Standard Credit Rate is 5.4% for 2010
Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940.
FUTA Wage Base is $7,000 for 2010
Since the FUTA wage base is $7,000 for 2010, a maximum tax of $56 per employee is due, calculated as follows:
|FUTA Taxable Wage Base|
|FUTA Taxable Wage Base||$7,000|
|FUTA Tax Rate||6.2%|
|Maximum FUTA Tax per Employee Before Credit $434.00||$434|
|Less: FUTA Tax Credit Reduction ($7,000 X 5.4%)||$378|
|Maximum Net FUTA Tax per Employee||$56|
Employers in Certain States Are Subject To Credit Reduction
Indiana Is Subject To Credit Reduction for First Time
Since Indiana was not a credit reduction state in 2009, the credit reduction rate will be 0.3% for 2010. Adding the credit reduction rate of 0.3% to the normal rate of 0.8% results in an effective FUTA rate of 1.1% for Indiana employers in 2010. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 0.6% in 2011, 0.9% in 2012, etc. Adding the credit reduction rate of 0.3% to the normal rate of 0.8% results in an effective FUTA rate of 1.1% for Indiana employers in 2010.
Vision Payroll Will Calculate the Credit Reduction for All Indiana Clients
Contact Vision Payroll if you have any further questions on the Indiana credit reduction.