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Publication 80
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taxmap/pubs/p80-011.htm#en_us_publink1000234037

11. Federal Unemployment (FUTA) Tax—U.S. Virgin Islands Employers Only(p16)

rule
Federal Unemployment (FUTA) Tax - U.S. Virgin Islands Employers Only
The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only the employer pays FUTA tax; it is not withheld from your employees' wages. For more information, see the Instructions for Form 940.
You must file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, if you are subject to FUTA tax under the following rules.
taxmap/pubs/p80-011.htm#en_us_publink1000234038

In general.(p16)

rule
You are subject to FUTA tax in 2011 on the wages you pay employees who are not farmworkers or household workers if:
  1. You paid wages of $1,500 or more in any calendar quarter of 2010 or 2011, or
  2. You had one or more employees for at least some part of a day in any 20 or more different weeks in 2010 or 20 or more different weeks in 2011.
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Household workers.(p16)

rule
You are subject to FUTA tax only if you paid total cash wages of $1,000 or more (for all household workers) in any calendar quarter in 2010 or 2011.
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Farmworkers.(p16)

rule
You are subject to FUTA tax on the wages that you pay to farmworkers in 2011 if:
To determine whether you meet either test above, you must count wages paid to aliens admitted on a temporary basis to the United States to perform farmwork, also known as "H-2(A)" visa workers. However, wages paid to "H-2(A)" visa workers are not subject to the FUTA tax.
In most cases, farmworkers supplied by a crew leader are considered employees of the farm operator for FUTA tax purposes. However, this is not the case if either of the following applies and the crew leader is not an employee of the farm operator.
  1. The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act.
  2. Substantially all of the workers supplied by the crew leader operate or maintain tractors, harvesting or cropdusting machines, or other machines provided by the crew leader.
If (1) or (2) applies, the farmworkers are generally employees of the crew leader.
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Computing FUTA rate.(p16)

rule
Before July 1, 2011, the FUTA tax rate is 6.2%. After June 30, 2011, the FUTA tax rate is scheduled to decrease to 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. Generally, you may take a credit of 5.4% against the FUTA tax for payments to U.S. Virgin Islands unemployment funds. Therefore, your actual tax rate is usually 0.8% (6.2% − 5.4%) for wages paid before July 1, 2011. For wages paid after June 30, 2011, the actual tax rate is 0.6% (6.0% – 5.4%). However, your credit is reduced if you did not pay all required U.S. Virgin Islands unemployment tax by the due date of Form 940 or if all your FUTA wages are not subject to U.S. Virgin Islands unemployment tax. The credit cannot be more than 5.4% of taxable FUTA wages.
taxmap/pubs/p80-011.htm#en_us_publink1000234043

Form 940.(p16)

rule
By January 31, 2011, file Form 940. If you made all FUTA tax deposits on time, you may file Form 940 by February 10, 2011. Once you have filed Form 940, the IRS will send you a preaddressed form.
taxmap/pubs/p80-011.htm#en_us_publink1000234044

Deposits.(p16)

rule
For deposit purposes, figure FUTA tax quarterly. Determine your FUTA tax liability by multiplying the amount of taxable wages paid during the quarter by 0.8% (0.6% after June 30, 2011). Stop depositing FUTA tax on an employee’s wages when he or she reaches $7,000 in taxable wages for the calendar year. If your FUTA tax liability for any calendar quarter is $500 or less, you do not have to deposit the tax. Instead, you may carry it forward and add it to the liability figured in the next quarter to see if you must make a deposit. If your FUTA tax liability for any calendar quarter is over $500 (including any FUTA tax carried forward from an earlier quarter), you must deposit the tax by electronic funds transfer. See section 8 for more information on deposits.
taxmap/pubs/p80-011.htm#en_us_publink1000234045

12. Special Rules for Various Types of Employment and Payments

The following table summarizes the treatment of special classes of employment and special types of payments. Employers who need more detailed information should consult their Internal Revenue Service representative or see the Employment Tax Regulations.
Special Classes of Employment
and Special Types of Payments 		Treatment Under Employment Taxes
Social Security
and Medicare 		Federal Unemployment
(U.S. Virgin Islands Only)
Agricultural labor:   
1. Service on farm in connection with cultivating soil; raising or harvesting any agricultural or horticultural commodity; the care of livestock, poultry, bees, fur-bearing animals, or wildlife. Taxable if $150 test or $2,500 test in section 6 is met.Taxable if either test in section 11 is met.
2. Service in employ of owner or operator of farm if major part of the services are performed on farm, in management or maintenance, etc., of farm, tools, or equipment, or in salvaging timber, or clearing brush and other debris left by hurricane. Taxable if $150 test or $2,500 test in section 6 is met.Taxable if either test in section 11 is met.
3. In connection with the production and harvesting of turpentine and other oleoresinous products.Taxable if $150 test or $2,500 test in section 6 is met.Taxable if either test in section 11 is met.
4. Cotton ginning.Taxable if $150 test or $2,500 test in section 6 is met.Taxable if either test in section 11 is met.
5. In connection with hatching of poultry.Taxable (not farmwork if performed off farm).*Taxable if either test in section 11 is met.
6. In operation or maintenance of ditches, canals, reservoirs, or waterways used only for supplying or storing water for farming purposes and not owned or operated for profit. Taxable if $150 test or $2,500 test in section 6 is met.Taxable if either test in section 11 is met.
7. In processing, packaging, delivering, etc., any agricultural or horticultural commodity in its unmanufactured state:  
  a. In employ of farm operator.If operator produced over half of commodity processed, taxable if $150 test or $2,500 test in section 6 is met; otherwise taxable (not farmwork).* If employer produced over half of commodity processed, taxable if either test in section 11 is met; otherwise taxable (not farmwork).
  b. In employ of unincorporated group of farm
  operators (never more than 20). 		If group produced all commodity processed, taxable if $150 test or $2,500 test in section 6 is met; otherwise taxable (not farmwork).* If employer produced over half of commodity processed, taxable if either test in section 11 is met; otherwise taxable (not farmwork).
  c. In employ of other groups of farm operators
  (including cooperative organizations and   commercial handlers). 		Taxable (not farmwork).*If employer produced over half of commodity processed, taxable if either test in section 11 is met; otherwise taxable (not farmwork).
8. Handling or processing commodities after delivery to terminal market for commercial canning or freezing.Taxable (not farmwork).*Taxable (not farmwork).
Aliens:  
1. Resident  
  a. Service performed in U.S.**Same as U.S. citizen; exempt if any part of service as crew member of foreign vessel or aircraft is performed outside U.S.Same as U.S. citizen.
  b. Service performed outside U.S.**Taxable if: (a) working for an American employer or (b) an American employer by agreement with the IRS covers U.S. citizens and residents employed by its foreign affiliates, or subsidiary of an American employer. Exempt unless on or in connection with an American vessel or aircraft and either performed under contract made in U.S. or alien is employed on such vessel or aircraft when it touches U.S. port.
* Wages for services not considered farmwork are reported on Form 941-SS or Form 944-SS. Other exemptions may apply. See sections 4 and 9.
* * Benefits provided under cafeteria plans may qualify for exclusion from wages for social security, Medicare, and FUTA taxes.
Special Classes of Employment
and Special Types of Payments 		Treatment Under Employment Taxes
Social Security
and Medicare 		Federal Unemployment
(U.S. Virgin Islands Only)
Aliens (continued):   
2. Nonresidents working in U.S.*  
  a. Workers lawfully admitted under section
  101(a)(15)(H)(ii)(a) of the Immigration
  and Nationality Act on a temporary
  basis to perform agricultural labor
  ("H-2(A)" workers). 		Exempt.Exempt.
  b. Student, scholar, trainee, teacher, etc.
  as nonimmigrant alien under section
  101(a)(15)(F),(J), (M), or (Q) or Philippine
  resident admitted to Guam or CNMI
  under section 101(a)(15)(H)(ii) of the
  Immigration and Nationality Act or parallel
  provision of immigration law in CNMI. 		Exempt if service is performed for purposes specified in section 101(a)(15)(F), (H), (J), (M), or (Q) of the Immigration and Nationality Act or parallel provisions of immigration law in CNMI. However, these taxes may apply if the employee becomes a resident alien.
  c. Korean resident admitted to Guam under section 101(a)(15)(H)(ii) of the Immigration and Nationality Act.Exempt if service is performed for purposes specified in section 101(a)(15)(H)(ii) of the Immigration and Nationality Act. However, these taxes may apply if the employee becomes a resident alien.
Exempt
  d. All other nonresidents working in U.S. *Same as U.S. citizen; exempt if any part of service as crew member of foreign vessel or aircraft is performed outside U.S. and employer is not American employer. Same as U.S. citizen
3. Nonresident working on American vessel or aircraft outside U.S.*Taxable if under contract made in U.S. or worker is employed on vessel or aircraft when it touches U.S. port.
Deceased worker's wages:  
1. Paid to beneficiary or estate in calendar year of worker's death.Taxable.Taxable.
2. Paid to beneficiary or estate after the year of worker's death.Exempt.Exempt.
Dependent care assistance programs (limited to $5,000; $2,500 if married filing separately). Exempt to the extent that it is reasonable to believe that amounts will be excludable from gross income under Internal Revenue Code (IRC) section 129.
Disabled worker's wages paid after the year in which worker became entitled to disability insurance benefits under the Social Security Act. Exempt if worker did not perform any service for employer during period for which payment is made.Taxable.
Domestic service in college clubs, fraternities, and sororities.Exempt if paid to regular student; also exempt if employee is paid less than $100 in a year by an income-tax-exempt employer.Taxable if employer paid total cash wages of $1,000 or more (for all household employees) in any calendar quarter in the current or preceding year.
Employee achievement awards.Exempt to the extent it is reasonable to believe the amounts will be excludable from gross income under IRC section 74(c).
Family employees:   
1. Child employed by parent (or by partnership in which each partner is a parent of the child).Exempt until age 18.Exempt until age 21.
2. Child employed by parent for domestic work or not in the course of a trade or business.Exempt until age 21.Exempt until age 21.
3. Parent employed by child.Taxable if in course of the child's business. For household work in private home of child, see Pub. 926.Exempt.
4. Spouse employed by spouse.Taxable if in course of spouse's business.Exempt.
Federal employees:   
1. Members of uniformed services; Young Adult Conservation Corps, Job Corps, or National Volunteer Antipoverty Program; Peace Corps volunteers and volunteer leaders. Taxable.Exempt.
2. All others.Taxable if employee is covered by FERS or has a break in service of more than one year (unless the break in service was for temporary military or reserve duty). Others generally subject to Medicare tax. Exempt unless worker is a seaman performing services on or in connection with American vessel owned by or chartered to the United States and operated by general agent of Secretary of Commerce.
* U.S. includes U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
Special Classes of Employment
and Special Types of Payments 		Treatment Under Employment Taxes
Social Security
and Medicare 		Federal Unemployment
(U.S. Virgin Islands Only)
Fishing and related activities, employment in connection with catching, harvesting, farming, etc.:   
1. Salmon or halibut.Taxable unless 3 applies.Taxable unless 3 applies.
2. Other fish and other aquatic forms of animal and vegetable life.Taxable unless 3 applies.Exempt unless on vessel of more than 10 net tons and 3 does not apply.
3. An arrangement with the owner or operator of the boat by which the individual receives a share of the boat's catch (or proceeds from the sale of the catch), the share depending on the boat's catch, and operating crew of the boat is normally fewer than 10 individuals.* Exempt if any cash remuneration is:

(a) $100 or less,
(b) contingent on minimum catch, and
(c) paid solely for additional duties (such as mate, engineer, or cook for which cash
   remuneration is traditional).
Foreign governments and international organizations.Exempt.Exempt.
Foreign service by U.S. citizens:  
1. As U.S. Government employee.Same as within U.S.Exempt. See also Federal employees on page 18.
2. For foreign affiliates or subsidiaries of American employers and other private employers.Exempt unless (a) an American employer by agreement with the IRS covers U.S. citizens employed by its foreign affiliates or subsidiaries or (b) U.S. citizen works for American employer. Exempt unless (a) on American vessel or aircraft and work is performed under contract made in U.S. or worker is employed on vessel when it touches U.S. port, or (b) U.S. citizen works for American employer (except in a contiguous country with which the U.S. has an agreement for unemployment compensation) or in the U.S. Virgin Islands.
Fringe benefits. Taxable on excess of fair market value of the benefit over the sum of an amount paid for it by the employee and any amount excludable by law. However, optional special valuation rules may apply.** See Publication 15-B for details.
Government employees (other than federal).


U.S. Virgin Islands.


American Samoa and political subdivisions.


Guam and Commonwealth of Northern Mariana Islands and political subdivisions. 		(See IRC section 3121(b)(7) or visit www.socialsecurity.gov.

Taxable if covered by Section 218 Agreement with SSA.

Taxable, unless employee covered by a retirement system.

Exempt, except for certain temporary and intermittent employees.


Exempt.


Exempt


Exempt
Group-term life insurance costs. See Publication 15-B for details. Exempt, except for the cost of premiums that provide more than $50,000 coverage.Exempt.
Homeworkers (industrial, cottage-industry):   
1. Common law employees.Taxable.Taxable.
2. Statutory employees. See section 1.Taxable if paid $100 or more in cash in a year.Exempt.
Hospital interns. Taxable.Exempt.
Household workers (domestic service in private homes). Also see Domestic service in college clubs, fraternities, and sororities on page 18. Taxable if paid $1,700 or more in cash in 2011. Exempt if performed by an individual who is under age 18 during any part of the calendar year and the work is not the principal occupation of the employee. Taxable if employee paid total cash wages of $1,000 or more (for all household employees) in any calendar quarter in the current or preceding year.
Insurance agents or solicitors:   
1. Full-time life insurance salesperson.Taxable.Taxable if employee under common law and not paid solely by commissions (applies to both 1 and 2).
2. Other salesperson of life, casualty, etc., insurance.Taxable only if employee under common law.
Interest foregone on below-market loans related to compensation and deemed original issue discount. See IRC section 7872 and its regulations for details. See Publication 15-A.
Meals and lodging furnished free or at a discounted price to the employee. For household employees, agricultural labor, and service not in the course of the employer's trade or business, see Noncash payments on page 20. (a) Meals—Taxable unless furnished for employer's convenience and on the employer's premises. For information on the de minimis fringe exclusion, see IRC section 132(e).
(b) Lodging—Taxable unless furnished on employer's premises, for the employer's convenience, and as condition of employment.
Ministers of churches performing duties as such. Exempt.Exempt.
* Income derived by Native Americans exercising fishing rights is generally exempt from employment taxes.
* * Benefits provided under cafeteria plans may qualify for exclusion from wages for social security, Medicare, and FUTA taxes.
Special Classes of Employment
and Special Types of Payments 		Treatment Under Employment Taxes
Social Security
and Medicare 		Federal Unemployment
(U.S. Virgin Islands Only)
Moving expense reimbursement:  
1. Qualified expenses.Exempt unless you have knowledge that the employee deducted the expenses in a prior year.
2. Nonqualified expenses.Taxable.Taxable.
Newspaper carrier under age 18 delivering directly to readers. Exempt.Exempt.
Newspaper and magazine vendors buying at fixed prices and retaining excess from sales to customers.Exempt.Exempt.
Noncash payments:   
1. For household work, agricultural labor, and service not in the course of the employer's trade or business.Exempt.Exempt.
2. To certain retail commission salespersons ordinarily paid solely on a cash commission basis.Taxable.Taxable.
Nonprofit organizations:   
1. Religious, educational, charitable, etc., organizations described in IRC section 501(c)(3) exempt from income tax under IRC section 501(a). Taxable if paid $100 or more in a year. (See Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes, for election out of social security and Medicare coverage for certain churches and church-controlled organizations.) Exempt.
2. Corporations organized under Act of Congress described in IRC section 501(c).Taxable if employee is paid $100 or more in a year unless services excepted by IRC section 3121(b)(5) or (6).Taxable if employee is paid $50 or more in a quarter unless services excepted by IRC section 3306(c)(6).
3. Other organizations exempt under IRC section 501(a) (other than a pension, profit-sharing, or stock bonus plan described in IRC section 401(a)) or under IRC section 521. Taxable if employee is paid $100 or more in a year.Taxable if employee is paid $50 or more in a quarter.
Partners: Bona fide members of a partnership. Exempt.Exempt.
Patients employed by hospitals.Taxable (exempt for state or local government hospitals).Exempt.
Religious orders: Members who are instructed by the order to perform services:   
1. For the order, agency of the supervising church, or associated institution.Exempt unless member has taken a vow of poverty and the religious order or its autonomous subdivision irrevocably elects coverage for entire active membership. Exempt.
2. For any organization other than those described in 1 above.Taxable.Taxable.
Retirement and pension plans: See Publication 15-A for details and information on employer contributions to nonqualified deferred compensation arrangements.
1. Employer contributions to a qualified plan.Exempt.Exempt.
2. Elective employee contributions and deferrals to a plan containing a qualified cash or deferred compensation arrangement (for example, 401(k)). Taxable.Taxable.
3. Employee salary reduction contributions to a SIMPLE retirement account.Taxable.Taxable.
4. Employer contributions to individual retirement accounts under a simplified employee pension (SEP) plan.Exempt except for amounts contributed under a salary reduction SEP agreement.
5. Employer contributions to IRC section 403(b) annuity contracts.Taxable if paid through a salary reduction agreement (written or otherwise).
Special Classes of Employment
and Special Types of Payments 		Treatment Under Employment Taxes
Social Security
and Medicare 		Federal Unemployment
(U.S. Virgin Islands Only)
Retirement and pension plans: (continued)

  
6. Distributions from qualified retirement and pension plans and section 403(b) annuities.Exempt.Exempt.
Salespersons:   
1. Common law employees.Taxable.Taxable.
2. Statutory employees (referred to in section 1).Taxable.Taxable except for full-time life insurance sales agents.
3. Statutory nonemployees (qualified real estate agents and direct sellers).Exempt. Treated as self-employed individuals if substantially all payments directly related to sales or other output and services performed as nonemployees specified in written contract. Direct sellers must be in the business of selling consumer products other than in a permanent retail place of business.
Scholarships and fellowship grants (includible in income under section 117(c)). Taxability depends on the nature of the employment and the status of the organization. See Students below.
Severance or dismissal pay. Taxable.Taxable.
Service not in the course of the employer's trade or business, other than on a farm operated for profit or for household employment in private homes. Taxable if employee is paid $100 or more in cash in a year.Taxable only if employee is paid $50 or more in cash in a quarter and works on 24 or more different days in that quarter or in the preceding quarter.
Sickness or injury payments under:   
1. Worker's compensation law.Exempt.Exempt.
2. Certain employer plans.Exempt after end of six calendar months after calendar month employee last worked for
employer (applies to both 2 and 3). See Publication 15-A for details.
3. No employer plan.
Students:   
1. Student enrolled and regularly attending classes (generally, at least half time or equivalent) while pursuing course of study, performing services for:   
  a. Private school, college, or university.Exempt.Exempt.
  b. Auxiliary nonprofit organization operated for
  and controlled by school, college, or
  university. 		Exempt unless services are covered by a section 218 (Social Security Act) agreement.Exempt.
  c. Public school, college, or university.Exempt unless services are covered by a section 218 (Social Security Act) agreement.Exempt.
2. Full-time student performing service for academic credit, combining academic instruction with work experience as an integral part of the program. Taxable.Exempt unless program was established for or on behalf of an employer or group of employers.
3. Student nurse performing part-time services for nominal earnings at hospital as incidental part of training.Exempt.Exempt.
4. Student employed by organized camps.Taxable.Exempt.
Supplemental unemployment compensation benefits. Exempt under certain conditions. See Publication 15-A.Exempt under certain conditions. See Publication 15-A.
Tips:   
1. If $20 or more in a month.Taxable.Taxable for all tips reported in writing to employer.
2. If less than $20 in a month.Exempt.Exempt.
Worker's compensation.Exempt.Exempt.
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