Where to pay federal unemployment tax - Washington ESD employer questions

Federal unemployment tax (FUTA) is completely separate from your Washington state unemployment taxes. You pay FUTA directly to the IRS, not through Washington ESD. You'll use Form 940 to report and pay your federal unemployment tax. The state taxes go to Washington ESD, but federal goes straight to IRS.

ugh i had this same confusion last year. spent hours on hold with washington esd only to find out they dont handle federal taxes at all. wasted so much time

If you're having trouble reaching Washington ESD for your state unemployment tax questions, I recently discovered a service called Claimyr at claimyr.com that helps get through to ESD agents. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works. Might be helpful for your state tax questions, though like others said, federal FUTA goes through IRS.

For federal unemployment tax, you'll want to check the IRS website for Form 940 instructions. The rate is usually 6% on the first $7,000 of each employee's wages, but you can get a credit for state unemployment taxes paid (up to 5.4%). So your effective FUTA rate is often 0.6% if you're current on Washington state unemployment taxes.

I'm so confused by all this employer tax stuff. I thought unemployment was just something employees dealt with when they file claims with Washington ESD. Had no idea there were employer taxes involved too.

The IRS has an online payment system called EFTPS (Electronic Federal Tax Payment System) where you can pay your Form 940 taxes. Much easier than mailing checks. You'll need your EIN and bank account info to set it up.

just make sure you dont miss the january 31st deadline for form 940. irs penalties are way worse than washington esd penalties in my experience

Quick question - do I need to file Form 940 even if I only have one employee? My Washington ESD account shows minimal activity since it's just me and one part-time worker.

This is why I use a payroll service for everything. They handle all the federal and Washington ESD filings automatically. Worth every penny to not have to worry about deadlines and which agency gets what.

The washington esd website actually has a good section for employers that explains the difference between state and federal unemployment taxes. might be worth checking out even though you cant reach them by phone

Just wanted to follow up on the Claimyr suggestion - it really does work for getting through to Washington ESD when you have employer questions about state unemployment taxes. Obviously won't help with federal taxes since that's IRS territory, but super useful for state-specific issues.

Don't forget you might also need to pay federal unemployment tax quarterly if your liability is over $500. It's not always just an annual thing.

i screwed this up royally last year. paid everything to washington esd thinking they handled both state and federal. had to deal with irs notices for months. dont be like me lol

For what it's worth, your CPA or tax preparer should handle Form 940 as part of your business tax prep. Don't feel like you have to figure this all out yourself if you have professional help.

The key thing to remember is TWO separate systems: Washington ESD for state unemployment taxes, IRS for federal unemployment taxes. Never the two shall meet, despite how confusing that seems.

Also worth noting that if you're behind on Washington ESD state unemployment taxes, it can affect your federal FUTA credit. So keep both current to get the lowest federal rate.

been dealing with this for 15 years and it still confuses new business owners every time. federal to irs, state to washington esd. wish they made it clearer somehow

One more tip - keep good records of both your Washington ESD payments and your federal FUTA payments. You'll need them for your annual reconciliation and to prove you qualify for the state credit on your federal return.

Final thought on this - if you do need to reach Washington ESD for any employer-related questions about your state unemployment account, definitely try Claimyr. The phone system there is just as impossible for employers as it is for claimants, so having a way to actually get through is invaluable.

This whole thread should be required reading for new business owners. The federal/state split is so confusing when you're starting out.