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Get your taxes done using TurboTax
No, you should not have to do that. When you are completing your Schedule H, you need to know how much of the wages for each person that will be taxed for unemployment tax by your state. Each state is different and not all states use the same amount as federal for unemployment tax. It's important to be sure you have paid that tax.
- The maximum wages for federal unemployment tax on wages is the first $7,000, assuming you paid more than $1,000 in any calendar quarter.
- Pennsylvania (PA), as example, has an amount of $8,000 and their own tax rate (example might be 3.5%)
If your state unemployment tax has been paid on time then your federal rate is dramatically reduced. More information can be found in the Schedule H instructions about credit reduction states. Check to see if your state falls into this category.
FUTA tax rate: The FUTA tax rate is 6.0%. The tax applies to the first $7,000 you paid to each employee as wages during the year. The $7,000 is often referred to as the federal or FUTA wage base. In your scenario this should be $1,200 ($7,000 + $7,000 + $6000 x .06)
- Sign into your TurboTax account > Search (upper right) type nanny tax > Select the Jump to ... Link
- Answer Yes you have household employees > Yes you paid more than $2,400 to at least one employee > enter your EIN > Continue
- Enter your wages subject to social security tax and medicare tax, also federal withholding if applicable
- Continue to Unemployment Tax Information > Continue > Check the appropriate state unemployment tax questions
- Do not check that all wages are taxable for FUTA > Continue > Enter your state information > Continue
- Enter the wages that are subject to FUTA ($20,000 in your example)
- Once completed you should see the correct result of Schedule H tax.
- See the image below for assistance.
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