News & Tech Tips

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.

Travel for Charity Work May Help Reduce Your Taxes

Are you traveling while doing charity work this summer? Many of my fellow staff members and I volunteer in organizations in our communities, and we know from talking with clients during the year that they are also doing volunteer work to support those in need in their communities.

But did you know that travel expenses may help lower your taxes if you itemize deductions when you file next year? Here are five tax tips from the IRS about travel while serving a charity.

1.  You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Select Check tool to see if the group is qualified.

2.  You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer. You can’t deduct the value of your time or services.

3.  The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip.

4.  You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.

5.  Deductible travel expenses may include: air, rail and bus transportation; car expenses; lodging costs; meal costs; and taxi fares or other transportation costs between the airport or station and your hotel.

If you have need further clarification about travel expenses related to your charity work, contact your Whalen tax adviser.