Q. If we have a Supplemental Unemployment Pay Plan to supplement unemployment benefits, do the company and the employee have to pay FICA and FUTA taxes on the supplemental pay?
A. No. FICA (Federal Insurance Contributions Act) is the payroll tax imposed by the federal government on employees and employers to fund Social Security and Medicare. FUTA (Federal Unemployment Tax Act) is the payroll tax imposed only on the employer to help fund unemployment .
If your Supplemental Unemployment Pay Plan is properly structured, you do not pay the employer’s share of the FICA and FUTA taxes, and the employee does not have withholding for FICA. The Supplemental Unemployment Pay Plan must comply with Revenue Ruling 56-249, 1956-1, C.B. 488.
However, the supplemental pay benefit will be subject to federal and state income tax withholding.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/9126/if-we-supplement-unemployment-comp-benefits-must-we-pay-ficafuta-on-it "
- How do we know if we must pay interns?
- Solidify an independent contractor's status by proving he turned down employee job offer
- Sterling Jewelers faces EEOC class-action discrimination suit
- Just-departed worker owes us money: Can we dock (or withhold) his final paycheck?
- Need cash for IRA deposits? Ask Uncle Sam