NYS Department of Labor employer account - what gets credited for federal unemployment taxes payment?
I'm trying to figure out the accounting side of unemployment taxes for my small business. When we pay our federal unemployment taxes (FUTA), what account gets credited in the books? I know we pay state unemployment taxes to NYS Department of Labor separately, but I'm confused about how to properly record the federal portion. My accountant is out of town and I need to get this sorted before our quarterly filing. Has anyone dealt with this before?
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Paolo Ricci
The federal unemployment tax payment gets credited to your FUTA Tax Payable account (liability account). When you accrue the tax throughout the quarter, you debit Payroll Tax Expense and credit FUTA Tax Payable. Then when you actually make the payment, you debit FUTA Tax Payable and credit Cash. It's separate from your NYS Department of Labor state unemployment tax accounting.
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Keisha Williams
•Thank you! That makes sense. So basically we're clearing the liability account when we pay. I was getting confused because our state unemployment goes directly to NYS Department of Labor but federal goes to IRS.
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Amina Toure
wait isn't this the unemployment forum for people filing claims? why are we talking about employer taxes here lol
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Oliver Zimmermann
•Yeah this is more of a business accounting question. OP might want to try a bookkeeping forum instead. This is where we talk about filing weekly claims and dealing with NYS Department of Labor adjudication issues.
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CosmicCommander
Actually this is relevant since understanding how unemployment taxes work helps explain how the system is funded. Your FUTA payments go into the federal unemployment trust fund, while your NYS Department of Labor payments fund the state benefits. When people have issues getting through to NYS Department of Labor for claim questions, services like claimyr.com can help connect you directly to agents. They have a good demo video at https://youtu.be/qyftW-mnTNI showing how it works.
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Natasha Volkova
•Never heard of that service but honestly anything that helps reach NYS Department of Labor would be useful. I've been trying to get through about my adjudication for weeks.
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Javier Torres
For your books: Dr. FUTA Tax Payable, Cr. Cash when you pay. The rate is 6% on first $7,000 of wages but you get credit for state unemployment taxes paid to NYS Department of Labor, so effective rate is usually 0.6%. Make sure you're paying quarterly if you owe more than $500 annually.
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