2013 FUTA Credit Reduction Information

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The IRS has released this year’s list of states that have defaulted on their 2013 Federal Unemployment Insurance (UI) Loans causing employers in these states to owe additional FUTA tax for the tax year 2013.

The following are the FUTA tax rate increases for each affected state:

1.2 percent:  Indiana

0.9 percent:  Arkansas, California, Connecticut, Georgia, Kentucky, Missouri, New York, North Carolina, Ohio, Rhode Island and Wisconsin

0.6 percent:  Delaware

The rates above will be applied to the 1st $7,000.00 that each FUTA taxable employee earned for the tax year 2013 and is due with the employer’s Federal Form 940 by January 31, 2014.

If you would like an estimation of your extra tax due, please contact your Account Manager or send an email to payroll@directpaypayroll.com.  We will collect the additional tax amount on January 20, 2014 so that we are able to remit the payment timely on your behalf.

Arizona, Florida, Nevada, New Jersey and Vermont were credit reduction states for 2012, but have repaid federal unemployment loan balances and are not credit reduction states for 2013.

The additional FUTA amount is reported on Federal Form 940 (Schedule A).  The IRS has not released a revised 2013 Schedule A at this time but DirectPay Payroll Services will file the appropriate Schedule A with your annual Form 940 in January 2014.

If you have questions, please let us know.

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