DIY ezPaycheck Payroll Tax Software: How to Set up FUTA and SUTA
ezPaycheck payroll software estimates the unemployment tax based on your set up. Some companies may be able to take credit to pay unemployment tax at lower rate. In some states, your local office will mail you the new rate for next year in Dec. You can also call them to find your rate.
If you entered a higher rate or a lower rate by mistake, you still have the chance to correct it when you file the year-end report (ie: form 940) to make deposit.
Step 1.1: Open company tax information setup screen
Start ezPaycheck payroll software
Click the left menu "Company Settings" then click the sub menu "Tax Information" to open the company tax setup screen (Click image to enlarge)
Step 1.2: Federal Unemployment Tax
FUTA (Federal Unemployment Tax) is Employer-side tax only and will not be printed on paycheck stubs
The default tax rate for 2024 is 6%. However, many companies can take up to 5.4% credit. Please check with your local IRS office to see what rate you should use.
For example:
- If your FUTA rate is 0.06 (6%), please enter 6 there.
- If your FUTA rate is 0.006 (0.6%), please enter 0.6 there
The FUTA tax applies to the first $7,000 you paid to each employee as wages during the year.
If you set up the wrong FUTA rate before, you still have chance to correct it when you file Form 940.
Step 1.3: State Unemployment Tax
SUTA (State Unemployment Tax) is Employer-side tax only and will not be printed on paycheck stubs
Usually your state goverment will mail you the new SUTA rate each year. If you are not sure about your rate, you can contact your state office.
Step 1.4: Click the UPDATE button to save your changes
When you add a new paycheck, ezPaycheck payroll software will use this new tax rate to withhold FUTA and SUTA. The change of FUTA or SUTA rate will NOT affect existing paychecks.
2. Tax Forms and Tax Deposit
2.1 Federal Form
IRS releases Form 940 in Dec each year. ezPaycheck estimates FUTA based on your settings and the current IRS guide. When you make FUTA deposit, please use the value from the tax form if they are different.
