Federal unemployment, like state unemployment, acts as an insurance policy, one that employers have no choice but to pay. The frequency of the payments for federal unemployment tax (FUTA, for short.) depends on the amount of payroll.

New Businesses

If you are a new employer, you will have to calculate and pay deposits on FUTA taxes on a monthly basis. It's a good idea to have the correct amounts set aside after each payroll period.

Amount of FUTA tax due

The frequency is also based on the amount of unemployment taxes due. If you owe more than $500 during any one quarter, you must file the FUTA taxes and deposit the amount using the IRS's EFTPS tax payment website. If the amount is less than $500, it may be rolled over into the next quarter.

Deposits Vs. Payments

Using the IRS's EFTPS site, an employer may make regular deposits to his unemployment account on a quarterly basis. The payment is due before the 15th day of the first month of the following quarter. These payments are called "deposits" and are held ready for the employer until the end-of-the-year calculations are in.

Form 940

At the end of the year, each employer is required to file a Form 940, on which is calculated the amount of FUTA tax due and the amount deposited. You should end up with only a slight difference in the amounts, if there is one. If the difference indicates a balance due, it should be paid before the 15th day of the next tax year.

Ideal Schedule

In filing and paying federal obligations, it is best to stick with a planned routine. File your federal and state unemployment quarterly, deposit calculated amounts using EFTPS after each payroll period so all work is completed at the same time. The use of a good accounting software package will go a long way in making sure you don't miscalculate or miss a deposit entirely.

Source:

IRS: Form 940

IRS: Form 940 Instructions