Cream of the Crop 1/Cream of the Crop 1.iso/BUSINESS/SBA62.ARJ/FSBA.EXE/F260.SBE

Text File | 1992-04-30 | 6KB | 138 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 em-
ployer.  The federal unemployment 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 em-
ployee), 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.

    . 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 differ-
ent 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 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 (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 (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 unemployment insurance funds.  @STATE unemployment
tax returns are due at the end of the month following the end of each
calendar quarter, and the tax is due in full at such time.  The state
@CODE:OF
@CODE: HI
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 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 Insur-
ance 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 re-
ported 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
of @STATE 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 Employment Development Department (E.D.D.).
If you have registered with E.D.D., you should automatically receive
the pre-headed form before the quarterly filing dates, but you are res-
ponsible for making sure you obtain it in time.

California unemployment tax applies, in general, to any employer that
pays more then $100 in wages in any calendar quarter.  If you are re-
quired 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.