2012 FUTA Credit Reduction

Sometime after November 10th, 2012 the Department of Labor will release the list of 2012 FUTA “credit reduction” states.  Employers paying wages in the states that are affected will be subject to additional FUTA taxes when the Form 940 is filed for 2012 (in Jan 2013).
‘credit reduction’ state is a state that has not repaid money it borrowed from the federal government to pay unemployment benefits. For the first year that the loans are not repaid, the additional tax is .3% (.003) on the first $7,000 of each employees wages earned in that state (maximum of $21/employee). This rate increases by an additional .3% for each subsequent year the loans remain unpaid. Because most of the listed states are into their 2nd year, their tax amount will be .6% (maximum of $42/employee). The state of Indiana would be into their 3rd year, so the rate would be .9% (maximum of $63/employee).

Watch here for more updates.

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