The unemployment tax in the United States was enacted with the Federal Unemployment Tax Act. The jobless tax helps to fund workforce agencies which can assist the jobless in finding suitable work. The employer may be required to file the unemployment tax quarterly, depending on the type of business.
The Unemployment tax is used to fund unemployment programs which can assist those that are jobless in finding suitable work or in determining which type of work they would like to do.
The fund is also used to pay one half of extended unemployment benefits, with the other half being the responsibility of the state where the unemployed individual resides. States may also borrow money from this fund if they should have a number of individuals claiming unemployment benefits.
There are some types of wages that are exempt form the Federal unemployment tax. In general, there is a tax of around six percent of an individual’s salary, but only to a threshold of around seven thousand dollars. Once the worker reaches that salary, the employer no longer has to pay the federal unemployment tax.
Wages that are exempt from the federal unemployment tax include those which are paid for work performed in another country. Wages paid to family members, including children to parents or parents to children, are also exempt form the tax.
Wages paid to an employee, directly from the government, are also exempt from the tax. There are in fact a variety of wages which are exempt from the tax. Yet, in some cases those individuals may be unable to collect unemployment benefits, such as independent contractors.