Budget Early for Projected FUTA Credit Reduction

83009e51-49ff-4cfa-9297-c502429c5609In case any of our Coastal Payroll clients did not receive our message on the upcoming Federal Unemployment tax credit reduction, below is information of the projected year-end FUTA increase.  These projected additional taxes may affect employers in seven states with up to $168 owed per employee.

The states listed below are required to pay their unemployment loan back to the federal government through an increased FUTA surcharge (known as FUTA credit reduction) for 2015.  The IRS will release the final list of states and rates in November 2015 and has provided initial estimates to help businesses prepare in advance.  Most of the states listed below have been on this list for several years now so you may be familiar with this tax increase from previous years.  The rates have increased for California employers for 2015.
Please see the table for estimated additional taxes per employee:
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What is a credit reduction state?

A state is a credit reduction state if it has taken loans from the federal government to meet its state unemployment benefits liabilities and has not repaid the loans within the allowable time frame. A reduction in the usual credit against the full FUTA tax rate means that employers paying wages subject to UI tax in those states will owe a greater amount of tax.

Coastal Payroll recommends that you start budgeting now as we will collect the additional taxes in December.   For an estimate, please refer to payroll reports found online, or contact your dedicated HCM specialist for more details.

Please don't hesitate to contact us with any questions you have regarding the 2015 FUTA credit reduction.  We will send additional notifications in late November after rates are finalized by the IRS.