Utah Contractor Practice Exam

When must state and federal unemployment taxes be paid by a company?

1. After 10 weeks of employment

2. After 15 weeks of employment

3. If there’s one employee for 20 weeks in a year

4. If there’s one employee for 30 weeks in a year

The correct answer is: If there’s one employee for 20 weeks in a year

A company is required to pay state and federal unemployment taxes if it has at least one employee for a minimum of 20 weeks in a year. This requirement is grounded in the guidelines established by the Federal Unemployment Tax Act (FUTA) and various state unemployment insurance laws, which set the threshold for tax liability based on the duration of employment within the year. The threshold of 20 weeks is significant because it reflects the intent of unemployment insurance programs to provide financial support during times of job loss, highlighting the need to contribute to the unemployment fund if a company has sustained employment for a certain period. It establishes a baseline measure for determining which employers are actively engaging in employee retention and the broader responsibilities associated with employment. In the context of the other options, the durations of 10 weeks, 15 weeks, or the criterion of having one employee for 30 weeks are either too short or do not align with the established guidelines, thus not triggering the obligation to pay unemployment taxes. The correct answer reflects the established standard that ensures companies contribute to the unemployment system when they have a consistent duration of employment with at least one worker.