26 U.S.C. § 3301 (FUTA)
Authoritative Statutory Source
FUTA Tax (Federal Unemployment)
Federal Unemployment Tax Act tax paid exclusively by employers on the first $7,000 of wages.
Detailed Definition & Statutory Context
FUTA Tax (Federal Unemployment) is governed by 26 U.S.C. § 3301 (FUTA) standards across corporate payroll administration, statutory tax withholding, and general ledger labor accounting. Rigorous compliance with FUTA Tax (Federal Unemployment) prevents IRS Form 941 deposit penalties and FLSA wage-and-hour litigation.
Statutory Formula & Equation
Net FUTA Tax = 0.6% × Min ( Employee Gross Pay, $7,000 Wage Base )
General Ledger / Payroll Journal Entry Standard
Debit: Gross Payroll Expense / Employer Tax Expense
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash
Common Operational Pitfalls
- Excluding non-discretionary bonuses from FLSA overtime regular-rate calculations.
- Failing to cap Social Security tax withholding once employee earnings exceed the $168,600 wage base.
- Misclassifying non-exempt hourly employees as exempt salaried workers.