APA Certified Payroll Professional (CPP) 2026 – 400 Free Practice Questions to Pass the Exam

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When employers are determining their quarterly FUTA tax liability for the first three calendar quarters, what should they assume?

A. 6.0% of their FUTA taxable wages will be due each quarter

B. 5.4% of their FUTA taxable wages will be due each quarter

C. No deposits should be made until the 4th quarter when they file their annual 940

D. 0.6% of their FUTA taxable wages will be due each quarter

When employers are determining their quarterly Federal Unemployment Tax Act (FUTA) tax liability, they should assume that 0.6% of their FUTA taxable wages will be due each quarter. This reflects the effective FUTA tax rate after accounting for the standard credit employers receive for state unemployment taxes (SUTA) paid, which reduces the effective rate from the statutory rate of 6.0% to 0.6%.

Employers are liable for FUTA taxes on a quarterly basis, and while they calculate and accumulate their payroll expenses to assess their FUTA tax liability, only the 0.6% rate is used for the calculation during the first three quarters. This approach allows employers to prepare for any required payments and reporting before the end of the calendar year when they file their annual Form 940.

Understanding this percentage is crucial for prudent financial planning and compliance, as it ensures that employers are accurately setting aside funds to meet their unemployment tax obligations and avoid any penalties associated with underpayment.