EmploymentQuestion 967 of 1605
The Federal Unemployment Tax Act (FUTA) imposes a payroll tax. Who pays it?
a.Split evenly between employer and employee
b.Only the self-employed
c.The employee, through wage withholding
d.The employer only; it is not withheld from employee wages
Explanation
FUTA is an employer-only federal payroll tax that funds the federal share of unemployment programs; it is not withheld from employee wages. Employers who pay their state unemployment (UI) taxes on time generally receive a substantial FUTA credit. This mirrors California's UI tax, which is likewise employer-paid, not employee-withheld.
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