When to pay federal unemployment tax as Washington employer - confused about timing
I'm a small business owner in Washington and I'm getting confused about when I need to pay federal unemployment tax (FUTA). I know I have to deal with Washington ESD for state unemployment taxes, but the federal side is throwing me off. My payroll company mentioned something about quarterly vs annual payments but I'm not sure what triggers which timing. Anyone else dealing with this? I don't want to mess up and get penalties.
50 comments
Join the conversation
Connor Rupert
FUTA tax is due quarterly if you owe more than $500 in any quarter. Otherwise you can pay annually by January 31st. The rate is 6% on first $7,000 of wages per employee, but you get credit for state unemployment taxes paid to Washington ESD which brings it down to 0.6% usually.
0 coins
Sophie Footman
•So if I owe less than $500 per quarter I can just wait until January? That would make things easier for my cash flow.
0 coins
Connor Rupert
•Exactly, but make sure you're calculating correctly. It's cumulative through the year, so if you hit $500 total you need to start paying quarterly.
0 coins
Molly Hansen
i think you file form 940 annually regardless but payments can be quarterly or annual depending on amount owed
0 coins
Brady Clean
•That's right - Form 940 is always annual, due January 31st. But if your FUTA liability exceeds $500 at the end of any quarter, you must deposit by the last day of the following month.
0 coins
Sophie Footman
•Got it, so it's the payment timing that changes, not the filing. Thanks for clarifying that.
0 coins
Skylar Neal
Just went through this nightmare myself. Was trying to figure out if my Washington ESD payments affected my FUTA calculations and couldn't get through to anyone at the IRS. Spent hours on hold. Finally found this service called Claimyr (claimyr.com) that helped me get connected to the right people. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works. Saved me so much time and frustration!
0 coins
Vincent Bimbach
•Wait, Claimyr helps with IRS calls too? I thought they were just for Washington ESD unemployment stuff.
0 coins
Skylar Neal
•They help with getting through to various government agencies when you're stuck on hold. Really useful when you need to talk to someone about tax questions that you can't find clear answers to online.
0 coins
Sophie Footman
•Interesting, might check that out if I run into issues. The hold times with government agencies are ridiculous.
0 coins
Kelsey Chin
The key thing to remember is that your Washington state unemployment tax rate affects your federal credit. If you're a new employer or have a high experience rating with Washington ESD, you might not get the full 5.4% credit which means higher FUTA liability.
0 coins
Sophie Footman
•How do I find out what my Washington ESD experience rating is? I've been in business for 2 years now.
0 coins
Kelsey Chin
•You should get a notice from Washington ESD each year with your experience rating. It's based on unemployment claims filed against your account. New employers usually get a standard rate for the first few years.
0 coins
Norah Quay
ugh federal and state unemployment taxes are so confusing!! why cant they just make it simple
0 coins
Connor Rupert
•I agree it's complicated, but once you understand the basic structure it becomes routine. Federal is pretty straightforward - 6% minus state credit on first $7k per employee.
0 coins
Norah Quay
•yeah but then you have to track everything separately and make sure the timing is right... just seems like unnecessary complexity
0 coins
Brady Clean
For Washington employers specifically: your SUTA rate with Washington ESD directly impacts your FUTA calculations. Make sure you're paying your Washington state unemployment taxes on time because late payments can affect your federal credit. The deposit schedule for FUTA is: if liability exceeds $500 at end of Q1, Q2, or Q3, deposit by April 30, July 31, or October 31 respectively. Q4 liability is due with your annual Form 940.
0 coins
Sophie Footman
•This is really helpful! So as long as I stay current with Washington ESD, I should get the full federal credit?
0 coins
Brady Clean
•Generally yes, assuming Washington maintains its approved status (which it does). Just make sure your SUTA payments aren't late or you could lose some credit.
0 coins
Leo McDonald
•What happens if you miss a quarterly payment deadline?
0 coins
Brady Clean
•You'll owe penalties and interest. The penalty is usually 2-15% depending on how late you are, plus interest that compounds daily.
0 coins
Vincent Bimbach
Been dealing with payroll taxes for 15 years and I still double-check the FUTA timing every quarter. The $500 threshold is cumulative for the year, not per quarter. So if you owe $300 in Q1 and $250 in Q2, you've hit $550 total and need to start making quarterly deposits.
0 coins
Sophie Footman
•Oh wow, I was thinking it was $500 per quarter. Thanks for clarifying that - could have made a costly mistake!
0 coins
Jessica Nolan
•This is exactly the kind of detail that trips people up. The IRS instructions aren't always super clear about the cumulative part.
0 coins
Angelina Farar
pro tip: set up electronic payments through EFTPS if you haven't already. makes the quarterly deposits much easier to manage
0 coins
Sophie Footman
•Good idea, I'll look into that. Is it free to use?
0 coins
Angelina Farar
•yep totally free and you can schedule payments in advance
0 coins
Sebastián Stevens
Just want to add that if you have employees in multiple states, you need to be careful about how you calculate the federal credit. But since you're in Washington, you're probably fine with the standard 5.4% credit as long as you pay your Washington ESD taxes on time.
0 coins
Sophie Footman
•All my employees are in Washington so that shouldn't be an issue. Good point though for anyone with multi-state operations.
0 coins
Bethany Groves
THE WHOLE SYSTEM IS DESIGNED TO CONFUSE SMALL BUSINESS OWNERS! They make it so complicated that you almost have to hire someone just to figure out when to pay what. Meanwhile big corporations have whole departments to handle this stuff.
0 coins
KingKongZilla
•I feel your frustration but honestly once you get the hang of it, it's not that bad. The quarterly vs annual thing is actually pretty logical.
0 coins
Bethany Groves
•Maybe for you but I've been struggling with this for months. Finally had to hire a payroll service.
0 coins
Skylar Neal
•That's when services like Claimyr really help - being able to actually talk to someone at the IRS or Washington ESD when you're confused beats trying to decipher their websites.
0 coins
Rebecca Johnston
Quick question - does the $7,000 wage base reset each year for each employee?
0 coins
Connor Rupert
•Yes, it resets January 1st. So you pay FUTA on the first $7,000 of wages per employee per calendar year.
0 coins
Rebecca Johnston
•Thanks! So if someone makes $50k, I only pay FUTA on the first $7k of their wages each year.
0 coins
Nathan Dell
I've been using a payroll service for years and they handle all this automatically. Might be worth considering if you're finding it overwhelming - the cost is usually worth the peace of mind.
0 coins
Sophie Footman
•I've been thinking about that. What do you typically pay for payroll services?
0 coins
Nathan Dell
•Depends on number of employees but usually $30-100 per month plus per-employee fees. Shop around though, prices vary a lot.
0 coins
Maya Jackson
wait so if i owe exactly $500 do i have to pay quarterly or can i wait until january?
0 coins
Brady Clean
•If you owe more than $500 (not including $500), you must deposit quarterly. So exactly $500 means you can wait until January 31st with your Form 940.
0 coins
Maya Jackson
•ok good to know, thanks!
0 coins
Tristan Carpenter
Another thing to watch out for - if Washington state ever loses its approved status for unemployment insurance (very unlikely but possible), your federal credit could be reduced. This happened to some states during the recession when their unemployment trust funds were depleted.
0 coins
Sophie Footman
•Is there any way to check Washington's status? I'd hate to be caught off guard by something like that.
0 coins
Tristan Carpenter
•The Department of Labor publishes a list annually. Washington has been in good standing for years though, so it's not something to lose sleep over.
0 coins
Amaya Watson
Form 940 is actually one of the easier tax forms once you understand it. The hard part is just keeping track of the payment timing throughout the year.
0 coins
Sophie Footman
•Yeah I think I was overcomplicating it in my head. Seems pretty straightforward now that everyone has broken it down.
0 coins
Grant Vikers
One last tip - keep good records of all your Washington ESD payments throughout the year. You'll need those amounts when you file Form 940 to calculate your credit. Makes the year-end filing much smoother.
0 coins
Sophie Footman
•Good point, I'll make sure to save all those payment confirmations. Thanks everyone for all the help - this thread has been incredibly useful!
0 coins
Skylar Neal
•Glad we could help! And seriously, if you ever need to actually talk to someone at the IRS or Washington ESD about any of this stuff, check out that Claimyr service I mentioned. Game changer for getting through government phone systems.
0 coins