When must a contractor deposit FUTA taxes if their liability exceeds a certain amount?

The requirement for a contractor to deposit Federal Unemployment Tax Act (FUTA) taxes depends on their accumulated tax liability during the previous year. If a contractor's FUTA tax liability for the previous year exceeds a threshold of $500, they are required to make deposits on a quarterly basis. This structured timeline ensures that federal funds are replenished regularly, supporting unemployment benefits for those in need.

Understanding the deposit schedule is crucial for compliance with federal tax regulations. While some businesses may have lower liabilities that allow for annual or monthly payment schedules, once the liability exceeds the specified amount, the quarterly obligation becomes mandatory. Weekly deposits are typically reserved for employers with significantly larger payrolls and tax liabilities, making them unnecessary for most contractors. By adhering to the quarterly deposit requirement, contractors can avoid potential penalties and ensure they are meeting their tax obligations in a timely manner.