Do You Know That Some Employers Owe Additional Unemployment Tax for 2011?
Is your business in a FUTA credit reduction state? Do you owe additional FUTA taxes for 2011?
The January 2012 issue of Insights & Innovations, CompuPay’s monthly publication highlighting topics that impact the business community, explains federal unemployment taxes (FUTA), the current situation with FUTA credit reductions and the resultant effect on employers.
In November of 2011, the U.S. Department of Labor announced the final list of states that have outstanding federal loans for 2011. Because the states involved have not paid their Title XII loans in full, the conditions of those loans require all employers in those states to lose a portion of the credit against the full FUTA (Federal Unemployment Tax Act) tax for 2011. 20 states plus the U.S. Virgin Islands failed to pay their loans in full in 2011. Because their FUTA credit has been reduced, employers in those states are now subject to higher unemployment taxes retroactive to January 1, 2011.
IRS Form 940 will require those 20 states and the Virgin Islands to populate fields that will result in a higher FUTA rate for employers for tax year 2011:
- Michigan employers must pay an additional 0.9% in FUTA taxes.
- Indiana employers must pay an additional 0.6% in FUTA taxes.
- Employers in the U.S. Virgin Islands and the following 18 states are required to pay an additional 0.3% in FUTA taxes: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin.
For additional information on FUTA rate changes and their impact on employers, please visit the Insights & Innovations page of the CompuPay website.
The material contained on this page is for informational purposes only and is current as of the date of publication. CompuPay is not a legal, tax or financial adviser and makes no claims as such. For tax, financial or legal advice, please seek a professional.