What factor determines whether an employer needs to make FUTA tax deposits?

The requirement for an employer to make Federal Unemployment Tax Act (FUTA) tax deposits is primarily based on the total tax liability. Employers are responsible for calculating the amount of FUTA tax they owe based on the wages they pay to employees, but it is the total tax liabilities that dictate when and how much they must deposit.

If the total FUTA tax liability for the quarter is $500 or more, the employer is typically required to make deposits. If it's less than that amount, they can pay it when they file their annual FUTA tax return. Understanding this means that it's not simply the total wages paid or the number of employees that determine the need for deposits but rather the actual tax liability computed from those wages. Therefore, recognizing tax liability is critical for compliance with FUTA obligations.

Projected earnings do not directly influence whether deposits are necessary, as deposits are based on realized tax liabilities rather than anticipated earnings.