Futa and Unemployment factors for an LLC taxed as a S corp. Both Kansas and MI state that they do not collect unemployment and the owners are not allowed to draw unemployment. How is Futa Affected? Please give me some of your experiences.
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Interesting Question
I believe its the same problem in Minnesota. An owner cannot draw unemployment, neither does he have to pay in. However, if he doesn't pay in then he pays a larger FUTA tax. Ordinarily you get a credit of your state taxes against FUTA. If you don't pay in, the FUTA tax is much larger. This is as I understand it. Maybe others know more. -
Corporation is Separate Entity
From what you say, it might depend on the state. From your handle, it may appear you are one of those Crimson Tide people.
I don't think any state will allow you to pay unemployment premiums on a spouse or child if you are a proprietorship. The state has to weigh the upside of collecting premiums versus the likelihood of having to pay out unemployment benefits. I believe the experience is different if the employer is a corporation. My state (TN) requires unemployment to be paid on every corporate employee, even 100% owners and their families. For proprietorships, owners and families are exempt.
I believe the FUTA people follow the same guidelines. Taxable under FUTA if the employee is a corporation, exempt if a partnership or proprietorship. Maximum effect per employee is $56 per year.
By the way, looks like this is your first post. Welcome!! We do our best to answer questions and have just a bit of fun too.Comment
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Futa
If the owner(s) is/are drawing salary, then that salary is subject to FUTA, whether or not
a state subjects said salary to SUTA or not. Whether or not such an owner (for example
myself as sole shareholder/general manager/president/employee of an S corp) can collect
unemployment should i suddenly declare myself redundant doesn't matter. My salary is
still subject to Alabama unemploymen tax up to the first $8,000 per annum.ChEAr$,
Harlan Lunsford, EA n LAComment
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