IRS Increases FUTA Tax Threshold

Employers who were required to make quarterly deposits of unemployment taxes when the tax exceeds $100 are now required to make the deposit when the tax exceeds $500. The maximum amount the IRS collects from employers per employee is $56 per year, if the employer makes timely state unemployment tax payments.

The previous $100 threshold required most employers with two or more employees to make at least one federal tax deposit per year. Raising the requirement to $500 will reduce the burden for employers with eight employees or less by eliminating their requirement to make up to four FUTA tax deposits yearly. The new rules are effective January 1, 2005.