The following types of payments are exempt from FUTA tax:
1. Fringe benefits, such as:
- Meals and lodging
- Contributions to accident or health insurance plans for employees, including certain employer payments to a Health Savings Account or an Archer MSA.
- Payment for benefits excluded under section 125 (cafeteria plans).
- A Cafeteria Plan is a plan that offers flexible benefits under IRC section 125. Employees choose their benefits from a menu of cash and benefits, some of which can be paid for with pretax deductions from wages.
- Employer reimbursements for qualified moving expenses, to the extent that these expenses would otherwise be deductible by the employee.
2. Group term life insurance.
3. Retirement/pension plan contributions made by the employer on behalf of employees to a qualified plan are exempt from FUTA tax. Such plans include:
- A SIMPLE retirement account
- A 401(K) plan
An employee's salary reduction contributions to a SIMPLE are subject to FUTA taxes. Keep in mind, FUTA taxes are an employer-paid tax; employees do not pay FUTA taxes.
4. Dependent care, such as:
- Payments up to $5,000, per employee, ($2,500 if married filing
separately) for a qualifying person's care.
- Payments made under workers' compensation law because of a work-related injury or sickness.
- See section 6 of Pub. 15-A, Employer's Supplemental Tax Guide
6. Other payments exempt from FUTA tax:
- All non-cash payments and certain cash payments for agricultural labor, and all payments to H-2(A)visa workers.
- See Publication 51, Agricultural Employer's Tax Guide
- Payments for domestic services if you did not pay cash wages of $1,000 or more (for all domestic employees) in any calendar quarter in 2013 or 2014.
- Publication 926, Household Employer's Tax Guide.
- Payments for services provided to you by your parent, spouse, or child under the age of 21.
- See section 3 of Pub. 15 (Circular E), Employer's Tax Guide.
- Payments for certain fishing activities.
- See Publication 926, Household Employer's Tax Guide
- Payments to certain statutory employees.
- See section 1 of Pub. 15-A, Employer's Supplemental Tax Guide.
- Payments to nonemployees who are treated as your employees by the state unemployment tax agency.