Employers to Pay More FUTA on 2013 Returns
Because Ohio has failed to repay outstanding federal loans related to the state’s unemployment insurance for the past four years, employers throughout the state will be unable to claim the maximum state unemployment tax credits on their 2013 federal unemployment tax (FUTA) return.
While the statutory tax rate for FUTA is 6.2 percent of the first $7,000 of employee’s wages, all states receive a credit from the federal government for maintaining state unemployment funds, reducing the standard FUTA rate to .6 percent. However, for states that have outstanding loans from the federal government to meet their state unemployment liabilities, this credit is reduced.
Employers in Ohio will now have an additional liability due by January 31, 2014, with their year-end Form 940 filing. Because this is the third year that Ohio has unpaid loans, the credit reduction has increased from .6 percent in 2012 (up from .3 percent in 2011) to .9 percent in 2013. The additional tax “penalty” translates to as much as $63 extra per employee.
The FUTA rate will continue to increase by .3 percent for each year that Ohio does not pay in full its outstanding loans.