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Do We Have To Pay FUTA Payments

Hi Linda,

We have an LLC being taxed as an SCorp. My husband is 70% ownership and I am 30% ownership. In our state we was able to opt out of the state unemployment paying but we are told that we have to pay FUTA to the federal govt at the 6.2% rate. We called the IRS and asked them if we had to pay the FUTA since we are the owners of the LLC being taxed as an SCorp and the one I was talking to said that we did not have to pay FUTA because we was the owners even though we was being paid a check for working and would receive a W2. He then asked his supervisor and he said that we did not have to pay as well. A friend of ours works for the IRS and emailed a fellow worker that handles that aspect for the IRS and she says that we have to pay FUTA. Both parties work for the IRS but they both gave us conflicting advise of what we needed to do. Do you have any idea what we would need to do so as we won't get into any trouble when it comes to this situation? Any advise would be greatly appreciated.

Thank You
Teresa

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Futa

Hi, I was doing some research on this topic, and came across your post. Please let me know if you have any more information about FUTA for an LLC taxed as an S-Corp.

Thanks

FUTA for LLC Taxed as S Corp

Yes, you do need to pay the 6.0% FUTA. (0.6% on Part 2 of Form 940 and 5.4% on Part 3)

When you elect to tax your LLC as an S-Corp, it must follow all the S corp rules for all tax types: Income, Employment, Excise...whatever.

Some states still treat the LLC as an owner for employment tax purposes even though they are taxed as an employee through payroll and there's no state UI tax. It is quite confusing.

It's possible the IRS representatives didn't understand that your LLC is taxed as an S-Corp, or they didn't know. There's been a lot of turn-over & brain drain at the IRS.

So the good news is the 6% only applies to the first $7000 of wages. That's still $420 per owner/employee. You might see if opting back in to your state program would save you anything.

Hope this helps.
L:)

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