States are in the process of establishing their unemployment taxable wage bases for 2012. Below is a listing of the taxable wage bases that we have obtained thus far. Regular updates will be made available on our website at www.thomasandthorngren.com.
* The 2012 taxable wage base for Rhode Island employers in the highest tax group (those at the rate of 9.79%) will be $21,100.
If there are any questions, please contact us.
Every January we remind clients with payroll in Alaska about the Option Forms that can be used to possibly reduce your UI tax rate. The option forms allow you to adjust for artificial variances in your quarterly payrolls caused by such payments as an extra bi-weekly payroll in a quarter, bonuses, and lump sum payments.
State unemployment tax rates in Alaska are computed differently than in any other state. Generally speaking, your tax rate is based on changes in your total payroll from one quarter to the next, over a three-year period.
When an employer’s payroll declines in comparison to the previous quarter, this causes the tax rate to increase. The theory is that an employer with declining payroll or unstable payroll is contributing to unemployment, and should pay a higher tax rate. Conversely, an employer whose payroll is consistent from one quarter to the next, or whose payroll increases from one quarter to the next, is rewarded with a low tax rate.
Some employers experience payroll declines from time to time which are “artificial,” in that they are caused by such things as bonuses or lump sum payments in one quarter which are not repeated in the next quarter, or by having an extra pay date in a quarter which can occur with bi-weekly payrolls.
The Alaska Department of Labor allows employers to adjust for these artificial payroll declines. Enclosed is material on this subject, as well as examples of the three forms which can be used to adjust your quarterly payroll.
If your gross payroll occasionally declines for one of these “artificial” reasons, your tax rate for future years can be lowered by using the attached adjustment forms. In this case, we suggest that you review the attached material carefully. Remember, that a decline in quarterly payroll in Alaska can adversely affect your tax rate for the following three years.
Adjustments may be taken into account within two years after the computation date for the purpose of a reduction in the tax rate. Through June 30, options can be used to reduce the rate for the preceding calendar year as well as the current year. From July 1, only the current year’s rate can be changed, but the lower rate would be retroactive to January 1 of the current year.
Click here if you wish to review the three option forms, to determine if you have an opportunity to “smooth out” your quarterly payrolls, thereby reducing your UI tax rate.
If there are any questions or you would like additional information regarding this matter, please do not hesitate to contact us.
The federal unemployment tax rates for 2011 have now been finalized (see table below).
The gross FUTA tax rate is 6.20% on the first $7,000 of wages per worker for January through June of 2011, and 6.00% for July through December 2011. Employers usually receive a credit of 5.40% for paying state UI taxes timely, resulting in a net tax rate of 0.80% for January through June of 2011 and 0.60% for July through December of 2011. For employers in states with long-term UI loans, the 5.40% credit may be reduced in 0.30% increments.
South Carolina, which had a 0.30% credit reduction for 2010, qualified for a zero credit reduction for 2011 by taking legislative action to restore solvency to its state UI trust fund.
The Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, has been redesigned for 2011 to accommodate the mid-year change in FUTA rates. Click here for a copy of the new Form 940 and Schedule A is attached.
As always, please feel free to contact us if there are any questions.
Click here for a printable version.