Unemployment Tax when S Corp paying wages to owner

[Bonnie]

I am doing some work for a local business and there are 2 owners who each draw wages for working at the business. Would they be required to pay unemployment for themselves? Thinking not since they are the owners and would not fire or lay themselves off. Don't want to do this wrong so just checking for others advice since I have not had this before. I do mostly individual returns and just a few S Corp and Partnerships. This is new to me so appreciate any help

[TaxGuyBill]

Federal Unemployment (Form 940): YES, it is required.

State Unemployment: It probably depends on your State. It is not required in my State (Minnesota), but it is an option. In my State, an owner can claim unemployment if they are 'laid off' because business really slowed down.

[kathyc2]

It is not required in my State (Minnesota), but it is an option. In my State, an owner can claim unemployment if they are 'laid off' because business really slowed down.

If the shareholder opts out of MN SUTA doesn't that then make the FUTA rate 6% instead of .6%?

[Jiggers]

Yes for the 940.

Yes if the wages are in Texas. Texas requires unemployment tax to be paid on all employees, even S-Corp and C-Corp shareholders. The bad part is that the only way that the shareholder to draw unemployment in Texas is to shut the corportion down and dissolve.

[TaxGuyBill]

If the shareholder opts out of MN SUTA doesn't that then make the FUTA rate 6% instead of .6%?

Yes. Depending on circumstances, MN SUTA can be less than 5.4%, so it's usually not an advantage to turn down SUTA (except for the extra filing work).

[Super Mom]

In NC, state unemployment is required, however if the business goes out, the owner can get unemployment.