Employer Liability for Unemployment Taxes

F you pay wages of $20,000 or more in a quarter in the previous or current calendar year, or employ 10 or more persons for some part of a day for 20 different calendar weeks in the previous or current calendar year, you are an employer. Employers are allowed to use wages reported to other states for employees also reported to North Carolina in the computation of excess wages. Using only the North Carolina wages, the employer’s excess wages may appear incorrect.

Keeping the number of unemployment insurance claims filed by former employees to a minimum can produce significant payroll tax savings. For example, in all states the most favorable unemployment tax rates are 1 percent or less. Your tax rate percentage is applied quarterly to your taxable payroll to determine the contribution amount you will pay. These contributions, except social charge deductions, are credited to your account. Tax rates are issued to all taxable employers on an annual basis, showing the contribution, payroll, and benefit charge amounts.

Reporting and Filing

In that circumstance, the LLC must pay UC taxes for its members under the “catch-all clause” in Section 4 of the UC Law. As a result, our payment addresses for employers also changed. Covered employment is any service performed for remuneration whether full-time or part-time, that is used as the basis for UI benefits.

Termination of a predecessor’s account, due to the transfer of the business, does not relieve the predecessor of liability for unpaid taxes, interest, and penalties. However, the successor may also become liable for taxes unpaid by the predecessor. The federal government generates unemployment benefit Employer Liability For Unemployment Taxes payments using the Federal Unemployment Tax Act tax while some states use a State Unemployment Tax Act tax which is a predominantly employer paid tax. (Some states do require employees to pay a portion of these taxes.) The amount an employer pays is a percentage of their taxable wage base.

Kona Claims OfficeAshikawa Building, 81-990 Halekii St, Rm 2090, PO Box 167, Kealakekua, HI 96750-0167,

Reimbursable employers receive a Statement of Reimbursable Benefits Paid correspondence to bill them for benefits charged against their accounts. This quarterly statement lists all claimants who collected benefits during the previous quarter. Employers who receive this form have 15 days from the Date of Invoice to file a written protest. Employers must pay federal and state unemployment taxes in order to fund the unemployment tax system. Unemployment compensation is designed to pay benefits to workers when they lose their jobs through no fault of their own. Worker misclassification occurs when an employer incorrectly classifies a worker as a non-employee.

However, if the LLC has elected corporate status for federal tax purposes, its sole member is an employee under FUTA. In that circumstance, the LLC must pay UC taxes on the sole member’s remuneration under the “catch-all clause” in Section 4 of the UC Law. Pursuant to the “catch-all clause”, if https://kelleysbookkeeping.com/ services constitute “employment” for FUTA, they also constitute “employment” under the UC Law. The unemployment trust fund is “forward funded”, which means that the tax schedules are designed to raise funding during good economic times to ensure that there is adequate funding during recessions.

Employer liability for unemployment taxes

What if you are unable to pay your state taxes by the due date for the federal return? If you secure a filing extension for the federal return you can preserve your right to the maximum allowable credit. Assuming the filing extension for the federal return is granted, you will get the full credit if you pay the state taxes by the extended due date for the federal return. Assuming you first met the 1-in-20 test in December 2013, you would have been responsible for the tax with respect to the wages you paid during the entire 2013 calendar year as opposed to just the wages you paid after you met the test. In addition, you would then continue to be liable for the FUTA tax during the 2014 calendar year, even if you fail to meet both the wages-paid test and the 1-in-20 test during that year. Wolters Kluwer is a global provider of professional information, software solutions, and services for clinicians, nurses, accountants, lawyers, and tax, finance, audit, risk, compliance, and regulatory sectors.