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Who Must Pay The Federal Unemployment Tax?

October 6th

According to the IRS, there are three litmus tests that function to determine what sort of businesses must pay Federal Unemployment Tax in order to avoid IRS penalties. The three different tests apply to different categories of employees, and each test is separate from the others.

What Are the Tests?

In the event that one of these tests describes your particular situation, you are responsible for paying Federal Unemployment Taxes to any employee that fits within that category during the current calendar year in order to stay in compliance with tax laws.

  • General test. If you pay wages of $1500 or more in any calendar quarter in the 2010 or 2000 level fiscal year, OR if you had one or more employees for at least a part of the day for any 20 or more weeks in either 2010 or 2011.
  • Household employees test. A household employee is defined as anybody who performs household work in a home, club, or fraternity or sorority chapter. You are subject to paying the Federal Unemployment Tax if you paid a total cash wages of $1000 or more to these employees in either 2010 or 2011.
  • ¬†Farmworkers test. If you paid cash wages of $20,000 or more to farmworkers throughout any calendar quarter in 2010 or 2011, OR if you have employed ten or more farmworkers during at least some part of the day throughout the course of 20 or more different weeks in 2009 or 2010

If any of these litmus tests apply to you, you may be swamped with paying Federal Unemployment Tax on these categories of workers during this current calendar year. If you need more information regarding the Federal Unemployment Tax, be sure to check out the IRS’ website at www.IRS.gov.¬† Also consider hiring the services of a tax lawyer or tax attorney if the situation gets too dire.

 

 
 
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