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barrylguy
New Member

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

 
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Accepted Solutions
DawnC0
Intuit Alumni

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

No, all versions of TurboTax are correctly updated for 2017.  For 2017, the FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base.   

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There are two parts of FICA -- one for Social Security and another for Medicare -- and both are assessed differently.

  • The Social Security tax rate is 6.2% of earned income up to a certain cap. For 2017, the maximum amount of income that can be subject to Social Security tax is $127,200. No Social Security tax is assessed on income in excess of this amount.
  • The Medicare tax rate is much lower, at 1.45% of earned income. However, there is no wage cap -- every dollar of earned income is subject to Medicare taxes, even if the income is in the millions. 

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4 Replies
DawnC0
Intuit Alumni

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

No, all versions of TurboTax are correctly updated for 2017.  For 2017, the FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base.   

-------------------------------------------------------------------------------------------------------------

There are two parts of FICA -- one for Social Security and another for Medicare -- and both are assessed differently.

  • The Social Security tax rate is 6.2% of earned income up to a certain cap. For 2017, the maximum amount of income that can be subject to Social Security tax is $127,200. No Social Security tax is assessed on income in excess of this amount.
  • The Medicare tax rate is much lower, at 1.45% of earned income. However, there is no wage cap -- every dollar of earned income is subject to Medicare taxes, even if the income is in the millions. 
kingdomtradingin
New Member

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

I agree with the original post. According to the IRS website, "For deposit purposes, figure FUTA tax quarterly. Determine your FUTA tax liability by multiplying the amount of taxable wages paid during the quarter by 0.6%. Stop depositing FUTA tax on an employee's wages when he or she reaches $7,000 in taxable wages for the calendar year." Unless this was changed to be affective for 2018, turbotax appears to be incorrect.
kingdomtradingin
New Member

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

I noticed this because my payroll done through QuickBooks paid the 0.6%, yet when I began my taxes for 2018, TurboTax states 6.0%.
TaxGuyBill
Level 9

I believe the FUTA computation for a household employee is incorrect for 2017. The rate percentage seems to be "off" by one decimal point. Do you agree?

@kingdomtradingin   FUTA is 6.0%, but *IF* you paid State Unemployment and *IF* that State is not a "credit reduction state", you get a "credit" of 5.4% (resulting in a 'net' of 0.6%).
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