What are the requirements for quarterly FUTA deposits?

The federal unemployment tax is to be computed by each covered employer on a quarterly basis. Computation of the tax is to be done during the month following the end of each calendar quarter, and, if the employer's tax liability (plus any accumulated liability for prior quarters is more than $500, the tax is to be deposited on or before the last day of that month.

FUTA tax liability. Liability for the FUTA tax may be computed by multiplying the amount of wages paid during the quarter by .008 (.8%). The employer should stop depositing FUTA tax on an employee's wages when he or she reaches $7,000 in wages for the calendar year. If any part of the wages subject to FUTA is exempt from state unemployment tax, more than the .008 rate may need to be deposited. For example, in certain states, wages paid to corporate officers, certain payments of sick pay by unions, and certain fringe benefits are exempt from state unemployment tax.

Electronic deposits. Employers must make electronic deposits of all depository taxes (including FUTA taxes) in 2009 if: (1) their total deposit of such taxes in 2007 exceeded $200,000; or (2) they were required to deposit electronically in 2008. Electronic deposits are made using the Electronic Federal Tax Payment System (EFTPS). [For information on EFTPS, see ¶36,660 , What are the methods of depositing employment taxes?]

If electronic deposits are not required, a federal tax deposit form must accompany any deposit. Deposits are to be made in authorized federal tax depositories.

The above procedure is to be followed, where required, for the first three calendar quarters of the year. All employers subject to FUTA must file an annual return on Form 940 or Form 940-EZ, at which time the employer must pay any balance of tax still owed for the prior year and not deposited.