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.

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.

July 10, 2011

Farmers Insurance Agrees to Pay $1.5 Million in Back Wages

Farmers Insurance Agrees to Pay $1.5 Million in Back Wages
Farmers Insurance Agrees to Pay $1.5 Million in Back Wages
Los Angeles-based Farmers Insurance Inc. (Farmers) has agreed to pay $1,520,705 in overtime back wages to 3,459 employees following an investigation by the US Department of Labor’s Wage and Hour Division that disclosed significant and systemic violations of the federal Fair Labor Standards Act’s (FLSA) overtime and record-keeping provisions. Violations occurred at 11 customer service call centers located in Florida, Kansas, Michigan, Oklahoma, Oregon and Texas.

Pre-Shift and Post-Shift Work Must Be Compensated

“Failing to properly compensate employees for pre- or post-shift work is a violation of federal law,” said Secretary of Labor Hilda L. Solis. “The Labor Department is committed to ensuring that employers abide by the law so that workers are protected against exploitation, and law-abiding employers are not placed at a competitive disadvantage.”

Farmers Did Not Pay for Pre-Shift Work

Through interviews with employees and a review of the company’s timekeeping and payroll systems, investigators found that the company did not account for time employees spent performing pre-shift work activities. Employees routinely performed an average of thirty minutes of unrecorded and uncompensated work — such as turning on work stations, logging into the company phone system and initiating certain software applications necessary to begin their call center duties — per week.

Farmers Agrees to Maintain Future Compliance with FLSA

Because employees’ pre-shift work times were excluded from official time and payroll records, they were not paid for all hours and are owed compensation at time and one-half their regular rates for hours that exceeded forty per week. Farmers Insurance has agreed to pay back wages, as well as to maintain future compliance with the FLSA by properly recording and compensating all hours worked by its employees.

Call Center Employees Across the Country Are Affected

The agreement affects call center employees who worked between Jan. 1, 2009, and May 10, 2010, at Farmers’ HelpPoint facilities in Olathe, Kansas; Oklahoma City, Oklahoma; Lake Mary, Florida; and Grand Rapids, Michigan. It also affects workers employed at a former location in Overland Park, Kansas, between Jan. 1, 2009, and Jan. 10, 2010. Additionally, it affects employees who worked between Jan. 1, 2009, and Feb. 1, 2010, at Farmers’ ServicePoint and commercial facilities in Austin, Texas; a ServicePoint facility in Grand Rapids, Michigan; a ServicePoint facility in Olathe, Kansas; and ServicePoint and commercial facilities in Hillsboro, Oregon.

FLSA Also Requires Overtime for Hours Worked in Excess of 40

The FLSA requires that covered employees be paid for pre-shift and post-shift job duties, and for attending required meetings. Employees must be paid time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond forty per week. Employers must pay at least the federal minimum wage of $7.25 for all hours worked, and maintain accurate time and payroll records.

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.

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 22, 2010

2011 Michigan Income Tax Withholding Guide Released

Filed under: News — Tags: , , , — Vision @ 6:00 pm
Michigan State Treasurer Robert J. Kleine
Michigan State Treasurer Robert J. Kleine
The Michigan Department of Treasury has released Publication 446, 2011 Michigan Income Tax Withholding Guide.

Withholding Rate and Personal Exemption Amount Announced

For wages paid after December 31, 2010 and before October 1, 2011, the withholding rate is 4.35% and the personal exemption amount is $3,700. For wages paid after September 30, 2011, a withholding rate reduction takes effect. Employers may calculate the reduced withholding by multiplying the withholding amount in the Michigan Income Tax Withholding Tables by 0.977. Alternatively, revised tables will also be released.

Exemptions Claimed on Form MI-W4

Employers should calculate Michigan withholding using the number of exemptions claimed on Form MI-W4, Employee’s Michigan Withholding Exemption.

Vision Payroll Using Updated Withholding Tables

Michigan employers do not need to take any further action as Vision Payroll will automatically transition to the revised withholding amounts on the effective dates.

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.

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