There are many states which will have an additional tax amount due for federal unemployment tax (FUTA) due January 31st. For employers in states that did not pay back their loans to the federal government, this credit is reduced by the percentage set by the Department of Labor. This reduction is .3% for each year the loan has not been repaid, up to 1.5%. For more information on this topic, see prior post http://todaysinnovativewoman.com/2013/11/states-face-increased-payroll-taxes-2013/.
For the final list of states owing additional tax, see http://workforcesecurity.doleta.gov/unemploy/docs/reduced_credit_states_2013_final.xls
If you do your own payroll by hand, you must calculate this rate for each employee on their wages up to the $7000 wage limit and total up the additional amount due for each employee. This amount will need to be reported on line 11 on page one of the 940 return as well as on the Schedule A (if you have employees in more than one state, each state must have the amount due listed).
If you are using QuickBooks for payroll processing, be aware that you will most likely have to manually adjust your file in order to accurately pay this tax. Although QuickBooks calculated the tax due on the 940 last year, it did not automatically adjust the liability account. To create the liability in your file, you must do the following:
- Go to the Employees Tab
- Go to Payroll Taxes and Liabilities
- Choose Adjust Payroll Liabilities
- Enter the effective date as 12/31/13
- Choose adjustment is for company
- For item enter Federal Unemployment
- Enter the amount due
- For accounts affected, choose liability and expense
Once you save this adjustment, you should see it in the pay liabilities window. Proceed as usual to pay the tax due.