Software of the Month Club 1997 March/Software of the Month Club 1997 March.iso/pc/dos/lg/sba/f260.sbe

Text File | 1996-08-23 | 13.9 KB | 467 lines

@096 CHAP 5

        ┌──────────────────────────────────────────────┐
        │     FEDERAL AND STATE UNEMPLOYMENT TAXES     │
        └──────────────────────────────────────────────┘

With relatively few exceptions, all businesses with employees
must pay unemployment taxes, both federal and state.  The
federal tax (and in most states, the state tax as well) is
imposed entirely upon the employer.  The federal unemployment
tax in 1996 is nominally 6.2% of the first $7,000 of annual
wages per employee.

In practice, however, the federal rate is usually only 0.8%
(for a maximum tax of $56 per employee), since a credit
for up to 5.4% is given for state unemployment taxes paid,
or if the employer has a favorable "experience rating" for
state unemployment tax purposes in @STATE.

@IF120xx]NOTE RE UNEMPLOYMENT TAX FOR @NAME:
@IF120xx]------------------------------------------------------------
@IF120xx]Since you are operating as an owner of an unincorporated
@IF120xx]business, rather than as an employee of a corporation, your
@IF120xx]personal earnings from the business are not subject to state
@IF120xx]or federal unemployment taxes.  This will save your firm
@IF120xx]several hundred dollars a year of such taxes on your business
@IF120xx]earnings, as compared to what you would pay if you were
@IF120xx]operating @NAME as a corporation.
@IF120xx]
@IF120xx]Remember, also, that if you and/or your spouse are the only
@IF120xx]owners of the business, you may hire your children, under
@IF120xx]age 21, to work in the business, free of any unemployment
@IF120xx]taxes.  (This would not be true if the business were to be
@IF120xx]incorporated.)
@IF120xx]------------------------------------------------------------
@IF120xx]
    . FEDERAL UNEMPLOYMENT TAX ("FUTA").

Your business will be required to pay FUTA taxes for any
calendar year if during any calendar quarter of the current
or preceding calendar year you paid wages of $1,500, or if
during either year you had one or more employees for at
least a portion of a day during any 20 different calendar
weeks during the year.  You must count individuals on
vacation and sick leave in making this determination.

Needless to say, this will cover almost any business that
has even one employee, even part-time.

If the FUTA liability during any of the first 3 calendar
quarters is more than $100, you must deposit the tax with a
federal tax deposit coupon at an authorized bank during the
month following the end of the quarter.  If the tax is $100
or less, you are not required to make a deposit, but you
must add it to the taxes for the next quarter.  For the
fourth quarter, if the undeposited FUTA tax for the year is
more than $100, deposit the tax with a tax deposit coupon
by January 31.  If the balance due at year-end is $100 or
less, either deposit with the coupon or mail it in with
your federal unemployment tax return (Form 940) by January
31.  Form 940 is not due until February 10 if all of the
FUTA tax for the prior year has already been deposited when
due.

NOTE FOR SMALL EMPLOYERS:  The IRS now offers Form 940-EZ,
which is a greatly simplified FUTA return for small
employers.  In general, the small employers who can use
the simplified 940-EZ form are those who:

        . Pay unemployment tax to only one state;

        . Pay all state unemployment taxes by Form 940-EZ's
          due date; and

        . Whose wages subject to FUTA are also taxable for
          state unemployment tax purposes.


    . @STATE UNEMPLOYMENT TAX.

The state also imposes an unemployment tax, which meshes
closely with the federal unemployment tax.

The state unemployment tax is imposed on the employer (only)
in all states except Alaska, New Jersey and Pennsylvania.
@CODE: AK NJ PA
In @STATE, most of the tax is imposed on the employer.
@CODE:OF
@CODE: AK
However, a 0.5% tax also applies to the employee.  Both the
employer and employee are subject to tax only on the first
$24,400 of annual wages of the employee (in 1996).

@CODE:OF
@CODE: PA

    . RATE:       3.6645% (1996 rate).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

However, a 0.03% tax also applies to the employee under
the Pennsylvania unemployment tax law.

@CODE:OF
@CODE: NJ

    . RATE:       2.8% (1996 rate).

    . WAGE BASE:  The first $18,000 of wages (for 1996).

However, a 0.625% tax (for state temporary disability
insurance) also applies to the employee under the New Jersey
unemployment tax law, with the employer required to also
contribute 0.5% towards the disability insurance.

@CODE:OF
@CODE: AL AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NB NV NH NM NY NC ND OH OK OR RI SC SD TN TX UT VT VA WA WV WS WY
@CODE:NF
The state unemployment tax is imposed on the employer, not
the employee, in @STATE.

The unemployment tax rate for a new employer in the state
of @STATE is:

@CODE:OF
@CODE: CO
    . RATE:       2.8% of the wage base (1996 rate)

    . WAGE BASE:  The first $10,000 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: DE
    . RATE:       2.4% of the wage base, generally (1996 rate),
                  for non-construction industry, generally.

    . WAGE BASE:  The first $8,500 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: MO
    . RATE:       3.51% of the wage base, generally (1996 rate)

    . WAGE BASE:  The first $8,500 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: HI
    . RATE:       3.0% of the wage base (1996 rate)
                  (Plus a 0.05% employment training tax)

    . WAGE BASE:  The first $25,800 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: CA
    . RATE:       3.4% of the wage base (1996 rate)
                  (Plus 0.1 employment training tax,
                  usually)

    . WAGE BASE:  The first $7,000 of wages per employee
                  (for 1996)

@CODE:OF
@CODE: AZ FL IN MS SC GA NH TN
    . RATE:       2.7% of the wage base (1996 rate).

@CODE:OF
@CODE: NY
    . RATE:       4.4% of the wage base (1996 rate).

@CODE:OF
@CODE: MA
    . RATE:       3.0% of the wage base (1996 rate).

@CODE:OF
@CODE: AZ FL IN MS SC TN NY
    . WAGE BASE:  The first $7,000 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: NH
    . WAGE BASE:  The first $8,000 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: GA
    . WAGE BASE:  The first $8,500 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: NM
    . RATE:       2.7% of the wage base (1996 rate).

    . WAGE BASE:  The first $13,900 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: TX
    . RATE:       2.7% of the wage base (1996 rate).

    . WAGE BASE:  The first $9,000 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: MA
    . WAGE BASE:  The first $10,800 of wages per employee
                  (for 1996).

@CODE:OF
@CODE: AR
    . RATE:       3.3% (1996 rate).

    . WAGE BASE:  The first $9,000 of wages (for 1996).

@CODE:OF
@CODE: CT
    . RATE:       5.1% (1996 rate).

    . WAGE BASE:  The first $11,000 of wages (for 1996).

@CODE:OF
@CODE: ID
    . RATE:       2.5% (1996 rate).

    . WAGE BASE:  The first $21,600 of wages (for 1996).

@CODE:OF
@CODE: IA
    . RATE:       1.0% 1996 rate (7.0% for construction)
                  (Plus 0.05% surcharge for all employers)

    . WAGE BASE:  The first $14,700 of wages (for 1996)

@CODE:OF
@CODE: KY
    . RATE:       3.0%, except for construction (1996 rate).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: LA
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $7,700 of wages (for 1996).

@CODE:OF
@CODE: MD
    . RATE:       2.3% (1996 rate).

    . WAGE BASE:  The first $8,500 of wages (for 1996).

@CODE:OF
@CODE: KS
    . RATE:       1.00%  (1996 and 1997 rate)

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: VT
    . RATE:       3.2%, generally (rate varies by industry).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: MT
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $15,800 of wages (for 1996).

@CODE:OF
@CODE: OH
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $9,000 of wages (for 1996).

@CODE:OF
@CODE: OR
    . RATE:       3% (1996 rate).

    . WAGE BASE:  The first $20,000 of wages (for 1996).

@CODE:OF
@CODE: ME
    . RATE:       4.3% (1996 rate).

    . WAGE BASE:  The first $7,000 of wages (for 1996).

@CODE:OF
@CODE: MN
    . RATE:       1.9% (1996 rate).  8.7% rate for the
                  construction industry.

    . WAGE BASE:  The first $15,800 of wages (for 1996).

@CODE:OF
@CODE: ND
    . RATE:       2.2% (1996 rate).  7.0% rate for the
                  construction industry.

    . WAGE BASE:  The first $13,900 of wages (for 1996).

@CODE:OF
@CODE: MI
    . RATE:       2.7% (1996 rate).

    . WAGE BASE:  The first $9,500 of wages (for 1996).

@CODE:OF
@CODE: NB
    . RATE:       3.5% (1996 rate).

    . WAGE BASE:  The first $7,000 of wages (for 1996).

@CODE:OF
@CODE: NV
    . RATE:       2.95% (1996 rate).

    . WAGE BASE:  The first $16,600 of wages (for 1996).

@CODE:OF
@CODE: NC
    . RATE:       1.2% (1996 rate).

    . WAGE BASE:  The first $11,600 of wages (for 1996).

@CODE:OF
@CODE: OK
    . RATE:       1.1% (1996 rate), revised annually.

    . WAGE BASE:  The first $10,900 of wages (for 1996).

@CODE:OF
@CODE: RI
    . RATE:       4.05% (1996 rate).

    . WAGE BASE:  The first $17,000 of wages (for 1996).

@CODE:OF
@CODE: SD
    . RATE:       1.9% (1996 combined rate).  (Higher rate
                  for the construction industry applies.)

    . WAGE BASE:  The first $7,000 of wages (for 1996).

@CODE:OF
@CODE: DC
    . RATE:       3.1%

    . WAGE BASE:  The first $10,000 of wages (for 1996).

@CODE:OF
@CODE: AL
    . RATE:       2.7% (1996 rate).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: WV
    . RATE:       2.7% (1996 rate).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: IL
    . RATE:       3.1% (1996 rate). (Except for the
                  construction industry.)

    . WAGE BASE:  The first $9,000 of wages (for 1996).

@CODE:OF
@CODE: UT
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $17,200 of wages (for 1996).

@CODE:OF
@CODE: VA
    . RATE:       2.53% (1996 rate).

    . WAGE BASE:  The first $8,000 of wages (for 1996).

@CODE:OF
@CODE: WA
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $20,300 of wages (for 1996).

@CODE:OF
@CODE: WS
    . RATE:       3.05% (1996 rate).  (Higher rate for the
                  construction industry applies.)

    . WAGE BASE:  The first $10,500 of wages (for 1996).

@CODE:OF
@CODE: WY
    . RATE:       (Rate varies by industry).

    . WAGE BASE:  The first $12,100 of wages (for 1996).

@CODE:OF

@CODE: AL AZ AR CA CO CT DC FL GA HI IL ID IN IA KS KY LA ME MD MA MI MN MS MO MT NB NV NH NM NY NC ND OH OK RI SC SD TN TX UT VT VA WA WV WS WY
The tax rate may be higher or lower after the employer has
been in business long enough to establish an "experience
rating," and may also vary considerably from year to year
based on the level of solvency of the state's unemployment
insurance funds.   @STATE unemployment tax
returns are due at the end of the month following the end
of each calendar quarter, and tax due in full at such time.

@CODE:OF
@CODE: HI
The Hawaii unemployment tax form is Form UC-B-6.  Blank
forms and instructions are mailed to each registered employer
about 15 days before the end of each calendar quarter by the
Unemployment Insurance Division.  It should be mailed, with
payment, to the state District Tax Office in the appropriate
county.

Employers subject to Hawaii unemployment tax are generally
those that are subject to Federal Unemployment Tax Act
(FUTA) coverage.  A Hawaii business entity should file
Form UC-1, Report to Determine Liability Under the Hawaii
Employment Security Law, not later than 20 days after first
hiring an employee.  Determination of liability will be
made and an employer subject to the tax will be assigned a
state identification number and tax forms will be furnished.
Form UC-1 can be obtained from the Department of Labor and
Industrial Relations, Unemployment Insurance Division,
located at 830 Punchbowl Street in Honolulu.

Note that an employer will be assessed a $10 penalty for
each failure to report a new hire or the separation from
employment of an employee within 5 working days after
hiring or separation.

New hires are reported on Form UC-BP-5(A), while individual
separations from employment are reported on Form UC-BP-5.

@CODE:OF
@CODE: NM
The state unemployment tax return is Form ES-903A, which
is filed with the New Mexico Employment Security Department.

@CODE:OF
@CODE: CA
@CODE:NF
California unemployment tax applies, in general, to any
employer that pays more than $100 in wages in any calendar
quarter.  If you are required to pay California unemployment
tax, you must register as an employer with the E.D.D. on
Form DE 1 to obtain a state employer I.D. number.

The quarterly state unemployment tax return is Form DE 6,
which is also used to report California personal income tax
and SDI withheld by employers.  A Form DE 88 (revised in
1995) tax coupon must accompany payroll tax payments.  If
you have registered with E.D.D., you can call an automated
telephone answering system, punch in your 8-digit employer
I.D. number, and receive the specific tax rate that applies
to your business, based on your "experience rating."  Obtain
a copy of the California Employer's Guide from the E.D.D.
for details on how to access this answering system.