Who is responsible for paying the full amount of FUTA on an employee's wages?

The correct answer is that the employer is responsible for paying the full amount of Federal Unemployment Tax Act (FUTA) on an employee's wages. Under FUTA, it is the employer's obligation to pay a federal tax designed to fund unemployment benefits. This tax is not deducted from the employee's wages; rather, it is solely the employer's responsibility to contribute a percentage of taxable wages for each employee to the federal government.

Employers are required to pay FUTA on the first $7,000 of each employee's earnings, meaning that there is no corresponding deduction from employees' paychecks for this tax. The funds collected through FUTA are then used to provide unemployment insurance to eligible workers who lose their jobs.

This structure ensures that the burden of financing unemployment benefits falls on the employers who benefit from the labor of their employees, rather than on the employees themselves, which is why the employer is solely responsible for the payment.