by employee and then by pay period. And we're looking over here at total earnings and or the Futa earnings. And so we have pay period week one, and then we go week two week two three, we scroll down before we enter the data for week 10, where we currently are for this current employee, it's adding up to 6,808. So we're close to the cap of 7000. So what we need to do then is a little subtraction problem. We're going to say well 7000 minus 6808.5 is 191.50. If that is less than the normal wages for this pay period, which it is, then we're going to use the 191.50. So in other words, we're going to say this pay period Futa wages is only 191.50. And that brings us to the 7000. Now if we go down to the earnings records down here for the second employee, note they're they're clearly over 7000 long before this. This is a higher earner. And so they're already over. They don't have any Futa wages at this time. So if we go back to our worksheet, then the Futa wages are going to be 191.50 for this time period. No way we could know what this number is based on the earnings records, based on the register information here, we'd have to go to the earnings records. And it's zero here because they hit the cap. Then we'll sum this up equals the sum. And we will sum this up. Okay, so that's going to be our wages. Now it's we're going to say that Suta is the same has the same cap. Typically, Suta will mirror the Fed for many states. They could have a slightly different cap. So it could change from state to state, but typically, oftentimes they'll mirror the Fed. So I'm just going to say this one's mirroring the Fed. So it's the same wages for Suta. And we'll sum this up. And then we can just multiply times the Futa rate and the Suta rate. Now note that the Futa rate, if you talk to someone about the Futa rate or look it up, it may give you a higher rate. And then you got to realize that it'll be reduced by whether if there's a Suta tax in the state, which almost there always is. Therefore, for all practical purposes, Futa is usually a lower rate, which we're going to use currently is this point six, which is quite low when compared to like Social Security or Medicare. So we're going to say this equals the Futa wages times point zero zero six point six percent or point zero zero six. And then this equals the Futa wages of zero times point zero zero six. And then we'll add these up equals the sum. So note it's a much smaller tax, we're just adding those up. And then we'll do the same for Suta. Again, Suta could vary in terms of the rate and the calculations, but we're going to say this equals the Suta cap. Once we know whatever the variation is, again, we just need to know what the rules are. And then we apply the same principles to whatever rule is there times 0.054. We'll do the same here. Futa times our Suta wages, Suta wage. Let's do that again. That's not right. Suta wages times the tax of 0.054. Okay, there we have it. Now we'll just sum this up with an equals SUM, double click the sum function and add those up. And that'll give us our 1034. It's important to remember that these are going to be employer taxes, not employee taxes. They're not going to come out of the net check. They're not in the calculation for the net check. They won't appear on a pay step, but they are payroll taxes for the employer portion based on employee wages.