The federal unemployment tax, also known as the FUTA tax, pays unemployment compensation to workers who lose their jobs.
Employers pay FUTA taxes on the first $7,000 of each employee’s annual wages at a rate of 6.0%. Employers who pay their state unemployment taxes on time receive a credit reduction of 5.4%, making the net rate 0.6%.
However, since the State of Ohio has outstanding federal loans for two consecutive Januarys, this credit will be reduced, as the cost of repaying the state’s loan is passed to employers as part of their FUTA tax liability.
For Ohio employers, the rate for 2014 FUTA returns being filed in January 2015 will be 1.8% if your Ohio unemployment taxes were paid on a timely basis.
If you have any questions regarding this, please contact us at either of our locations!
Treasury Circular 230 Disclosure
Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.