Fritz: All Fritz/All Fritz.zip/All Fritz/FILES/BUSITION/SBA.LZH/FSBA.EXE/F260.SBE

Text File | 1992-10-01 | 6KB | 156 lines

@096 CHAP 5

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

With relatively few exceptions, all businesses with employ-
ees 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 unem-
ployment tax in 1992 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.

    . 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 va-
cation and sick leave in making this determination.  Need-
less 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 has introduced a new
Form 940-EZ, a greatly simplified FUTA return for small
employers, whose use began with the 1989 tax year.  In
general, the small employers who can use the new 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.

@CODE: HI CA NM
@CODE:NF
The state unemployment tax is imposed on the employer, not
the employee, in @STATE.

The unemployment tax rate for new employers in @STATE
is:

@CODE:OF
@CODE: HI
    . RATE:       1.7% of the wage base (1992 rate)

    . WAGE BASE:  The first $22,700 of wages per employee
                  (for 1992)

@CODE:OF
@CODE: CA
    . RATE:       3.4% of the wage base (1992 rate)
                  (Plus 0.1 employment training tax,
                  usually)

    . WAGE BASE:  The first $7,000 of wages per employee
                  (for 1992)

@CODE:OF
@CODE: NM
         .  2.7% of the first $12,100 of wages, in 1992.

@CODE:OF
@CODE: HI CA NM
The tax rate may be higher or lower after the employer has
been in business long enough to establish an "experience
rating."  The tax may also vary considerably from year to
year based on the level of solvency of the state's unemploy-
ment 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. The state
@CODE:OF
@CODE: HI
unemployment tax form is Form UC-B-6.  Blank forms and in-
structions are mailed to each registered employer about 15
days before the end of each calendar quarter by the Unem-
ployment Insurance Division.  It should be mailed, with
payment, to the state District Tax Office in the appropri-
ate 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, lo-
cated 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 hir-
ing 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
unemployment tax return is Form ES-903A, which is filed
with the New Mexico Employment Security Department.

@CODE:OF
@CODE: CA
@CODE:NF
unemployment tax return is Form DE 3, which is also used to
report California personal income tax and SDI withheld by
employers.  The Form DE 3 you file must be pre-headed with
your name, state account number and tax rate by the Employ-
ment Development Department (E.D.D.).  If you have regis-
tered with E.D.D., you should automatically receive the pre-
headed form before the quarterly filing dates, but you are
responsible for making sure you obtain it in time.

California unemployment tax applies, in general, to any em-
ployer that pays more than $100 in wages in any calendar
quarter.  If you are required to pay California unemploy-
ment tax, you must register as an employer with the E.D.D.
on Form DE 1 to obtain a state employer I.D. number.