Understanding FUTA Employer payments for QuickBooks setup - what exactly is FUTA Employer paid YTD?

Thanks for explaining, but I'm confused about something - I thought unemployment tax was a state thing? I pay SUTA quarterly but didn't realize there was a separate federal version. Do you have to pay both? And is the FUTA payment separate from the 941 deposits I make for federal taxes?

Yes, there are both federal (FUTA) and state (SUTA/SUI) unemployment taxes, and employers generally have to pay both. The good news is that paying your state unemployment tax on time usually gives you a credit against the federal FUTA tax. The FUTA payments are completely separate from your 941 deposits. Form 941 covers federal income tax withholding, Social Security, and Medicare taxes. FUTA is reported on Form 940 annually, though you may make quarterly FUTA deposits if your liability exceeds $500. This is different from your regular payroll tax deposits that you might make semi-weekly or monthly.

How does it work with QuickBooks specifically? Does it connect directly or do you have to export reports first? I'm using QB Online if that matters.

That sounds too good to be true. Does it really understand all the state-specific rules too? My business operates in two states and the unemployment stuff gets really complicated with different rates and rules.

It works great with QuickBooks! You can just export your payroll reports as PDFs or spreadsheets and upload them to taxr.ai. It recognizes the QuickBooks format and automatically extracts the relevant data. I use QB Desktop, but it should work the same with Online. For multi-state businesses, it absolutely handles state-specific rules. You just indicate which states you operate in, and it applies the correct rates and calculations for each state's unemployment taxes. It even flags potential issues where you might need to allocate wages differently between states. Super helpful for complex situations like yours!

How does this actually work? The IRS phone system is notoriously impossible to navigate. Does this just keep calling for you or something?

Yeah right. No way this actually works. I've tried calling the IRS business line at least 20 times this year and never got through. If this service actually worked, everyone would be using it. Sounds like a scam to me.

It uses a callback system. Basically, it navigates the IRS phone tree for you and holds your place in line. When it's about to reach an agent, you get a call connecting you directly. No more sitting on hold for hours! It's not a scam at all - it's just technology that navigates the phone system more efficiently than we can manually. I was skeptical too until I tried it. The IRS doesn't advertise this service because it's a third-party solution, but it's completely legitimate. You still talk directly to real IRS agents, just without the ridiculous wait times.

But what if I've been making quarterly deposits for FUTA even though they were under $500? Should I still enter those in the YTD field? My accountant from last year had me paying quarterly regardless of the amount.

Yes, if you've been making quarterly FUTA deposits, even though they were under the $500 threshold, you should absolutely include those in your YTD total. There's no penalty for making deposits when you're under the threshold - it's just not required. In fact, some accountants prefer making quarterly deposits regardless of amount just to keep everything consistent and avoid a larger payment at year-end. Just add up all the FUTA deposits you've made so far this calendar year and enter that total in the YTD field.

This is super helpful! One question - if an employee quits mid-year and I hire someone new, do I start over with the $7k FUTA base for the new person? Or is there some kind of transfer?

Thanks so much everyone for the detailed explanations! This clarifies everything. I now understand that FUTA is completely separate from Medicare and income tax withholding. I checked my records and found I've paid about $630 in FUTA so far this year, so that's what I'll enter in the YTD field. Really appreciate all the help, especially the explanation about the $7,000 wage base per employee. That's going to save me a lot of money since two of my employees are well past that threshold already!

Each employee gets their own $7,000 FUTA wage base for the calendar year, regardless of when they start or if they replace someone else. So yes, if someone quits mid-year and you hire a replacement, the new employee starts fresh with their own $7,000 base. There's no transfer or carryover between employees. This actually works in your favor since you'll pay FUTA on less total wages if you have turnover during the year.

This is excellent advice about setting up separate accounts! I'm just getting started with QuickBooks and made exactly this mistake - everything was going into one big "Payroll Taxes" bucket. It's been a nightmare trying to figure out how much I've actually paid for each type of tax when I need to file forms. Quick question though - when you say QuickBooks Payroll calculates FUTA automatically, does that include stopping the calculation once each employee hits the $7,000 wage base? I want to make sure I'm not overpaying if the system doesn't automatically recognize that threshold.

Yes, QuickBooks Payroll automatically stops calculating FUTA once each employee reaches the $7,000 wage base for the calendar year. It tracks this individually for each employee, so you don't have to worry about overpaying. However, I'd still recommend spot-checking the calculations periodically, especially if you have employees who work irregular hours or receive bonuses that might push them over the threshold unexpectedly. One thing to watch out for is if you're manually entering payroll data (like the original poster mentioned doing with historical data) - in that case, you'll need to make sure you're correctly applying the wage base limits yourself since QB won't automatically know where each employee stood wage-wise when you're backfilling data.