What amounts are subject to FUTA withholding?
As with FICA, elective contributions (Employee salary deferral) to a 401k plan are subject to FUTA withholding but matching contributions or profit sharing contributions (Employer contributions) are not subject to FUTA withholding. (The maximum amount of wages paid to an employee during any calendar year that may be subject to FUTA tax is $7,000 (in 2004) but this amount may be periodically adjusted through legislative amendment). Q: As a Subchapter “S” Corporation, can I contribute 25% of the income distributed to me as profit at the end of the year (K1) or is it only 25% of my W-2 wages.
