Vision Payroll

November 27, 2011

IRS Revamps Schedule A for 2011

IRS Revamps Schedule A for 2011
IRS Revamps Schedule A for 2011
The Internal Revenue Service (IRS) has issued a revamped Schedule A for Form 940 for 2011. The revised Schedule A includes a line for every state as well as the District of Columbia, Puerto Rico, and the US Virgin Islands.

Revamped Form Necessitated by Increase in Number of Credit Reduction States

A revision to Schedule A was required since the number of states and territories subject to a credit reduction increased from three in 2010 to twenty-one in 2011.

Each State Is Listed with the Relevant Rate

The individual lines for each state, DC, PR and VI are listed with the applicable credit reduction rate. Taxpayers should simply enter the wages paid in each state and multiply by that state’s rate. Wages should be entered even for states that have a zero credit reduction rate.

Not All Taxpayers Must File Schedule A

Not every taxpayer that is required to file Form 940 is required to file Schedule A. Taxpayers that pay wages in more than one state or taxpayers that pay wages in a credit reduction state must complete and file Schedule A. Taxpayers that pay wages only in a single state that is not a credit reduction state need not complete or file Schedule A.

Rely on Vision Payroll for Your Schedule A

Vision Payroll will complete and electronically file Schedule A for all tax pay and file clients. Employers will be able to download a copy of Schedule A for their records.

November 26, 2011

IRS Releases 2011 Form 940

US Virgin Islands and Twenty States Have a Credit Reduction in 2011
US Virgin Islands and Twenty States Have a Credit Reduction in 2011
The Internal Revenue Service (IRS) has released the 2011 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and accompanying instructions. Employers use Form 940 to report their annual Federal Unemployment Tax Act (FUTA) tax.

Twenty Credit Reduction States for 2011

There are twenty credit reduction states for 2011: Michigan, Indiana, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin as well as the US Virgin Islands. The credit reduction for most Michigan employers is 0.9% and for most Indiana employers it’s 0.6%. Most employers in the other credit reduction states and the US Virgin Islands have a credit reduction of 0.3%.

2011 FUTA Rate Decreased as of July 1, 2011

The FUTA tax rate decreased to 6.0% (before SUTA credits) on July 1, 2011. The rate for the first six months of 2011 was 6.2%. Under current law, the rate will remain at 6.0% throughout 2012. The 2011 Form 940 contains lines to report wages paid before July 1, 2011 and wages paid after June 30, 2011.

Vision Payroll to File Form 940 Electronically

Vision Payroll will file Form 940 for its clients electronically with the IRS and will not submit the paper version. Employers will be able to download a copy of Form 940 for their records.

November 25, 2011

Question of the Week: What Are the Credit Reduction States for 2011?

What Are the Credit Reduction States for 2011?
What Are the Credit Reduction States for 2011?
This week’s question comes from Victoria, a corporate controller.

Victoria asks:

I read that California is going to be a credit reduction state for 2011, but heard that they be more credit reduction states. What are the credit reduction states for 2011?

Answer: The Internal Revenue Service (IRS) has released a list of credit reduction states for 2011. There are a total of twenty states and one territory.

Standard Credit Rates Is 5.4% for 2011

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. Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is a 0.9% Credit Reduction States

Since this is Michigan’s third consecutive year as a credit reduction state, the credit reduction for Michigan is 0.9% for 2011.

Indiana Is a 0.6% Credit Reduction States

Since this is Indiana’s second consecutive year as a credit reduction state, the credit reduction for Indiana is 0.6% for 2011. South Carolina, which was a first-year state for 2010, has paid off its loans and is not a credit reduction state for 2011.

Eighteen New Credit Reduction States for 2011

There are eighteen new credit reduction states for 2011. These states will have a credit reduction of 0.3% for 2011. The states are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin. Additionally, the US Virgin Islands also has a credit reduction of 0.3%.

Contact Vision Payroll Today

For more information on the credit reduction states in 2011, be sure to contact Vision Payroll today.

November 21, 2011

California Is a Credit Reduction State for 2011

Filed under: News — Tags: , , , , , — Vision @ 6:00 pm
Pam Harris, Chief Deputy Director, California EDD
Pam Harris, Chief Deputy Director, California EDD
According to the California Employment Development Department, California will be a FUTA tax credit reduction state in 2011.

Standard Credit Rates Is 5.4% for 2011

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 2011

The FUTA wage base is $7,000 for 2011.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

California Is Subject To Credit Reduction for First Time

Since California was not a credit reduction state in 2010, the credit reduction rate will be 0.3% for 2011. California employers will receive a reduced credit of 5.1% for 2011. For the first six months of 2011, the FUTA tax rate was 6.2% and for the last six months of 2011, the FUTA tax rate has been 6.0%. Therefore, California employers will pay an effective rate of 1.1% for the first six months of 2011 and 0.9% for the last six months of 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 0.6% in 2012, 0.9% in 2013, etc.

Vision Payroll Will Calculate the Credit Reduction for All California Clients

Contact Vision Payroll if you have any further questions on the California credit reduction.

August 7, 2011

Michigan Offers Rebate for Expected Credit Reduction

Steven Hilfinger, Director, Michigan Department of Licensing and Regulatory Affairs
Steven Hilfinger, Director, Michigan Department of Licensing and Regulatory Affairs
According to the Unemployment Insurance Agency (UIA) of the State of Michigan Department of Licensing and Regulatory Affairs in Fact Sheet 139, the FUTA tax credit reduction rate will increase from 0.6% in 2010 to 0.9% in 2011. Since the determination will not be made until November 1, 2011, this is only a projection at this time.

Standard Credit Rate is 5.4% for 2011

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.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is Subject To Credit Reduction for Third Consecutive Year

Since Michigan was already subject to a credit reduction in 2009 and 2010, the credit reduction will increase to 0.9% for 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 1.2% in 2012, 1.5% in 2013, etc.

Rebate Offered To Fully Experienced Employers with a Positive Balance

Fully experienced employers with a positive balance may claim a credit using Form UIA 1110. The credit is the lower of 50% of the additional tax paid due to the credit reduction or the taxable wages for the year of the credit reduction multiplied by the employer’s Nonchargeable Benefits Component (NBC). Based on the eligibility conditions for prior years, the expected eligibility conditions for a 2012 tax credit should be as follows:

  1. Your “actual reserve” balance as of June 30, 2010 as shown on your 2011 annual tax rate determination must be positive. If the “actual reserve” is a negative figure, refer to Voluntary Payment information at www.michigan.gov/uia.
  2. In 2011, you are in your fifth or subsequent year of coverage with the UIA (you are a fully experienced employer).
  3. You pay the 2011 FUTA credit reduction to the Internal Revenue Service prior to January 1, 2013.
  4. You certify on Form UIA 1110 the amount of additional FUTA tax you paid for 2011 as a result of the credit reduction.
  5. You have taxable wages with UIA in the 2011 calendar year.

Vision Payroll Will Calculate the Credit Reduction for All Michigan Clients

Contact Vision Payroll if you have any further questions on the Michigan credit reduction.

June 29, 2011

Tip of the Week: FUTA Tax to Decrease This Friday

Filed under: News — Tags: , , , , , , — Vision @ 5:18 pm
Tip of the Week: FUTA Tax to Decrease This Friday
Tip of the Week: FUTA Tax to Decrease This Friday
Most employers nationwide will receive an employment tax reduction July 1, 2011 when the temporary FUTA surtax expires. The temporary surtax was enacted in 1976. The standard FUTA tax rate will decrease from 6.2% to 6.0%.

Standard Credit Rate is 5.4% for 2011

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. Therefore, for 2011, many employers will pay an effective rate of 0.8% for wages paid from January 1, 2011 to June 30, 2011 and 0.6% for wages paid from July 1, 2011 to December 31, 2011.

FUTA Wage Base is $7,000 for 2011

The FUTA wage base for 2011 is $7,000. Since many employees have already been paid $7,000 in wages during 2011, no reduced tax will apply for those employees.

Credit Reduction Will Apply in Some States

Unless Congress changes the law, as many as thirty-eight states could be credit reduction states in 2011. Michigan would have a credit reduction of 0.9%, Indiana and South Carolina would have credit reductions of 0.6%, and all other states would have credit reductions of 0.3%. If these states are determined to be credit reduction states in November, the effective rates for the second half of 2011 would be 1.5% for Michigan employers, 1.2% for Indiana and South Carolina employers, and 0.9% for all other credit reduction state employers.

Vision Payroll Will Calculate the Appreciate FUTA Tax for All Employers

Employers in every state can contact Vision Payroll for assistance in determining their FUTA tax rate for 2011 and for assistance in filing Form 940.

March 20, 2011

IRS Discontinues Mailing of Form 941 Tax Package

Filed under: News — Tags: , , — Vision @ 3:52 pm
IRS Discontinues Mailing of Form 941 Tax Package
IRS Discontinues Mailing of Form 941 Tax Package
The Internal Revenue Service (IRS) has announced that it will no longer mail the Form 941 tax package to business taxpayers. Taxpayers who need paper copies of the forms can download them at IRS.gov or VisionPayroll.com.

Growth in Electronic Filing Spurred Move

The IRS says that it took these steps due to the continued growth in electronic filing as well as to help reduce costs. Additionally, most business forms are available through tax professionals and tax software.

Mailing of Many Other Forms Also Discontinued

The IRS also announced that mailing of the following forms and publication has also been discontinued:

ProductTitle
Form 940Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 943Employer’s Annual Federal Return for Agricultural Employees
Form 944Employer’s Annual Federal Tax Return
Form 945Annual Return of Withheld Federal Income Tax
Form 720Quarterly Federal Excise Tax Return
Form 730Monthly Tax Return for Wagers
Form 2290Heavy Highway Vehicle Use Tax Return
Form 5500Annual Return/Report of Employee Benefit Plan
Form 8027Employer’s Annual Information Return of Tip Income and Allocated Tips
Form 8160-TTax Product Availability for Exempt Organization Filers
Form 11-COccupational Tax and Registration Return for Wagering
Form CT-1Employer’s Annual Railroad Retirement Tax Return
Publication 51(Circular A) Agricultural Employer’s Tax Guide
Publication 80(Circular SS) Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands
Publication 179(Circular PR) Guía Contributiva Federal para Patronos Puertorriqueños
Package 1120-HU.S. Income Tax Return for Homeowners Associations

Vision Payroll Submits These Forms Electronically

Vision Payroll submits Form 941, Form 944, and Form 940 electronically to the IRS for its clients and does not need paper copies of the forms.

January 14, 2011

Question of the Week: What Are 10 Hot Items for Payroll in 2011?

What Are 10 Hot Items for Payroll in 2011?
What Are 10 Hot Items for Payroll in 2011?
This week’s question comes from Seth, a company controller. It seems as if there are many changes in payroll recently. What are 10 hot items for payroll in 2011? Answer: The payroll industry and payroll departments have seen many changes as Congress uses the payroll and payroll tax system as a means to implement desired changes in social policy. Many items are new or revamped for 2011.

10 Hot Payroll Items in 2011

  1. 2011 Withholding Table Changes: Because of the recently passed Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act), employers should implement the 2011 withholding tables as soon as possible, but not later than January 31, 2011.
  2. Reduced Social Security Tax Rate for Employees: For 2011, the employee tax rate for Social Security is 4.2%, down from 6.2% in 2010. The employer rate remains at 6.2%.
  3. Expiration of Making Work Pay Credit: The Making Work Pay credit expired on December 31, 2010, resulting in higher federal withholding from many employees in 2011.
  4. Extension of COBRA Premium Assistance Credit: The credit for COBRA premium assistance payments has been extended to include premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.
  5. Advance Payment of Earned Income Credit (EIC) Discontinued: The option to receive advance payroll payments of EIC expired on December 31, 2010.
  6. Federal Tax Payments Must Be Made by Electronic Funds Transfer: With the discontinuation of Forms 8109 and 8109-B, most federal tax payments must now be made by electronic funds transfer.
  7. FUTA Tax Rate Scheduled to Decrease: Under current law, the FUTA tax rate will decrease from 6.2% to 6.0%, effective July 1, 2011.
  8. Withholding Allowance Amount Set at $3,700: For 2011, the amount for one withholding allowance on an annual basis is $3,700, up from $3,650 for 2009 and 2010.
  9. Aggregate Form 940 and Form 941 Filers Must File Schedule R: Agents must complete the appropriate Schedule R when filling an aggregate Form 940 or Form 941.
  10. Choose to File Form 941 Instead of Form 944: Employers notified that they should file Form 944, but who want to file Form 941 instead, may notify the IRS and request to file Form 941.

More Changes Expected Throughout 2011

Check VisionPayroll.com regularly as the only certain thing about payroll and payroll taxes for 2011 is that many more changes can be expected.

December 18, 2010

IRS Releases 2010 Form 940

On 2010 Form 940, Michigan Is One of Three Credit Reduction States
On 2010 Form 940, Michigan Is One of Three Credit Reduction States
The Internal Revenue Service (IRS) has released the 2010 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and accompanying instructions. Employers use Form 940 to report their annual Federal Unemployment Tax Act (FUTA) tax.

FUTA Tax Must Be Deposited Electronically Using EFTPS in 2011

As previously announced, the IRS will discontinue accepting paper coupons for depository taxes after December 31, 2010. Employers should make their deposits electronically using Electronic Federal Tax Payment System (EFTPS).

Three Credit Reduction States for 2010

There are three credit reduction states for 2010: Michigan, Indiana, and South Carolina. The effective FUTA rate for most Michigan employers is 1.4% and for most Indiana and South Carolina employers it’s 1.1%. Most other employers have an effective rate of 0.8%.

2011 FUTA Rate Scheduled to Decrease

Under current law, the FUTA tax rate is scheduled to decrease to 6.0% (before SUTA credits) on July 1, 2011. The rate for the first six months of 2011 is 6.2%.

Vision Payroll to File Form 940 Electronically

Vision Payroll will file Form 940 for its clients electronically with the IRS and will not submit the paper version. Employers will be able to download a copy of Form 940 for their records.

November 28, 2010

Indiana Is a Credit Reduction State for 2010

Filed under: News — Tags: , , , , — Vision @ 5:40 pm
Mark W. Everson, Commissioner, Indiana Department of Workforce Development
Mark W. Everson, Commissioner, Indiana Department of Workforce Development
According to the Indiana Department of Workforce Development, Indiana will be a FUTA tax credit reduction state in 2010.

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 Rate6.2%
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

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

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.

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