The Dept. of Labor has announced the 2015 FUTA credit reduction states, giving you a heads up before Form 940 is due on Feb. 1, 2016.
Once again, the FUTA tax rate is 6.0%. If you apply the regular credit of 5.4%, you get a net rate of 0.6%.
But certain states that have outstanding federal loans for their unemployment insurance trust funds will pay more than 0.6%.
Here are the affected states, with the credit reduction rate in parenthesis, followed by the final FUTA tax rate:
- California: (1.5%) 2.1%
- Connecticut: (2.1%) 2.7%
- Ohio: (1.5%) 2.1%, and
- Virgin Islands: (1.5%) 2.1%.
During 2015, Indiana, Kentucky, New York, North Carolina and South Carolina paid off their loans.
Payments to employees
As you get ready to fill out the 2015 Form 940, remember no matter what rate you pay, certain payments may be exempt from FUTA tax.
Example: Your company may not owe the tax on employer payments to Health Savings Accounts.
