Vision Payroll

Monday, January 16, 2012 will be the Birthday of Martin Luther King, Jr., a federal holiday. Although the offices of Vision Payroll will be open and payrolls will be processed, most banks will be closed in observance of the holiday.

Date Paid	Process Deadline
1/16/2012	1/11/2012
1/17/2012	1/12/2012
1/18/2012	1/13/2012

Payroll Dates May Be Affected by Birthday of Martin Luther King, Jr.

Payrolls dated January 16 will be paid January 13 unless a previous change in schedule has been submitted. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. No changes are required for payrolls dated January 20.

Washington’s Birthday Is Next Federal Holiday

The next federal holiday will be Monday, February 20, 2012, Washington’s Birthday. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

Monday, January 2, 2012 will be observed as New Year’s Day, a federal holiday. The offices of Vision Payroll will close December 30 at 3 pm EST and re-open Tuesday January 3. Most banks will also be closed in observance of the holiday. Payroll changes and hours must be submitted before the processing deadlines as listed below.

Date Paid	Process Deadline
01/02/2012	12/28/2011
01/03/2012	12/29/2011
01/04/2012	12/30/2011

Payroll Dates May Be Affected by New Year’s Day

Payrolls dated January 2 will be paid December 30 unless a previous change in schedule has been submitted. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. No changes are required for payrolls dated January 5.

Birthday of Martin Luther King, Jr. Is Next Federal Holiday

Due to heavy USPS and UPS delivery requirements as well as limited bank hours and staffing, we strongly recommend submitting payrolls during this time as early as practicable. UPS does not ship ground deliveries received on December 30 until January 3 so we do not recommend submitting payrolls on that date. The next federal holiday will be January 16, 2012, the Birthday of Martin Luther King, Jr. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

Monday, December 26, 2011 will be an observed federal holiday for Christmas Day. The offices of Vision Payroll will close December 23 and re-open Tuesday December 27. Most banks will also be closed in observance of the holiday. Payroll changes and hours must be submitted before the processing deadlines as listed below.

Date Paid	Process Deadline
12/26/2011	12/21/2011
12/27/2011	12/22/2011
12/28/2011	12/23/2011

Payroll Dates May be Affected by Christmas Day

Payrolls dated December 26 will be paid December 23 unless a previous change in schedule has been submitted. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. No changes are required for payrolls dated December 29.

New Year’s Day Is Next Federal Holiday

Due to heavy USPS and UPS delivery requirements as well as limited bank hours and staffing, we strongly recommend submitting payrolls during this time as early as practicable. UPS does not ship ground deliveries received on December 23 until December 27 so we do not recommend submitting payrolls on that date. The next federal holiday will be observed on January 2, 2012 for New Year’s Day. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

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.