When is federal unemployment tax due? California EDD FUTA filing deadlines explained

this is super helpful thank you, so basically if i owe less than $500 in futa all year i can just pay it when i file the 940 in january? thats what im understanding

Exactly right. If your total FUTA liability for the whole year stays under $500, you don't need to make any quarterly deposits - just pay the full amount when you file Form 940 by January 31st (or February 10th if all deposits were timely).

I wish someone had explained this to me two years ago. I got hit with a penalty because I didn't realize deposits were required quarterly once you hit that $500 threshold. Cost me way more than just paying on time would have.

Yes this is exactly the part I was fuzzy on - the interaction between what I pay to California EDD and how that affects my federal FUTA calculation. So as long as I'm current on my California EDD SUI payments, I should get that full 5.4% credit against FUTA?

yep that's the general idea. california is typically a non-credit-reduction state so you should be getting that full credit as long as youre current. but double check the current year IRS Schedule A for Form 940 just to be sure

California has not been a credit reduction state for several years now so the full 5.4% FUTA credit should apply for California employers who are current on their state UI taxes paid to California EDD. Just verify with the IRS Schedule A attached to Form 940 instructions for the current tax year.

Wait this is actually exactly what I need - I've been trying to reach California EDD to verify my SUI payment history is correct. I'll check that out, thanks!

does it work for employer accounts or just individual unemployment claimants? asking because i need employer-side help too

I used it for employer account questions so yes it should work. The California EDD agent I spoke with was able to pull up my account and confirm everything on the spot.

Ive been trying to call EDD for three days straight and cant get through lol maybe ill try this

what happens if you miss one of the quarterly FUTA deposits? is there a big penalty?

Yes, the IRS charges a Failure to Deposit penalty that ranges from 2% to 15% depending on how late the deposit is. The longer you wait, the higher the penalty rate. 2% if you're 1-5 days late, up to 10% if more than 15 days late, and potentially 15% if the IRS has to send a notice and you still haven't paid. So it's not something to ignore.

got nailed with this penalty once, it adds up fast especially if you have several employees. just pay on time people its not worth it

Don't panic - you've got time to get this right. First step is to register with California EDD as an employer through their e-Services for Business portal if you haven't already. You're required to register within 15 days of paying over $100 in wages in a calendar quarter. Once registered you'll get your California employer account number and can start making proper SUI/ETT contributions. Then for FUTA just make sure you have an EIN and are set up to make federal deposits through the IRS EFTPS system.

thank you this is so helpful. i guess i need to get on the california edd employer registration asap then

also look into whether you need to withhold SDI from your employee - california requires it and thats another thing that goes through california edd. its a lot to set up at first but once youre registered and in the system it becomes routine

This is actually an important distinction. The FUTA credit generally requires that you've paid your state UI taxes by the due date of your Form 940 (January 31). There's a provision that if you pay late state contributions, you may still qualify for a reduced credit of 90% of what you would have gotten, rather than losing it entirely. But the rules can get complicated depending on timing. I'd strongly recommend getting this confirmed directly with a tax professional or by contacting both California EDD and the IRS before you file your 940.

ugh this is exactly why I need to talk to someone at California EDD directly. every time I call I get stuck in the hold queue and eventually disconnected

That's exactly the situation where Claimyr came through for me - claimyr.com gets you past the endless hold times and actually connects you to a live California EDD agent. Worth it when you have a time-sensitive question like this. There's a quick demo at https://youtu.be/JmuwXR7HA10 if you want to see what it's about before trying it.

Seriously same. I've had my business for 3 years and still get confused every tax season about which payment goes where. Having both California EDD and IRS obligations with similar but not identical deadlines trips me up every time.

exactly! and then add in payroll software that sometimes doesn't explain what it's doing and you're just guessing

california edd has some ok resources for new employers on their website but honestly forums like this have been more helpful for me lol

Great question and a lot of people get this confused. FUTA taxes collected by the federal government primarily fund two things: (1) the federal-state extended benefits program that kicks in during high unemployment periods, and (2) administrative costs for running the state unemployment systems. The actual regular unemployment benefits that workers receive when they file claims with California EDD come from the California State Unemployment Insurance fund, which is funded by the SUI taxes employers pay to California EDD. So when someone files an unemployment claim in California, they're drawing from the California state fund, not directly from federal FUTA funds.

ohhhh that makes so much more sense now. so FUTA is kind of like the backup system and California EDD SUI is the main source for regular benefits

That's a reasonable way to think about it. FUTA also funds the loans to states when state unemployment trust funds get depleted during severe recessions - which is why some states become credit reduction states, because they borrowed federal funds and haven't fully repaid them yet. California has fully repaid its federal unemployment loans so no credit reduction applies currently.

This is really scary to hear but also really useful advice. I'm going to do exactly this before I file - log in and verify every payment is posted correctly in the California EDD system.

Yep. And if you find any discrepancies in your California EDD account, get them fixed BEFORE the 940 deadline. Which is why being able to reach a live California EDD agent quickly matters so much. I wasted two weeks playing phone tag trying to get a correction made.

two weeks?! that's insane. california edd phone hold times are absolutely brutal

FUTA only applies to wages paid to employees - not to payments made to independent contractors classified as 1099 workers. However, be very careful about worker classification in California specifically. California uses the ABC test under AB5 to determine employee vs. contractor status, and the bar for qualifying as an independent contractor in California is quite high. If workers are misclassified as contractors, you could face liability for back SUI taxes to California EDD plus penalties in addition to FUTA issues.

yeah ive heard california is really strict about the employee vs contractor thing. my workers are legit contractors i think but maybe i should have someone review it

definitely get that reviewed. california edd does audits on exactly this issue and the penalties for misclassification can be really severe. not worth the risk

Yes I use it and agree it's not super intuitive at first but it is genuinely useful once you know where things are. Being able to see exactly what California EDD has on record for each quarter's contributions is really valuable especially at 940 time.

The e-Services portal is definitely worth learning. You can submit DE 9 and DE 9C filings online, make payments, see your account history, and send secure messages to California EDD employer services. The secure message feature is underused - it's slower than calling but you get written confirmation of responses which is valuable.

ooh i didn't know about the secure message feature, i'll have to try that

yes THIS was my confusion too! i thought the form was due every quarter like a quarterly tax filing and was completely lost

exactly and the IRS instructions for 940 are not great at making this distinction clear upfront. it really should say on page one - quarterly DEPOSIT deadlines may apply, annual FILING deadline is January 31. but no, you have to read the whole thing to piece it together

the irs really does make simple things complicated lol. at least california edd employer stuff is all in one portal even if the portal is clunky

oh wow i had no idea there was a mail-in step for EFTPS. i need to do this NOW thank you for the warning

yes do it asap, you can enroll at eftps.gov and they mail a pin to your business address. once you have the pin you activate online and then you can make federal tax deposits including FUTA. alternatively your bank may offer same-day federal tax payments through their online business banking but EFTPS is the standard way

This is a genuinely important practical tip that could save someone from a penalty. Thanks for posting it.

I had exactly this problem last quarter. Found out about Claimyr from someone here and it genuinely solved the problem - you go to claimyr.com, it helps you get connected to a live California EDD agent without the endless hold hell. They also have a video showing how it works: https://youtu.be/JmuwXR7HA10. I was skeptical but it worked and I got my payment confirmation same day.

I'll try literally anything at this point. Three disconnected calls is maddening when all I need is a 2 minute answer about whether a payment posted.

california edd phone system is genuinely one of the most frustrating experiences i have had as a business owner. you have my full sympathy

You have the right baseline. FUTA is 6% on the first $7,000 of each employee's wages per year. For California employers who are current on their state unemployment insurance taxes paid to California EDD, you receive a credit of up to 5.4% against that 6%. So your effective FUTA rate as a California employer is typically 0.6% on the first $7,000 per employee - which works out to a maximum of $42 per employee per year. Compare that to the maximum gross FUTA of $420 per employee per year without the credit. It's a substantial benefit that makes it all the more important to stay current with California EDD SUI payments.

$42 per employee max?! that seems really low. i was budgeting way more than that. guess i've been overpaying into escrow through my payroll service

don't worry too much, if you've been overpaying through your payroll service it will reconcile when your 940 is filed and you'll either get a credit applied forward or a refund depending on the situation

Good instinct. I can't stress enough how important this is. The money leaving your bank does NOT guarantee it posted correctly in California EDD's system. EFT payment failures, misapplied payments, account number issues - these things happen and you wouldn't know unless you checked your California EDD employer account directly.

just logged in and everything looks correct thankfully. but now I'm glad I checked rather than assuming. good thread

This is exactly the kind of proactive thing that prevents headaches later. Great that you checked and everything reconciled correctly.

You're correct that the federal FUTA wage base of $7,000 has not been updated since 1983 and is extremely outdated relative to actual wage levels. California's SUI wage base, by contrast, is updated annually by California EDD and is significantly higher - it's been increasing year over year. This disconnect between the federal and state wage bases is a frequent point of discussion in payroll and tax policy circles but Congress has not acted to change it. For California employers this means your California EDD SUI contributions apply to a much higher per-employee wage amount than your FUTA calculation does.

wow 1983?? that's wild. no wonder the max FUTA per employee is so low. if they updated the wage base to match inflation it would be like $25,000+

This is a perfect summary. Whoever finds this thread via search is going to be well served. Thanks everyone for the incredibly detailed discussion.

solid summary. only thing id add is to verify your California EDD employer account in e-Services before filing 940, as others mentioned above. don't assume the numbers match

good addition. verifying California EDD account matches your records before 940 filing = critical step

Good point. Multi-state employers need to complete Schedule A of Form 940 for each state where they have employees. Each state's SUI payments get credited separately. If any of those states happen to be credit reduction states, that affects only the credit for that state's employees - it doesn't impact your California FUTA credit as long as California EDD obligations are current.

exactly right - the credit reduction issue is per state so California employers with California-only workers are generally in good shape as long as California stays off the credit reduction list

I did not know any of this multi-state stuff. Glad I only have California employees for now lol