Page 268 - Essentials of Payroll: Management and Accounting

CHAPTER 10
Unemployment Insurance

After reading this chapter you will be able to

• Understand the structure of the federal unemployment
tax system
• Know which labor categories are exempt from federal
unemployment taxes
• Know how to deposit federal unemployment taxes
• Know how to fill out annual federal unemployment tax

returns

ederal and state unemployment taxes were initiated in order to cre-

ate unemployment funds,which give former employees some money
Fto tide them over until they can find work again. The laws sup-
porting these actions were the Social Security Act and the Federal
Unemployment Tax Act.
Benefits are paid by the state-sponsored programs, which require a
short waiting period (usually a week, plus the vacation, holiday, and sev-
erance pay portion of any final payment) before payments can be made

to unemployed persons. The amount paid is a percentage of a person’s
former pay, up to a low maximum level. If an employee looks for work
and proves it by reporting back to the state agency, then payments can

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