skip navigation

Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

FAQs
Forms
Publications
Tax Topics

Comments
About Tax Map

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

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

rule
The Federal Unemployment Tax Act, 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 if you are subject to federal unemployment (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 2014 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 2013 or 2014, or
  2. You had one or more employees for at least some part of a day in any 20 or more different weeks in 2013 or 20 or more different weeks in 2014.
taxmap/pubs/p80-011.htm#en_us_publink1000234039

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 2013 or 2014.
taxmap/pubs/p80-011.htm#en_us_publink1000234040

Farmworkers.(p16)

rule
You are subject to FUTA tax on the wages that you pay to farmworkers in 2014 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-2A" visa workers. However, wages paid to "H-2A" visa workers are not subject to 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.
taxmap/pubs/p80-011.htm#en_us_publink1000234041

Computing FUTA tax rate.(p16)

rule
For 2014, the FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. Your wage base in the U.S. Virgin Islands may be different.
Generally, you can take a credit against your FUTA tax for amounts you paid into U.S. Virgin Islands unemployment funds. The credit may be as much as 5.4% of wages subject to FUTA tax. If you are entitled to the maximum 5.4% credit, the FUTA tax rate after the credit is 0.6%. You are entitled to the maximum credit if you paid your U.S. Virgin Islands unemployment taxes in full, on time, and on all the same wages as are subject to FUTA tax, and as long as the U.S. Virgin Islands is not determined to be a credit reduction state. See the Instructions for Form 940 to determine the credit.
The U.S. Virgin Islands may exclude some types of wages from its unemployment insurance tax, even though they are subject to FUTA tax. In such a case, you may be required to deposit more than 0.6% FUTA tax on those wages. Contact the U.S. Virgin Islands Department of Labor for information on wages subject to the U.S. Virgin Islands unemployment insurance tax. See the Instructions for Form 940 for further guidance.
In years when the U.S. Virgin Islands is determined to be a credit reduction state, you must include liabilities owed for credit reduction with your fourth quarter deposit. You may deposit the anticipated extra liability throughout the year, but it is not due until the due date for the deposit for the fourth quarter, and the associated liability should be recorded as being incurred in the fourth quarter. See the Instructions for Form 940 for more information.
taxmap/pubs/p80-011.htm#en_us_publink1000290906

Form 940.(p17)

rule
By January 31, 2014, file your 2013 Form 940. if you made all FUTA tax deposits on time, you may file Form 940 by February 10, 2014.
taxmap/pubs/p80-011.htm#en_us_publink1000234044

Deposits.(p17)

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 0.6%. 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.

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 IRS representative or see the Employment Tax Regulations.
Special Classes of Employment and Special Types of PaymentsTreatment Under Employment Taxes
Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)FUTA (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 Forms 941-SS or 944. Other exemptions may apply. See section 4 and section 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 PaymentsTreatment Under Employment Taxes
Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)FUTA (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-2A" workers).
Exempt.Exempt.
  b. Student, scholar, trainee, teacher, etc.
as nonimmigrant alien under section
101(a)(15)(F), (J), (M), or (Q).
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. However, these taxes may apply if the employee becomes a resident alien.
  c. Philippine resident admitted to Guam or CNMI
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.
  d. Philippine resident performing services before
January 1, 2015 in CNMI.
Exempt.Exempt.
  e. Korean resident admitted to Guam under
section 101(a)(15)(H)(i) 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.
 f. Korean resident admitted to CNMI under section 101(a)(15)(H)(ii) of the Immigration and Nationality Act.Taxable.Exempt.
 g. 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 an 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 PaymentsTreatment Under Employment Taxes
Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)FUTA (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, earlier.
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.
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 2. 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, earlier. Taxable if paid $1,900 or more in cash in 2014. 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, later. (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.
* 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 PaymentsTreatment Under Employment Taxes
Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)FUTA (U.S. Virgin Islands Only)
Ministers of churches performing duties as such.Exempt.Exempt.
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 PaymentsTreatment Under Employment Taxes
Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)FUTA (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 2). 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.
Territory government employees (other than federal). (See IRC section 3121(b)(7) or visit www.socialsecurity.gov.
1. U.S. Virgin Islands.Taxable if covered by Section 218 Agreement with SSA.Exempt.
2. American Samoa and political subdivisions.Taxable, unless employee covered by a retirement system.Exempt.
3. Guam.Exempt, except for certain temporary and intermittent employees.Exempt.
4. The Commonwealth of the Northern Mariana Islands and political subdivisions.Taxable (beginning in the fourth calendar quarter of 2012).Exempt.
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.