Vision Payroll

November 19, 2010

Question of the Week: Are There Any Other Credit Reduction States for 2010?

Filed under: News — Tags: , , , , , — Vision @ 3:12 pm

Governor Mark Sanford, Courtesy of South Carolina Governor's Office
Governor Mark Sanford, Courtesy of South Carolina Governor's Office
This week’s question comes from Peter, a company controller. I read that Michigan is a credit reduction state for 2010. Are there any other credit reduction states for 2010? Answer: 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.

South Carolina and Michigan Are the Credit Reduction States for 2010

In addition to Michigan, the South Carolina Department of Employment and Workforce has announced that South Carolina is also a FUTA credit reduction state for 2010.

Maximum Tax Increase Is $21 per Employee

Since this is South Carolina’s first year as a credit reduction state, the credit reduction will be 0.3% or a maximum of $21 per employee. This is calculated by multiplying the wage base of $7,000 by the credit reduction of 0.3%.

Michigan, South Carolina and Indiana Are Credit Reduction States for 2010

As noted elsewhere and in the comments, the three credit reduction states for 2010 are Michigan, South Carolina, and Indiana. Unless Congress changes the rules or states make significant changes, as many as thirty-eight states may be credit reduction states in 2011.

Vision Payroll Will Calculate the Credit Reduction for All South Carolina Clients

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

November 16, 2010

Michigan FUTA Tax Credit Reduction to Increase for 2010

Filed under: News — Tags: , , , , — Vision @ 6:44 pm

Andrew S. Levin, Acting Director, Michigan Department of Energy, Labor & Economic Growth
Andrew S. Levin, Acting Director, Michigan Department of Energy, Labor & Economic Growth
According to the Unemployment Insurance Agency of the State of Michigan Department of Energy, Labor & Economic Growth, the FUTA tax credit reduction rate will increase from 0.3% in 2009 to 0.6% 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.

Michigan Is Subject To Credit Reduction for Second Consecutive Year

Since Michigan was already subject to a credit reduction in 2009 of 0.3%, the credit reduction will increase to 0.6% for 2010. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 0.9% in 2011, 1.2% in 2012, etc.

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.

December 11, 2009

Question of the Week: What is a Credit Reduction State?

Filed under: News — Tags: , , , , — Vision @ 10:26 pm

This week’s question comes from Scott, a small-business owner. I own a business in Michigan. I’ve heard that for 2009, Michigan is a credit reduction state. What is a credit reduction state? Answer: For 2009, Michigan is the only “credit reduction state”. This means that employers in Michigan are not allowed the full credit against the federal unemployment tax act (FUTA) tax. Wages paid that are subject to the unemployment compensation laws of the state of Michigan do not receive the full credit of 5.4%; a credit reduction of 0.3% applies so that such wages receive a credit of 5.1% for 2009. Employers that have wages that are subject to the unemployment compensation laws of the state of Michigan must use Schedule A of Form 940 to calculate the FUTA due. Contact Vision Payroll if you have any further questions on credit reduction states.

October 9, 2009

Question of the Week: How Can I Get Copies of My Quarterlies?

Filed under: News — Tags: , , , , , , — Vision @ 11:10 am

This week’s question comes from Elizabeth, a small business owner. I need to give copies of my quarterly tax returns to my CPA so I can finish my income tax return. I can’t find my copies anywhere. How can I get copies of my quarterlies? Answer: Vision Payroll offers a CPA Reporting Service that will deliver electronic or paper copies of your quarterlies to your CPA. Your CPA will appreciate always having your file up-to-date and you’ll appreciate the timesavings for both of you at year-end. And there’s no charge for this valuable service. Send us the name and address of your CPA and we’ll get you the paperwork to enroll. Contact Vision Payroll today to get started.

November 12, 2008

Tip of the Week: Save Time and Money with Vision Payroll’s CPA Reporting Service

Filed under: News — Tags: , , , , , , — Vision @ 1:02 pm
Does your CPA call at year-end looking for copies of quarterly payroll reports? Don’t waste time finding them, copying them, and mailing them. Sign up now to have Vision Payroll send copies of reports to your CPA each quarter. Your CPA will appreciate always having your file up-to-date and you’ll appreciate the time-savings for both of you at year-end. And there’s no charge for this valuable service. Send us the name and address of your CPA and your next quarter’s reports will be on their way. Contact Vision Payroll today to get started.
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