C corporations and unemployment insurance.
A C corporation is the standard corporation. The corporation is the employer, and its officers who work in the business are its employees.
What it is
A C corporation is a corporation taxed under the regular corporate rules, separately from its owners. It needs its own EIN, and reports employment taxes under it.
Officers and directors
- An officer of a corporation is generally an employee.
- An officer who performs no services, or only minor services, and receives no pay is not considered an employee.
- A director is not an employee for services performed as a director.
- An officer's wages should generally match the duties performed; the IRS can adjust when they do not.
Family on the payroll
The family exemptions do not apply to corporations. Pay to a child who works for the corporation is subject to federal unemployment tax regardless of age, and the same goes for a spouse.
What changes from state to state
- How much you have to pay in wages before you must register.
- Which owners, officers, members and family members count as employees.
- The tax rate for a new employer, and how much of each employee's pay it applies to.
- The registration form, and what it asks about the owners.
The rules that decide your registration are your state's.
Generally yes, when they work in the business. In New York, officers of all corporations who perform services are employees, and their pay for those services, including dividends or distributions, is subject to contributions.
Not for services as a director. A director who also works in the business as an officer is an employee for that work.
No. The family exemptions are for sole proprietors and some partnerships, not corporations. Your child's pay is subject to federal unemployment tax regardless of age.
Sources
- IRS Publication 15-A, Employer's Supplemental Tax Guide
- IRS Publication 15 (2026), Employer's Tax Guide
- IRS: Paying Yourself
- IRS: Family Help
- IRS: Employer Identification Number
- NY DOL: Covered or Excluded Employment
Plain-language guidance, checked against the sources above. It is not legal or tax advice; for your own situation, ask a qualified tax professional or the agency.