FUTA

Walt Texas

Do you have to pay Futa tax in Texas (in addition to the state unemployment tax?

Don D

>Do you have to pay Futa tax in Texas (in addition to the state
>unemployment tax?
Your quarterly paid state unemployment taxes are sent in to the Texas Workforce Commission. The FUTA tax (Federal Unemployment Tax Act) payment is paid annually to the IRS. They are separately maintained trust funds, one state, the other federal. The state fund is used chiefly to pay claims. The federal trust fund account pays, among other things, for the operation of the state field offices of your state Employment Security system or Labor Department or Workforce Commission. On occasion, we may read that X-State's unemployment trust fund is 'broke'. When this happens (claims exceed collections) the FUTA fund can be used to 'bail out' the state fund and you'll probably see taxes affected as well. It is my understanding that every employer nationally who is registered with his or her state UI system and who pays the state UI taxes also is required to pay the annual FUTA tax. Each state sends a 'magnetic tape' or other more sophisticated report to the IRS listing employers in the state, by IRS ID number, who have paid the state tax. As a result, the employer realizes a credit for having paid those taxes. If the state tax has not been paid, there is a federal penalty imposed by the IRS. If you have specific questions about the state tax, you should consult your Texas Workforce Commission office. If the question is about the federally imposed FUTA tax, you should consult the IRS. Also, this FUTA trust fund is another 'smoke and mirrors' opportunity for congress to manipulate budget and deficit figures on paper.