FUTA Credit Reduction States

Employers are entitled to a FUTA credit if they paid unemployment taxes to a state government.  The FUTA credit is built into IRS Form 940 and is calculated for you if you are filling out the form and correctly following the Form 940 instructions. But that nice FUTA credit (it’s a credit of .054 % by the way) gets reduced if you paid wages in one of the following states…. Read Article →

Schedule A (Form 940)

If you are an employer and you paid wages in more than one state you will have to fill out Schedule A (Form 910).  You simply check the box next to each state in which you paid wages.  It’s quite simple unless you paid wages in a Credit Reduction State. If you look at Schedule A (Form 910) you’ll see each state listed, with three boxes after each state.  The… Read Article →

FUTA Credit Reduction

Now you know what a FUTA credit is.  When employer pays unemployment taxes to the IRS and to one or more state governments, it’s double billing.  The IRS gives credit for the State tax paid and chops off a chunk owed to the feds. That nice FUTA credit can be reduced, however, depending on what State we’re dealing with.  It’s called a FUTA credit reduction.  Yes, that nice FUTA credit… Read Article →

FUTA Credit

We know that the federal government requires employers to pay a payroll tax on every employee.  It’s to fund the unemployment system run by the federal government.  The rate is 6.2% on the first $7000 of wages for each employee.  That comes to $434 per year per employee.  It’s called the Federal Unemployment Tax, or FUTA for short. States also have unemployment systems that work alongside the federal system.  Consequently… Read Article →

What is the IRS Form 940?

Who Has to file the irs form 940? The IRS form 940 is a required form for any business that has employees.  If you own a business and you pay wages to your employees then you have to file IRS form 940 once a year.  That goes for people who hire domestic help as well (people who work in your home).  If a college club, sorority, fraternity or any other… Read Article →