Vision Payroll

The Internal Revenue Service (IRS) has issued a revamped Schedule A for Form 940 for 2011. The revised Schedule A includes a line for every state as well as the District of Columbia, Puerto Rico, and the US Virgin Islands.

Revamped Form Necessitated by Increase in Number of Credit Reduction States

A revision to Schedule A was required since the number of states and territories subject to a credit reduction increased from three in 2010 to twenty-one in 2011.

Each State Is Listed with the Relevant Rate

The individual lines for each state, DC, PR and VI are listed with the applicable credit reduction rate. Taxpayers should simply enter the wages paid in each state and multiply by that state’s rate. Wages should be entered even for states that have a zero credit reduction rate.

Not All Taxpayers Must File Schedule A

Not every taxpayer that is required to file Form 940 is required to file Schedule A. Taxpayers that pay wages in more than one state or taxpayers that pay wages in a credit reduction state must complete and file Schedule A. Taxpayers that pay wages only in a single state that is not a credit reduction state need not complete or file Schedule A.

Rely on Vision Payroll for Your Schedule A

Vision Payroll will complete and electronically file Schedule A for all tax pay and file clients. Employers will be able to download a copy of Schedule A for their records.

The Internal Revenue Service (IRS) has released the 2011 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and accompanying instructions. Employers use Form 940 to report their annual Federal Unemployment Tax Act (FUTA) tax.

Twenty Credit Reduction States for 2011

There are twenty credit reduction states for 2011: Michigan, Indiana, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin as well as the US Virgin Islands. The credit reduction for most Michigan employers is 0.9% and for most Indiana employers it’s 0.6%. Most employers in the other credit reduction states and the US Virgin Islands have a credit reduction of 0.3%.

2011 FUTA Rate Decreased as of July 1, 2011

The FUTA tax rate decreased to 6.0% (before SUTA credits) on July 1, 2011. The rate for the first six months of 2011 was 6.2%. Under current law, the rate will remain at 6.0% throughout 2012. The 2011 Form 940 contains lines to report wages paid before July 1, 2011 and wages paid after June 30, 2011.

Vision Payroll to File Form 940 Electronically

Vision Payroll will file Form 940 for its clients electronically with the IRS and will not submit the paper version. Employers will be able to download a copy of Form 940 for their records.

This week’s question comes from Victoria, a corporate controller.

Victoria asks:

I read that California is going to be a credit reduction state for 2011, but heard that they be more credit reduction states. What are the credit reduction states for 2011?

Answer: The Internal Revenue Service (IRS) has released a list of credit reduction states for 2011. There are a total of twenty states and one territory.

Standard Credit Rates Is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940. Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

Michigan Is a 0.9% Credit Reduction States

Since this is Michigan’s third consecutive year as a credit reduction state, the credit reduction for Michigan is 0.9% for 2011.

Indiana Is a 0.6% Credit Reduction States

Since this is Indiana’s second consecutive year as a credit reduction state, the credit reduction for Indiana is 0.6% for 2011. South Carolina, which was a first-year state for 2010, has paid off its loans and is not a credit reduction state for 2011.

Eighteen New Credit Reduction States for 2011

There are eighteen new credit reduction states for 2011. These states will have a credit reduction of 0.3% for 2011. The states are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Virginia, and Wisconsin. Additionally, the US Virgin Islands also has a credit reduction of 0.3%.

Contact Vision Payroll Today

For more information on the credit reduction states in 2011, be sure to contact Vision Payroll today.

According to the US Department of Labor, in the week ending November 19, the advance figure for seasonally adjusted initial claims was 393,000, an increase of 2,000 from the previous week’s revised figure of 391,000. The 4-week moving average was 394,250, a decrease of 3,250 from the previous week’s revised average of 397,500.

Advance Seasonally Adjusted Insured Unemployment Rate Remains Unchanged

The advance seasonally adjusted insured unemployment rate was 2.9% percent for the week ending November 12, unchanged from the prior week’s unrevised rate.

Advance Seasonally Adjusted Insured Unemployment Increases

The advance number for seasonally adjusted insured unemployment during the week ending November 12 was 3,691,000, an increase of 68,000 from the preceding week’s revised level of 3,623,000. The 4-week moving average was 3,671,500, a decrease of 2,250 from the preceding week’s revised average of 3,673,750.

The 3% Withholding Repeal and Job Creation Act (HR 674) was recently signed into law by President Barack Obama. The new law repeals the 3% withholding on certain payments made by the federal, state, and local governments. It also established the Returning Heroes Work Opportunity Tax Credit (Returning Heroes WOTC) and the Wounded Warriors Work Opportunity Tax Credit (Wounded Warriors WOTC), which provide credits to employers who hire qualified veterans.

Returning Heroes WOTC

The Returning Heroes WOTC has two types of incentive. The first incentive, for veterans who have been unemployed for at least four weeks, is equal to forty percent of the first $6,000 wages or up to $2,400. The second incentive, for veterans who have been unemployed for at least six months, is equal to 40% of the first $14,000 wages or up to $5,600.

Wounded Warriors WOTC

The Wounded Warriors WOTC also has two types of incentives. The first incentive is an extension of the current existing Work Opportunity Tax Credit (WOTC) for veterans with a service-connected disability. The credit, which was set to expire on December 31, 2011, is now extended to December 31, 2012. This credit is worth up to $4,800. It also adds a new incentive for veterans with a service-connected who have been unemployed for at least six months. It is equal to 40% of the first $24,000 wages or up to $9,600.

Tax-Exempt Entities May Receive Payroll Tax Credit

The new law also provides incentives to tax-exempt organizations for hiring veterans “for services in furtherance of the activities related to the purpose or function constituting the basis of the organization’s exemption.” The credit for tax-exempt entities is a payroll tax credit rather than an income tax credit and is only available for 26% of wages, not 40%.

Contact Vision Payroll for Tax Credit Information

Contact Vision Payroll for more information on the tax credits available for hiring Returning Heroes and Wounded Warriors.

The California Employment Development Department (EDD) recently released the 2012 UI, ETT, and SDI rates. An historical compilation of prior year rates is available in Form DE 3395.

2012 UI, ETT, and SDI Rates

The UI rate schedule in effect for 2012 is Schedule “F+.” This is Schedule F plus a 15% emergency surcharge, rounded to the nearest tenth. Schedule “F+” provides for UI contribution rates from 1.5% to 6.2%.

Exception for Employers Subject to §977(c)

Exception: Employers subject to §977(c) of the CUIC must pay at the highest rate provided by law plus an additional 2%.

Taxable Wage Limit Remains at $7,000

The taxable wage limit is $7,000 per employee.

The Voluntary UI program Is Not in Effect for 2012

The Employment Training Tax (ETT) rate for 2012 is 0.1%. The UI and ETT taxable wage limit remains at $7,000 per employee per calendar year.

SDI Rate Is Set at 1.0%

The State Disability Insurance (SDI) withholding rate for 2012 is 1.0%. The taxable wage limit is $95,585 for each employee per calendar year. The maximum to withhold for each employee is $955.85.

Notices Will Be Mailed December 30

UI, ETT, and SDI tax rates are combined on a single rate notice, Notice of Contribution Rates and Statement of UI Reserve Account (DE 2088). The DE 2088 will be mailed in December, with a mailing date of December 30. Employers will have 60 days from the December 30 mailing date to protest any item on the DE 2088 except SDI and ETT, which are specifically set by law.

New Employer Rate Set at 3.4%

For new employers, the UI tax rate is 3.4% for up to three years. Owners that purchased an established business have the option of acquiring the previous owner’s UI tax rate.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any questions on the California unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

According to the California Employment Development Department, California will be a FUTA tax credit reduction state in 2011.

Standard Credit Rates Is 5.4% for 2011

Generally, employers who pay their state unemployment tax by the due date for filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, receive a credit 5.4% against their Federal Unemployment Tax Act (FUTA) tax. This credit is claimed on Form 940.

FUTA Wage Base Is $7,000 for 2011

The FUTA wage base is $7,000 for 2011.

Employers in Certain States Are Subject To Credit Reduction

Federal law provides for a reduction in the FUTA tax credit when a state has outstanding federal loans for two years. The credit reduction is calculated on Schedule A of Form 940.

California Is Subject To Credit Reduction for First Time

Since California was not a credit reduction state in 2010, the credit reduction rate will be 0.3% for 2011. California employers will receive a reduced credit of 5.1% for 2011. For the first six months of 2011, the FUTA tax rate was 6.2% and for the last six months of 2011, the FUTA tax rate has been 6.0%. Therefore, California employers will pay an effective rate of 1.1% for the first six months of 2011 and 0.9% for the last six months of 2011. The credit reduction will continue to increase by 0.3 percentage points each year until the loan is paid, e.g., 0.6% in 2012, 0.9% in 2013, etc.

Vision Payroll Will Calculate the Credit Reduction for All California Clients

Contact Vision Payroll if you have any further questions on the California credit reduction.

The California Employment Development Department (EDD) has announced the release of the California Employer’s Guide 2012 DE 44 Rev. 38 (the Guide). The Guide is published to help employers understand their rights and responsibilities.

Information Presented in Chronological Sequence

Information in the Guide is presented in a chronological sequence, beginning with what employers need to know or do first, such as who is an employer, when to register, who is an employee, and what are wages.

California Generally Follows Federal Law

To simplify reporting requirements, the EDD follows federal tax guidelines and due dates whenever possible; however, California laws and rates may differ from federal laws and rates. The EDD administers payroll tax reporting laws according to the California Unemployment Insurance Code (CUIC) and California Code of Regulations (CCR).

The Guide Is an Important Resource

Regardless of the size of the business, the Guide is an important resource on the procedures required for compliance with California payroll tax laws. It clarifies both the provisions of the CUIC and CCR and their application to the business.

The Guide Provides General Information

The Guide provides general information that applies to the majority of employers. The Guide provides references to additional information on specialized topics. Information on detailed or complex issues that only apply to a small number of employers is not included in the Guide.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the Guide.

The US Department of Labor (DOL) recently announced a $2,261,417 National Emergency Grant to provide re-employment services to about 365 workers affected by layoffs at 12 companies throughout Massachusetts, including four employee staffing businesses that provided workers for the other companies.

Layoffs Scheduled to Continue Through 2012

The layoffs, which began in May 2008 and are scheduled to continue until March 2012, are occurring at Biogen Idec in Cambridge, Commercial Sheet Metal in Canton, Covidien in Mansfield, EDO Fiber Innovations/ITT Corp. in Walpole, Henkel Corp. in Billerica, International Power America in Marlborough, Reveal Imaging Technologies Inc. in Bedford and Unilever-Breyers Ice Cream in Framingham. The staffing agencies include Kelly Services in Quincy, Randstad in Boston, Aerostek in Braintree and Total Technical Services in Waltham.

DOL Secretary Solis Comments on Grant

“This funding from the federal government is a step toward helping Massachusetts workers, who face a challenging market, find new employment,” said Secretary of Labor Hilda L. Solis. “The grant will support efforts to prepare these individuals for good jobs in high-growth occupations.”

Funds Are Awarded to the Massachusetts Department of Workforce Development

Awarded to the Massachusetts Department of Workforce Development, the grant will provide training and supportive services for affected workers. Supplemental services will be available to workers who also have been deemed eligible for benefits in the form of Trade Adjustment Assistance. Those who are not eligible for TAA will receive the full array of employment-related services available under this grant.

Additional Funding May be Available at a Later Date

Of the $2,261,417 announced today, $998,078 will be released initially. Additional funding up to the amount approved will be made available as the commonwealth demonstrates a continued need for assistance.

National Emergency Grants Are Part of Discretionary Fund

National Emergency Grants are part of the secretary of labor’s discretionary fund and are awarded based on a state’s ability to meet specific guidelines.

This week’s question comes from Natalie, an HR director.

Natalie asks:

We are looking to hire some more employees, but need some help locating talented candidates. How can Vision Payroll help us recruit employees?

Answer: Vision Payroll has partnered with My Recruiting Center to provide a comprehensive solution to employers looking to recruit and hire new employees.

Different Solutions for Different Employer Needs

Vision Payroll and My Recruiting Center know that different employers have different needs. Therefore, employers can pick from three different levels of service:

1. Self Service Solution
2. Full Service Solution
3. Temp/Contract Solution

Self Service Solution: An Easy Way to Advertise Your Job Opening!

The Self Service Solution has three easy steps:

1. Pick a Job Description—Edit one of ours or use your own;
2. Choose Your Advertising— Monster, Career Builder, the paper…We have 150+ locations. List your job wherever you choose; and
3. Review Your Candidates—One list of candidates screened and ranked. No more logging on to multiple sites to get the same resumes over and over again.

Full Service Solution: Want Someone to Recruit for You?

We have a dedicated team of recruiters available and on call to address any recruiting need. From day labor to IT Specialists, we have the expertise to find the right people quickly.

Temp/Contract Solution: Looking for Temporary and Contract Workers?

Whether it’s a project, a day of labor, or a long-term contract, My Recruiting Center can help you find the temporary and contract labor that meets your needs.

Get Started with My Recruiting Center Today!

Simply go to the Vision Payroll home page, click “Payroll Login”, and then sign in to Online Employer. Once in, click the “Recruiting Center” tab on the left and then the company you want to recruit for on the right and you’re ready to go. Contact Vision Payroll if you need help with your Online Employer login or password.