
Missed the tax deadline? Here’s what you should do
If you haven’t filed your taxes yet, don’t panic — but act fast.
The Federal Unemployment Tax Act helps jobless people. Bankrate explains it.
The Federal Unemployment Tax Act (FUTA) imposes a federal payroll tax to help fund unemployment programs at the state level. Unlike other payroll taxes, FUTA tax is paid entirely by the employer and not withheld from employees’ pay. Funds from FUTA taxes are granted to individual states to fund unemployment benefits and job training initiatives.
Employers must pay unemployment taxes for their workers. These taxes help fund unemployment assistance for workers who find themselves without a job. The employers cannot deduct the taxes from their workers’ pay; instead, they must pay the entirety of the tax.
As of March 2017, the tax rate under the FUTA is 6 percent. An employer must pay unemployment taxes if it pays $1,500 or more in wages in a single quarter, but only on the first $7,000 of each employee’s wages. Even if a company pays more than $1,500 in wages for only one quarter of the entire calendar year, the unemployment taxes are still required.
Many employers also have to pay state unemployment taxes in addition to taxes required by FUTA. If an employer also pays state unemployment taxes, it can take a credit of up to 5.4 percent of its taxable income. The employer then deducts this amount from its FUTA payment.
Check out Bankrate’s small business calculators to gauge your profitability and track your company’s financial health.
Violet Heifer, an energy drink company, has two part-time employees who earn approximately $2,000 each quarter of the year. Violet Heifer will need to pay federal unemployment taxes for these employees for all the wages they earn for the first three quarters. However, in the fourth quarter, each of those employees will now have earned $8,000 that year, so Violet Heifer doesn’t have to pay FUTA taxes on the amount exceeding $7,000.
If you haven’t filed your taxes yet, don’t panic — but act fast.
Typically, taxpayers have two options: Take the itemized deductions or take the standard deduction.
Regardless of what may cause a person to miss the tax-filing deadline, there are potential consequences.
Applying for more time to file your taxes is easy. Just don’t put off paying your tax bill.
The fast-approaching deadline for filing your 2021 taxes is April 18, 2022.
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