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Introduction to Payroll Administration Module 6 – Unemployment Taxes
Text Reading Assignment: Chapter 5 (beginning to end). I. Unemployment taxes are collected by state governments and used to provide support payments to workers who become unemployed. This gives unemployed workers a source of income while they seek new jobs. The Social Security Act (1935) required all the states to establish unemployment programs A. FUTA. To fund the administration of these state programs, Congress enacted the Federal Unemployment Tax Act (FUTA) which requires that employers (not employees) pay a tax to the federal government to pay for the administration (but not the payment of benefits) of the federal and state unemployment programs.

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The IRS has produced a series of video lessons for employers that relate to income tax withholdings laws. One of these lessons discusses the FUTA program and FUTA withholdings requirements. Launch the video by clicking the link below.

http://my-accounting-tutor.com/Payroll/Videos/FUTA.wmv B. SUTA. The payment of benefits is handled by each state, and is made from the trust fund established by the state and funded through its respective State Unemployment Tax Act (SUTA). Each state creates its own state tax act and unemployment program and the rules and regulations vary from state to state, but the states must conform to federal standards. This results in state programs that are generally similar, though their individual features differ greatly. In some states employees pay a portion of the state tax, in others (Illinois is one) only the employer pays the tax. Worker’s Eligibility. In order to receive unemployment benefits, certain criteria must be satisfied. 1. In Illinois, the worker must have earned at least $1,600 in wages during a 12-month base period. The base period is defined as the first four of the five completed calendar quarters preceding the worker's initial claim for benefits.

C.

© Craig Pence, 2009. All rights reserved.

Payroll Accounting Course Manual, Module 6

2

2.

At least $440 of the $1,600 must have been earned during quarters other than the one in which earnings were highest.

Example: Bill Bit is laid off on November 1, 20X8 (during the fourth quarter of the year) and files for unemployment benefits. During the previous 5 calendar quarters, Bill earned the following amounts: Calendar Quarter July 1 – September 30, 20X8 April 1 – June 30, 20X8 January 1 – March 31, 20X8 October 1 – December 31, 20X7 July 1 – September 30, 20X7 Total Quarterly Earnings $900 $800 $700 $600 $500 $3,500 Base Period Earnings --$800 $700 $600 $500 $2,600

Conclusion: Bill has earned $2,600 during the 12-month base period, well above the $1,600 required. The April 1 – June 30 quarter has the highest earnings ($800), and $1,800 (well above the $440 required) was earned in the other base period quarters. Bill qualifies for unemployment benefits.

D.

Additional Information. 1. An eligible claimant can receive up to 26 weeks of regular benefits during the year after he or she first files a claim. During periods of high unemployment, additional weeks of extended benefits may be authorized. 2. The amount of weekly benefits paid depends on the amount of wages earned during the base period -- specifically, on average weekly earnings during the two quarters in which earnings were highest. The Act sets minimum and maximum weekly benefit amounts; within those limits, a claimant's weekly benefit amount will be roughly half his or her former wages. 3. The weekly benefit payment may be increased by a dependent's allowance. It may be decreased if the claimant receives income from other sources. 4. Benefits may be denied to employees who have voluntarily quit a job without good cause attributable to the employer, been discharged for misconduct connected with the job, or who have ceased work due to involvement or participation in a labor dispute. 5. Benefits may be discontinued because of physical inability to work, failure to adequately search for work, unavailability for work (including refusal of a suitable job offer or refusal of a former employer's recall).

II.

FUTA Tax Rates, Earnings Limitations and Calculations. A. The FUTA tax rate is 6.2% of the first $7,000 paid each employee during the calendar year. It is only the cash wages paid during the year that count in the determination of earnings, and not accrued wages.

© Craig Pence, 2009. All rights reserved.

a.360).200 ($100.000 x 6.4%).$5400).4%).200 . To receive the full credit.000 set for FUTA taxes. Had Adams again paid $400 of its state tax liability after February 2. irregardless of the actual state rate imposed. The FUTA tax before the state credit is $6.2%).200 ($100. resulting in a net effective FUTA tax rate of . 1.$5400).8% (6. for total SUTA taxes of $3. When the state’s wage base is higher than the $7. and $40 ($400 x 10%) of the state tax credit would have been lost. the amount of state taxes paid at 5. employers must make the required state contributions on or before the due date for filing the annual FUTA return (form 940).000 and pays SUTA taxes at a rate of 5.000 x 5.360). The FUTA tax would now be $840 ($6.4% to the state. and the net tax due is $800 ($6.$5. a 10% penalty would have been imposed.4% credit allowed for FUTA taxes. a 10% penalty would have been imposed. the credit is reduced by 10% of the portion of the state tax that was late.000 and pays SUTA taxes at a rate of 3%.2%). Employers are given a credit against the federal rate for participation in state programs. If an employer has not made the state payments in full by February 2 of the following calendar year. .4% for total SUTA taxes of $5.000 x 6.400.200 .$5. If the employer’s state rate is less than 5. All rights reserved.200 . the FUTA state tax credit is kept at a full 5.4% of the first $7. penalties imposed for late payment are based only upon the cash amount paid late. b. and $40 ($400 x 10%) of the state tax credit would have been lost.000.200 .000 x 5.000 x 5. The amount of the credit is 5.$5.2%). which is January 31 of the following calendar year. © Craig Pence.400 ($100.360). The FUTA tax would now be $840 ($6. The FUTA tax before the state credit is $6.400 ($100. Module 6 3 B.4%).2%-5. Example: Adams Company had annual taxable wages paid of $100.$5400).200 ($100. a 10% penalty would have been imposed. for total SUTA taxes of $7. and the net tax due is $800 ($6.000. The amount of the state tax credit is $5. Had Adams paid $400 of its state tax liability after the due date of From 940. and they have the effect of reducing the state tax rate levied upon the employer.4% can be greater than the 5. 3. Had Adams again paid $400 of its state tax liability after February 2. Experience ratings (or merit ratings) are given by the state to employers who have good employment records.000 and pays SUTA taxes at a rate of 7%. Now suppose that Adams Company had annual taxable wages paid of $100.4%). The amount of the state tax credit is again kept at $5.4%.4% for all employers who make timely payment to the state.400 ($100. The amount of the state tax credit is still $5. 2009. Example: Adams Company had annual taxable wages paid of $100. and $40 ($400 x 10%) of the state tax credit would have been lost.200 . The FUTA tax would again be $840 ($6.000 x 6. The FUTA tax before the state credit is $6. and the net tax due is $800 ($6.200 . 2.Payroll Accounting Course Manual.000 in wages paid. Despite the fact that the employer may pay more or less than 5.

3% reduction is applied (total reduction = .asp. A.state. the state unemployment tax paid by an employer is a varying percentage rate multiplied by the first $12.000).3% annual reductions may continue. forms.520 earnings base are not taxed. for total SUTA taxes of $7. © Craig Pence.4% of the first $7. III. The reduction in the state tax credit begins in the second calendar year after the advance is made.us/employer/uitax.000. The earnings base changes from year to year. Adams pays SUTA taxes at a rate of 5. and does not provide this information. The state in which the company pays SUTA taxes has set a wage base of $9.Payroll Accounting Course Manual.4%. Title XII advances may reduce the state tax credit for FUTA taxes. Earnings Limitations and Calculations.4%-. another . but only if it has not been repaid. Note from the Instructor: Highland Community College is located in Illinois.4%). All rights reserved.8% (5.400 ($100. In 2010 it was raised from the $12. but they are limited to a total of no more than . Module 6 4 Example: For FUTA purposes ($7.6%) of the first $7. Earnings above this $12. which results in $130. but has met the DOL’s solvency standards. Adams Company had annual taxable wages of $100.ides. and it amounts to .il.4% x $130. Employers of workers who earn wages in more than one state must pay unemployment taxes in each state where the work is performed. These . c.6%). The state in which Adams pays SUTA taxes has taken Title XII advances and kept them outstanding for three years. SUTA Tax Rates. the state credit for FUTA taxes is still 5.300 limit that was effective in 2009. If the balance is still outstanding in the third year. Adams Company had annual taxable wages of $100. D. The text that accompanies these module outlines was written for a national market.3%. so the information that follows is specific to Illinois. etc. The FUTA state credit is still $5. For additional information.000 x 5.000 of taxable wages for SUTA purposes. 2009..000 wage base).020 (5. These advances represent loans from the federal government to states that are unable to pay their unemployment benefits. Adams state tax credit is 4.6% as long as the state meets the solvency standards set by the Department of Labor. Despite payment to multiple states. Beginning in 2010 in Illinois.000 wage base). see the Illinois Department of Employment Security’s website at http://www. . on the wages earned in that state.520 of wages paid an employee during the calendar year.000 in wages paid its employees.000.000 in total wages paid to the employee.000. Example: For FUTA purposes ($7.

For 2010.8% + .0045 in decimal). Maximum = (6. for example. To illustrate: 2. whichever is higher -plus the .8%].5% (6. and it is set at a level that ensures the solvency of the fund while avoiding excessive surpluses. and the minimum rate cannot be less than . the maximum rate is 7.914%.65% Example: Assume. for the following year. It is announced each year.4%.45% (45 hundredths of a percent.25% Minimum = (. and the fund building premium amount is .45% = 7.2% x 1.27) + .6% minimum rates that were in effect in 2009. so the minimum rate became . the state experience factor value is 107%. The percentage rate used by the employer in Illinois can vary between a maximum rate and a minimum rate.2%. For 2010. for a given year.45% = . If so.4%. . Therefore.07 plus the 0.2% x 1. C.25% and the minimum rate is .4% x 1.2%.8%].4% x 1. The maximum rate and the minimum rate are each determined by applying a rather complicated formula to the current year's factor values (see below): The state experience factor value is determined by the state each year. respectively). and they can sometimes vary by quite a lot.45% fund building premium.27) + .65%. or .9% (0.8% maximum and a 1.1% without regard for the state experience rating. whichever is higher -plus the . The minimum rate is equal to EITHER .2% minimum rate! 1.000 are taxed at rate that cannot exceed a maximum amount of 5.4%. which rounds to . that the state experience factor is 107% and the fund building premium is 0.4% or higher.07 plus the 0. when the fund building premium was .4% and . The maximum rate must be at least 6. for example. and the minimum rate was 1. Module 6 5 B.7%.8% maximum and .7% Fund Building Premium = .2% x 1. The result is rounded to the nearest tenth of a percent. Therefore.07) + . there was a 9.7% Fund Building Premium). The minimum and maximum rates are then adjusted by adding on a special fund building premium (applied to build up reserves in the trust fund). These rates increased from the 6.45% fund building premium.9%) and the maximum contribution rate is a rounded 7.4%).45% = . All rights reserved. the minimum contribution rate for the year is 0.4% x 1.4% multiplied by the adjusted state experience factor OR 6. In 2006.2% multiplied by the adjusted state experience factor OR . the adjusted state experience factor was 127%. the current year's state experience factor value is multiplied by a base rate (6. In 1996. the unadjusted minimum was set by statute at . © Craig Pence. Caution: these calculations are subject to legislative change. In 2005. 2009. 3.1% + . usually in October.5% (. Changes in rates are common. To determine the maximum and minimum SUTA rates.Payroll Accounting Course Manual. the maximum contribution rate for 2006 was 8. the maximum rate is EITHER equal to 6.9% [(6.1% [(.07) + .45% = 6.2% for the maximum and minimum rates.2% + . Small business exception: employers whose total taxable wages for a quarter are less than $50.

40% $9. 2009.40% 5.90% 5.40% $12. employers who became liable for the payment of contributions on or after January 1.000 2009 91% 138. with employees. Note how the rates varied from year to year as the factor values changed.4% 4. All rights reserved. The term "experience" here refers to the number of the employer's former workers who drew unemployment benefits and the amounts paid to them.60% 5. the higher the rate.20% 0.500 2006 127% 138.500 2008 103% 138. 2008.90% 0. for some time now.80% 5.000 2007 115% 138.90% 8. • Taxable Wages -.40% $11.4% 4.80% 7. For 2010.4% 3.7% fund building premium.The amount of unemployment benefits paid to former employees during the benefit charge periods listed below (the period to use depends on the number of years the employer has been paying unemployment taxes). Illinois Department of Employment Security Revenue Division YEAR STATE EXPERIENCE FACTOR BENEFIT CONVERSION FACTOR STARTING RATE MINIMUM RATES MAXIMUM RATES FUND BUILDING SMALL EMPLOYER RATE WAGE BASE 2004 123% 138.520 E. 1.35%. employers who became liable for unemployment taxes on or after January 1.40% $12.These are the wages recorded by the employer for the benefit charge period as reported on the UI-3/40 Quarterly Contribution and Wage Reports.40% 0.70% 1.4% 3.40% $11. but after three consecutive years of incurring unemployment tax liability they become experiencerated employers and the SUTA rate becomes variable.The BCF is computed by the state each year and announced early in the year.40% $10.300 2010 107% 138. usually January. .4% 4.00% 8. If you have incurred liability within each of the three calendar years immediately preceding 2010. This rate included the 0.80% 5.65% 7.60% 0.35% 0.10% 0.10% 8. assume that it is 2010 and you have been in business.2%. The BCF has remained constant for several years at 138. 2. To illustrate the calculation of the Benefit Ratio.70% 5. For experience-rated employers (those with three or more years of experience). For 2006. 2004 paid an introductory rate of 4. • Benefit Conversion Factor (BCF) .60% 6. Subsequent rates.40% $12.80% 0. These benefit charges are listed on the BEN-118 Statement of Benefit Charges received from the state of Illinois. a.20% 9.45% 5.20% 1.800 2005 139% 138. the SUTA tax rate is based on the benefit ratio. Module 6 6 D.00% 0. The table below summarizes the factor values for several years. Initial starting rates: New employers (those becoming liable for the unemployment taxes within the prior two years) who have no experience rating with the state are given an introductory starting rate. There are three components of the Benefit Ratio: • Benefit Charges .20% 0. This ratio is determined in such a way that the greater the amount of unemployment benefit payments caused by the employer. Employers are initially given a fixed starting SUTA rate. calculate your Benefit Ratio as follows: © Craig Pence.4%.80% 0.4% 3. pay an introductory rate of 3. An experience-rated employer qualifies for a variable rate based on the "experience" the state has had with the employer.Payroll Accounting Course Manual.25% 0.4% 3.90% 1.

• This result. 2009. This is the employer’s contribution rate. This effect will continue for four more years.4% • Divide these Converted Benefit Charges by your Taxable Wages for the period July. is your Benefit Ratio. Therefore. Module 6 7 2. 2008 through June 2009.45% (for 2010) to the number calculated in step 2 above. c. The state experience factor is calculated by the state each year and is set in order to ensure the solvency of the fund while avoiding excessive surpluses. If you have incurred liability within each of the five calendar years immediately preceding 2010 calculate your Benefit Ratio as follows: • Total the Benefit Charges for the period July. rounded to four places past the decimal and expressed as a percentage. • Multiply the total Benefit Charges by the benefit Conversion Factor of 138. and the employer's benefit ratio (and SUTA taxes) will not return to normal levels until the 5 years pass. • This result. It must fall within the minimum contribution rate (. 2006 through June. is your Benefit Ratio. 2006 through June 2009. . Total the Benefit Charges for the period July.Payroll Accounting Course Manual. 2007 through June.65% in 2010) and the maximum contribution rate (7. rounded to four places past the decimal and expressed as a percentage. add the fund building premium of . it is multiplied by the state experience factor (127% in 2010) and rounded to the nearest one tenth of one percent. additional years are not considered. Once 5 years of "experience" are reached. b. 2009. d. NOTE: Remember that a small employer whose calculated contribution rate is 5. If you have incurred liability within each of the four calendar years immediately preceding 2010. 9 • This result. It is announced each year.4%. calculate your Benefit ratio as follows: • Total the Benefit Charges for the period July.5% or • © Craig Pence. is your Benefit Ratio.25% in 2010). 2008 though June. for the following year. To finally determine the employer's SUTA tax rate. • Divide these Converted Benefit Charges by the employer’s Taxable Wages for the period July. 2009. • Multiply the total Benefit Charges by the Benefit Conversion Factor of 138. employers who lay off workers in a given year will see their benefit ratios (and SUTA tax rates) increase in the following year. 2007 through June. • Multiply the total Benefit Charges by the Benefit Conversion Factor of 138. • Divide these Converted Benefit Charges by your Taxable Wages for the period July.4%. 2009. usually in October. rounded to four places past the decimal and expressed as a percentage. All rights reserved. Once the benefit ratio is determined. 3.

laid the claimant off or reduced his hours. and any individual who consulted the company to engage in a SUTA dumping practice.5299% is multiplied by the 2004 State Experience Factor of 123% to get 1. and the company can have a 50 percent penalty surcharge applied to its annual contribution rate for up to four years. An employer's Benefit Ratio of 0. NOTE: See the Supplement at the end of this module for a comprehensive illustration of the determination of SUTA tax rates and the effect of benefit charges upon the SUTA tax liability.9%.0888% which rounds to 0. Rights of Employers 1. Although adding the Fund Building Rate of 0. After adding the Fund Building Rate of 0. How Benefit Charges are Determined. and was the last one to employ the claimant before he filed his claim (for a period of at least 30 working days).000 in civil penalties. Although adding the Fund Building Rate of 0. Examples of Rate Calculation (based upon 2004’s 123% experience factor and the 2004 8.7% equals 0." These "benefit charges" ultimately affect the employer's tax rate. The chargeable employer is the employer who a.9% minimum SUTA tax rates).Payroll Accounting Course Manual. 2009. Companies violating the law are guilty of a Class B misdemeanor and its officers could face jail time of up to 60 days. the employer's 2004 contribution rate is the minimum rate of 0.9%. thereby qualifying for a new starting SUTA tax rate and fraudulently reducing its SUTA taxes. 2. In addition.6%.9153% which rounds to 9.7% equals 10. An employer's Benefit Ratio of 8. or who b. the company. the employer's 2004 contribution rate is the maximum rate of 8." This occurs when a company with high unemployment insurance contribution rates deliberately creates a new business entity and dumps its employees into it. 1.6% maximum and .6%. could be fined up to $10. © Craig Pence. IDES lists each benefit payment in the account records of a "chargeable employer. G. An employer's Benefit Ratio of 1. F. law-abiding employers to make up the difference through an increase in the State Experience Factor. The law imposes federally mandated penalties for "SUTA dumping. In 2006 the state of Illinois implemented federal requirements that forced the individual states to crack down on employers who illegally lower their unemployment insurance taxes by setting up dummy business entities. SUTA Dumping.6%.7%.000.4% in that quarter.0722% is multiplied by the 2004 State Experience Factor of 123% to get 0. All rights reserved. Module 6 8 higher and whose total quarterly wages are less than $50. pays contributions at 5. provided employment that allowed the claimant to requalify for benefits after he was disqualified for certain reasons.8%. the employer's 2004 contribution rate is determined to be 2.9%.0612% is multiplied by the 2004 State Experience Factor of 123% to get 9.8818% which rounds to 1. 3. .1%. The practice forces other.

or employed 10 or more workers in each of 20 weeks in a given calendar year. 1. It must also pay contributions quarterly thereafter. IV. An employing unit that does not meet the "one or more" test but pays or paid wages for services in employment of $1. For the termination of coverage to be effective as of January of any calendar year. except certain types of nonprofit organizations or local governmental entities. or once having paid $1. An employing unit. full-time workers for 20 weeks in a row. Who must pay unemployment tax? Employers of "one or more in twenty weeks" or employers with $1.500 in wages are paid for the first time in the fourth quarter of the year. even though it did not or does not have one or more employees in as many as 20 weeks in that second year. . if the employer again has individuals providing services to it during that calendar year or the following calendar year. There is a time limit for filing such a request. AND such request is granted.500 or more of quarterly payroll must pay federal and state unemployment tax." AND all the quarterly taxable payrolls in that year are less than $1. AND it asks the Director of Employment Security (in writing) to be relieved from the requirement of paying contributions. and it must file reports for each quarter in which it had paid employees.500 or more during any calendar quarter of a calendar year ($1. that has one or more persons in employment in Illinois on any one day within each of 20 or more calendar weeks in any calendar year is required to pay contributions for that calendar year and for at least the following calendar year. an employer that no longer has services being performed for it in Illinois can request termination immediately if it files an application with the Director within 5 days of the date that its next wage report is due. or $1. Module 6 9 2. EXAMPLE: Even if the twentieth week in which one or more persons were employed falls in the last part of December of a particular year. For an employing unit to have in employment one or more individuals within each of 20 or more calendar weeks does not mean that an employing unit must necessarily have a staff of one or more regular. 2009. the request must be filed prior to February 1 of that year. All rights reserved. However. It must file its first report in January of the second year and pay contributions based on its first year’s taxable payroll.000 in the case of domestic service work) is required to pay contributions for the remainder of that calendar year and for at least the following calendar year.500 or more in wages in any calendar quarter for services in employment. In the case of farm work.500.000 in cash wages in one calendar quarter. the termination shall be rescinded as of the date that the termination was originally granted. Employers have the right to protest former employee's claims and to appeal any adverse decision. or that the same individual is employed in © Craig Pence. the employing unit is liable for contributions on its taxable payroll for that year and also for the following year. A. B.Payroll Accounting Course Manual. 2. However. the employer must have paid $20. Once having had one or more persons in employment on any one day within each of 20 or more calendar weeks in any calendar year. an employing unit will have to pay contributions for that year and for every year thereafter unless it has a year with less than "twenty weeks of one.

on Sunday and ends at midnight on the following Saturday. 5. if such person is not covered by any other state or Canada. who works for only a half hour one day a week. Adm. daughter. 7. 2. business or profession. This provision is much more narrowly defined than what is commonly known as an "independent contractor.200 for the factors considered in the application of this exception. The week to be used in determining liability is a calendar week. are not considered the owners of the business of a corporation. and the owner's child under the age of 18. © Craig Pence. However. If a worker works a few hours on Saturday and a few hours on Sunday in the same weekend. An employer's payroll week could end on any day of the week. even if they are the sole stockholders. All individuals performing services for an employing unit are counted in determining the number of workers or in determining the quarterly taxable wages except for the following. (Section 218) 4. The services on the committee must be as a Director dealing with broad matters of policy. full-time worker. A part-time worker. Directors of a corporation acting in the capacity of a Director or on a committee provided for by law or by the charter or the by-laws of the corporation. Code 2732. a person working for a corporation is counted even though the owner of all the stock is the worker's son.Payroll Accounting Course Manual. counts just as much in each week as one regular. Example: If the employing unit hired a different part-time worker each week for 20 calendar weeks. However. mother.M. The worker should be counted if the employing unit paid cash wages of $20. Module 6 10 each such week." See 56 Ill. he is working in two different calendar weeks. They usually are considered to be in employment and must be counted. This Section does not apply to certain nonprofit organizations. If they perform services which are outside the course of the employer's business or performed outside the place of business (Section 212). after 1971. Persons who do not perform any of their services in the State of Illinois. C. which may not necessarily be the employer's payroll week. spouse. Only certain specified types of these workers are counted in employment. D. Officers of a corporation. 2009. occupation. but a calendar week begins at 12:01 A.000 or more in any calendar quarter either in the current or preceding year to workers employed in agricultural or aquacultural labor. Domestic workers in private homes.4). 3. . All rights reserved. local college clubs and local chapters of college fraternities or sororities. The owner or owners (partners) of an employing unit (Section 206). Persons free from the employer's control and direction who are engaged in an independent trade. The owner's father. and not those ordinarily performed by an officer or other employee of a corporation (Section 232). 6. 1. it would have to pay contributions for that year and for at least the next calendar year. OR the employing unit employed 10 or more such workers in each of 20 or more weeks in either the current or preceding year (Sections 214 and 211. Agricultural and aquacultural workers. spouse or parent. Compensation payments to these persons are specifically exempted from SUTA taxes. his services are considered to be Illinois employment if the place from which the services are directed or controlled is in Illinois.

which is not an American aircraft. Persons under the age of 18 who deliver newspapers or shopping news and any persons who deliver newspapers or shopping news to the ultimate consumer. 9. Insurance agents who are paid solely by commission (Section 228). This also includes persons whose services are performed on or in connection with an aircraft. (See the section on governmental entities for a complete explanation. 10. Golf caddies. 19. Persons who perform services in another state as well as in Illinois. 17.1).2). If substantially all of their remuneration is on a "per piece" or output rather than an hourly basis and they work under written contracts that indicate they are not to be treated as employees for federal tax purposes. Freelance editorial and photographic work for newspapers is also exempt (Section 225). All rights reserved. Owner-operators of their own trucks. 2009. (See the section on nonprofit organizations for a complete explanation. If their written employment contracts provide that they are paid on a fee per appraisal basis and that they are free to accept or reject appraisal requests from that entity or other entities (Section 217. Certain persons performing services for nonprofit organizations.205). Real estate closing agents. Direct sellers of consumer goods outside of a retail establishment. But only if the Director of Employment Security has agreed to consider all of their services performed in another state (Section 2700).1 and 56 Ill. But only if the remuneration for such service is directly related to sales. Real estate salesmen Under certain conditions (Section 217). 12.) 15. and the services are performed pursuant to a written contract that provides that the person shall not be treated as an employee for federal tax purposes (Section 217). But only under certain specified circumstances as provided in the Act (Section 212.000 or more in any calendar quarter in either the current or preceding calendar year to an individual or individuals employed in such domestic service (Sections 215 and 211. Officers or members of the crew of a vessel that is not an American vessel or that is directed or maintained from an operating office outside this State. Certain persons who perform services for governmental entities.1).Payroll Accounting Course Manual. .5). 18. if the person is employed on or in connection with such aircraft when outside the United States (Section 216). Code 2732. This includes persons whose services are performed outside this State. When their contracts with the title insurance company specify that they are not employees and that they are paid on a per closing basis (Section 217.) 14. Real estate appraisers. 16. 8. Adm. 11. 13. © Craig Pence. If they are full-time students under the age of 22 and are paid directly by a golf club member or by the golf club on behalf of a member (Section 232. rather than hours worked. Module 6 11 Unless the employer had paid cash wages of $1.

2. including those not liable for the payment of contributions. All employers determined to be liable for the payment of contributions must file Form UI-3/40 (Contribution and Wage Report) quarterly. Quarterly deposits must be made at the bank with an accompanying Form 8109 coupon marked ‘940’ and with the proper quarter marked. $230 for the third quarter. The wages of the workers for a calendar quarter are B. Reporting Forms and Filing Requirements A. and (c) paid wages that are taxable for both state and federal unemployment. If. 1. . the total accumulated liability is less than $500. 3. This report also must be filed if a business sells a separate part of its business or the assets of such separate part. 4. the $240 deposit may be made with its annual Form 940 filing. Davidson must make a quarterly deposit of $575 by October 31. Sunday. In addition. Quarterly deposits of FUTA taxes are required if the accumulated FUTA liability exceeds $500. Module 6 12 V. the deposit must be made by the end of the month following the end of the quarter. at the end of the year. © Craig Pence. 1. If any deposit due date falls on a Saturday. Postmark dates determine the date filed. If timely deposits have been made and the total liability has been paid in full through them. Example: Davidson Company’s FUTA tax liability is $150 for the first quarter. then the due date is extended to February 10. which goes out of business. A newly created employing unit must file this report within thirty days after it begins business. See chapter 5 of the text for examples. (b) has made the state unemployment tax payments by the due date of Form 940EZ (January 31). or legal holiday. Form 940 (or 940EZ) is used to report the employer’s annual federal unemployment tax liability. Federal Form 940. When this happens. 2. Had the accumulated liability been more than $500. or is involved in any change must submit Form UI-50A (Notice of Change) to the Department of Employment Security within ten days of such change. 1. The due date for Form 940 is January 31 of the following calendar year. Deposits and Record Keeping Requirements. Similar forms must be filed by nonprofit organizations and local governmental entities that elect to reimburse benefits in lieu of paying contributions. 2009. $195 for the second quarter. the fourth quarter’s payment may be mailed with Form 940 instead of being deposited at the bank. 2. Form 940EZ may only be used if the employer (a) paid state unemployment taxes in just one state. the deposit is due on the next business day. or transfers or sells substantially all of its business assets or its business. the deposit would have had to have been made at the bank with a Form 8109. Any employing unit.Payroll Accounting Course Manual. since Davidson’s liability is only $240 at the end of the fourth quarter. All rights reserved. SUTA Filings. C. and $240 for the fourth quarter. Illinois requires new employers whom have not paid contributions or has not filed a report of its employment experience to complete and file Form UI-1 (Report to Determine Liability) from the Revenue Division of the Department of Employment Security. This report must be completed and filed with the Revenue Division. 3.

2. Each worker's name (including temporary and part-time workers). the UI-3/40 must be filed by the use of electronic media which has been approved by the Director if the employer reasonably expects to have 250 or more workers in its employ during that year or had 250 or more workers in its employ during the previous year. salary and commissions. 3. the date on which each worker was laid off. Adm. All individuals or firms that employ one or more workers must maintain and preserve payroll records that show (56 III. The city or county in which each worker is employed. 9. Employer Records. The dates covered by the employer's pay period. 7. The dates upon which each worker performed services. etc. 6.110) b. a. b. Before mailing the UI-3/40 to the employer. Adm. 10. Module 6 13 reported on Form UI-3/40. he should file a final report showing the wages paid in the last quarter of business and should also file a Form UI-50A. account number and the rate at which contributions are to be computed. 5. Attn: Document Control. State Street. (56 Ill. 401 S. Each worker's social security account number. 8. Failure to comply with this requirement will result in penalties to the employer. Code 2730. 2009. Reasonable cash value of remuneration other than cash such as board.100) © Craig Pence. room. discharged or quit. The customary or scheduled fulltime hours for each worker paid on an hourly or piecework basis in the employment in which he is engaged. may submit its individual workers' wages on electronic media. The date on which each worker was hired. The check should be made payable to The Director of Employment Security and mailed with the Report and Transmittal to the designated address.. IL 60605 D. weekly. An employer who has been paying contributions but who has paid no wages in a calendar quarter because of temporary inactivity must file a quarterly report showing "no wages paid. These forms should be mailed using the envelope provided. The monthly. (56 Ill. The UI-3/40 should be completed and promptly returned with a check or money order covering the contributions due. c. laundry. the wages paid each worker for each pay period and the total wages for each pay period." If the employer terminates business. Information and detailed instructions for reporting on tape may be obtained by writing to: Department of Employment Security . daily or hourly rate of pay. All rights reserved. and the date of rehiring after temporary layoffs.115): 1. . address. The number of hours worked by each worker paid at an hourly or piecework rate. An employer whose payroll records are maintained on data processing equipment. Code 2760. Waiver of this requirement is allowed only where the employer has been granted a waiver of the similar federal electronic reporting requirement. or the piecework rate if the worker is paid on a piecework basis. Chicago. the Department of Employment Security imprints on it the employer's name. The record of wages paid must include: a. Money wages paid. except where a meal is provided for the benefit of the employer. such as wages.Payroll Accounting Course Manual. Adm. and who is not subject to the requirement explained in the previous paragraph. Code 2760. Effective with reports due for the first quarter of 1994. 4.

dismissal pay. This Notice must be mailed to the local office designated on the form. the employing unit must.130) b. The records of employing units must be preserved for at least five years. interest. 2009. IL 60605 © Craig Pence. An employer which receives the above Notice and which believes that the claimant may be ineligible for benefits for any reason. must AT THAT TIME file a letter or a Notice of Possible Ineligibility (Form UI(ILL) BIS-32)(return copy) if it wishes to be a party to the claims adjudicator's determination. prizes. d. gifts. such as bonuses. a. interest or penalties has become final or is canceled and withdrawn. All rights reserved. Special payments. Module 6 14 c 11. notify the following office: Illinois Dept. vacation pay or pay in the nature of vacation pay. Unless the employer is a party to a determination. (Section 702 and 56 Ill. or penalties is made or an action for the collection of contributions. within 10 days of the date that the individual files his next claim for benefits. If an employing unit discharges an individual for an alleged felony or theft connected with his work. All payroll records must be kept in such a way that quarterly wages of each worker and the weeks in which the workers performed their services may be easily determined. and by the designated "REPLY DUE DATE " (within TEN days from the NOTICE OF CLAIM). Code 2720. 2. The same notice is sent when an additional claim or a claim for Extended Benefits is first filed. where these are customarily received by workers from persons other than the employer and are reported to the employer by the worker. and the period of time these special payments cover. 7 South Chicago. As mentioned above. of Employment Security Attn: Labor Dispute Unit 401 S. if the Notice is not sent on time. State St. Notice Of Claim 1.Payroll Accounting Course Manual. the employer loses its appeal rights except with regard to the issues of availability. Adm. or until a determination and assessment of contributions. it would not have the right to appeal an adverse determination. 12. wages in lieu of notice. (Section 1801) E. The amount of tips and gratuities. a Notice of Claim to Last Employing Unit and Last Employer or Other Interested Party is sent to the claimant's last employing unit. . the employer whose experience rating will be chargeable if benefits are paid to the individual and to any other individual or organization for which the individual provided services subsequent to the beginning of his benefit year. refusal of work or "not unemployed" for subsequent weeks. disqualifying income. As soon as possible after a claim is filed for benefits..

Before we leave our course. Beginning in tax year 2011. may represent taxpayers before the IRS. Certification A. Notice to Workers About Unemployment Insurance Benefits (IDES) Equal Employment Opportunity is the Law Your Rights Under the Family and Medical Leave Act Job Safety and Health Protection Notice: Employee Polygraph Protection Act Fair Labor Standards Act . All rights reserved. apply to individuals who only prepare payroll or other non-income tax returns? Yes. Posters are available by download from the IDES website or by contacting IDES at 800247-4984 or 312-793-4880. Illinois employers are required to inform workers about their rights to unemployment insurance benefits. If it cannot be hand-delivered.Payroll Accounting Course Manual. VIII. Will the income tax certification requirement. Previously. The following posters are mandatory: • • • • • • • • • • 2. The Internal Revenue Service (IRS) is moving toward regulation of the tax preparation industry. Congratulations upon your completion of our course! As you studied these modules. it must be mailed to the worker's last known address within five days of separation. the employer must give the worker a copy of the brochure titled “What Every Worker Should Know about Unemployment Insurance” (Form BEN-39). 2009. Module 6 15 VII. you should be aware of the requirements and the opportunities regarding certification in payroll. © Craig Pence. Certified Public Accountants and lawyers are exempt from this rule. The IDES provides the brochures at no charge. like CPA's and attorneys. There are two kinds of certification that you should know about: 1. or (2) by working with the IRS for 5 years in a position in which tax regulations were interpreted and applied. all tax preparers who receive a fee for completing a federal tax return will be required to obtain a preparer tax identification number (PTIN) and become certified. then. but anyone else will now have to pass a certification examination in order to prepare tax returns for clients. a. 1. anyone who "hung out a shingle" could prepare income tax returns for clients and charge a fee for doing so. or assisting in the preparation of. all or substantially “Enrolled Agents” are licensed to practice by the federal government and. The license is earned in one of two ways: (1) by passing a comprehensive examination over all aspects of the tax code. 1 . you were given a comprehensive overview of the rules and regulations that govern the careers of payroll professionals in America. Enrolled Agents 1 . Individuals who are compensated for preparing.Federal Minimum Wage Notice to Workers with Disabilities Migrant and Seasonal Agricultural Worker Protection Act (MSPA) Notice to Employers and Employees Worker's Compensation: Notice to Employees from the State of Illinois When a worker’s employment is terminated. Notifying Workers of Their Rights Under SUTA A.

What about employees? Will a bookkeeper employed by a business have to take the exam if they only do their employer's 941 and 940? No. APA offers two levels of certification. he or she will not be required to register and obtain a PTIN. similar to the way CPA’s use the CPA designation to publicize their status as an accounting professional. Accordingly. reporting. certified public accountants. and abilities in the payroll profession. objective credential that verifies a specified level of knowledge. c. skills. and enhance their standing within the profession. administration. you studied the same material that is covered on the APA certification examinations. all of a federal tax return must obtain a PTIN. unless the employee prepares other federal tax returns for compensation. advance their careers. they will need to take the competency test and become certified. a. and APA membership is not required. the Fundamental Payroll Certification (FPC) and the Certified Payroll Professional (CPP) certification. Unless they are attorneys. certified public accountant. The Certified Payroll Professional (CPP) exam does have eligibility requirements.Payroll Accounting Course Manual. 2. The American Payroll Association (APA) is a national not-for-profit organization of payroll professionals. d. taxation. As you completed our course. all independent paid tax return preparers. will be required to obtain a preparer tax identification number (PTIN). education/consulting. It is open to all those who wish to demonstrate a baseline of payroll competency. . whether they prepare income tax returns or payroll tax returns. and Forms 941 and 940 are federal tax returns! Therefore. and I am confident that with a little investment of time and effort you will be able to pass the examination and become certified. or enrolled agent. or enrolled agents. who handle payrolls for their clients independently. Certification helps individuals demonstrate their payroll expertise. The FPC is designed for entry-level payroll professionals and students. will have to have a PTIN. Payroll professionals. All rights reserved. d. I encourage you to consider doing this! b. The Fundamental Payroll Certification (FPC) exam has no eligibility requirement. The APA administers two certification programs in payroll. © Craig Pence. Module 6 16 b. APA certification is a valuable. systems. secure promotions. Individuals must meet at least one of the three eligibility criteria: 1. To summarize. c. employees who administer the payroll function and prepare Form 941 will not be required to be certified. Another form of certification should also be of interest to you. 2009. If the preparer is not an attorney. An employee who prepares his or her employer’s returns is not required to sign as a paid preparer. Employed in the practice of payroll for at least three of the five years preceding the date of examination through either direct or related involvement in at least one of the following payroll industry areas: payroll production. accounting. the preparer will need to take the competency test and satisfy the continuing education requirements. Persons who pass the national examination may list the FPC or CPP designations following their names and on their resumes.

(See the following page for Supplement 2) © Craig Pence.Payroll Accounting Course Manual. Employed in the practice of payroll for at least 18 months. and Strategic Payroll Practices or the following two APA courses: Payroll 101 and Payroll 201.org/. APA members receive newsletters. and Strategic Payroll Practices or the following APA course: Payroll 201. Advanced Payroll Concepts. 2009.org/certification/.americanpayroll. I would encourage you to now consider membership in the American Payroll Association. Advanced Payroll Concepts. For more information see http://www. all of the following three American Payroll Association (APA) courses: Payroll Practice Essentials. Module 6 17 2. obtained an FPC designation. the following APA courses: Intermediate Payroll Concepts. Intermediate Payroll Concepts. and are able to network with other professionals in the field. and to also consider becoming certified in payroll. All rights reserved. training opportunities. e. Details about membership are available on the APA’s national website at http://www. . Employed in the practice of payroll for at least the last 24 months and must have completed. and must have completed. 3. within the last 24 months.americanpayroll. within the last 18 months.

and the maximum SUTA rate is 7.3%.000 = $ 900 $ $ 300.000 = $ 4.000 = $ 900 . Tax rate=.000 0% 1.40% 0.2%) limits SUTA Rate 12/31/20X5 Incurred SUTA liability in each of the 4 prior calendar years? Yes.40% 0. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X4 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (. SUTA Tax Rate Calculations: 12/31/20X1 Incurred SUTA liability in each of the 3 prior calendar years? No. All rights reserved. x $150.40% 0. the minimum SUTA rate is . 2009. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X3 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.60% x $150.60% x $150.3%.950 $ $ 150.6%) and maximum (7. Tax rate = 12/31/20X3 Incurred SUTA liability in each of the 3 prior calendar years? No. In the example.Payroll Accounting Course Manual.2%) limits SUTA Rate © Craig Pence.6%.2%. a fund building premium of . 3. We will use a state Benefit Conversion Factor of 140% for each of the years in question.3%. Module 6 18 Supplement 2 Comprehensive Illustration of the Determination of Illinois SUTA Tax Rates and Effect of Benefit Charges Upon SUTA Tax Expense Barrington Company has been in business from 20X1 through 20X8 and qualifies as a small business in the state of Illinois.950 3. Part I.000 0% 1.1 0% 0.000 = $ 4. We will now calculate the SUTA tax rates and the amount of SUTA taxes paid for each of the years 20X1 through 20X8 assuming that no employees were laid off during the 8 year period.3% x $150.1 0% 0. The taxable wages for SUTA purposes in each of these years was $150. x $150.40% 0.6%) and maximum (7. and the introductory SUTA rate given to the company in 20X1 was 3.000.4%.20% 0. 12/31/20X2 Incurred SUTA liability in each of the 3 prior calendar years? No.950 3.000 = $ 4. and a State Experience Factor of 110% throughout the period.20% 0. Tax rate = 12/31/20X4 Incurred SUTA liability in each of the 3 prior calendar years? Yes.

40% 0.20% 0.000 0% 1.40% 0.60% x $150.000 = $ 900 $19. . Tax Rate: Benefit Charges in period 7/1/20X3 through 6/30/20X6 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (. Module 6 19 12/31/20X6 Incurred SUTA liability in each of the 5 prior calendar years? Yes.40% 0.20% 0.60% x $150.2%) limits SUTA Rate 12/31/20X7 Incurred SUTA liability in each of the 5 prior calendar years? Yes.000 0% 1. All rights reserved.1 0% 0.000 0% 1.350 © Craig Pence.Payroll Accounting Course Manual.000 = $ 900 $ $ 450.40% 0.60% x $150.000 = $ 900 $ $ 450.6%) and maximum (7. 2009.1 0% 0. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X5 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.20% 0.2%) limits SUTA Rate Total SUTA Taxes Paid $ $ 450.2%) limits SUTA Rate 12/31/20X8 Incurred SUTA liability in each of the 5 prior calendar years? Yes.6%) and maximum (7.40% 0. Tax Rate: Benefit Charges in period 7/1/20X4 through 6/30/20X7 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.1 0% 0.40% 0.6%) and maximum (7.

Let us assume now that in the third year of operations an employee was laid off and drew $6.000 = $ 4.Payroll Accounting Course Manual. .000 = $ 5. Tax rate = 12/31/20X3 Incurred SUTA liability in each of the 3 prior calendar years? No. x $150. Tax rate = 12/31/20X4 Incurred SUTA liability in each of the 3 prior calendar years? Yes.50% 0.250 © Craig Pence.40% 6.950 3. x $150.000 = $ 4.000 1.2%) limits SUTA Rate 3.2%) limits SUTA Rate Maximum SUTA rate applicable to small businesses: 12/31/20X5 Incurred SUTA liability in each of the 4 prior calendar years? Yes.40 $ 8.16% 0.6%) and maximum (7.100 6.60% 1. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X4 Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.40% 3.3%.00% 3.000 = $ 4.000 1.3%.80% 1.400 $ 300.56% 5. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X3: Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.1 3.1 6. All rights reserved. 12/31/20X1 Incurred SUTA liability in each of the 3 prior calendar years? No. We will now recalculate the SUTA tax rates and SUTA taxes that must be paid and determine how much additional SUTA tax was paid because of the layoff.56% 0.000 2. 2009.10% 0.000 5.950 3.000 = $ 8. Tax rate = 12/31/20X2 Incurred SUTA liability in each of the 3 prior calendar years? No.00% 6.6%) and maximum (7.3%.40 $ 8. x $150.950 6.000 of state unemployment benefits all during the first half of 20X3.50% $ x $150. Module 6 20 Part II.40% $ x $150.400 $ 150.

50% 0.350): $ 14.000 = $ 900 Total SUTA Taxes Paid $ 33. Tax Rate: Benefit Charges in period 7/1/20X3 through 6/30/20X6 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.60% x $150.000 1. Tax Rate: Benefit Charges in period 7/1/20X4 through 6/30/20X7 Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.00% 2.6%) and maximum (7.000 0.000 = $ 900 $ $ 450.750 Additional Taxes Paid (Case (a) versus Case (b) ($33.000 0% 1.000 1.60% x $150.400 © Craig Pence. All rights reserved.40% 0.750-$19.1 2.6%) and maximum (7.2%) limits SUTA Rate 12/31/20X8 Incurred SUTA liability in each of the 5 prior calendar years? Yes.20% 0.40 $ 8.Payroll Accounting Course Manual.2%) limits SUTA Rate 6. 2009.10% 0.750 $ $ 450.400 $ 450.1 0% 0.000 = $ 3. Module 6 21 12/31/20X6 Incurred SUTA liability in each of the 5 prior calendar years? Yes.40% 0.40% 2.00% 1.40% 0. Tax Rate: Benefit Charges in period 7/1/20X2 through 6/30/20X5 Multiply by Benefit Conversion Factor: Total Divide by Taxable Wages in this period: Benefit Ratio Multiply by State Experience Factor Unadjusted SUTA Rate Add Fund Building Premium Preliminary SUTA Rate Adjust for minimum (.40% 0.1 0% 0.6%) and maximum (7.20% 0.50% $ x $150. .2%) limits SUTA Rate 12/31/20X7 Incurred SUTA liability in each of the 5 prior calendar years? Yes.87% 1.

What is the amount of wages paid to Candace during each quarter of 20X3? Does Carolyn have to pay unemployment taxes? Why or why not? FUTA Credit for State Unemployment Taxes. Can Robert still continue to receive unemployment benefits? Who Must Pay Unemployment Taxes? Carolyn Cobb began a house cleaning business in 20X3. . What is Johnson’s FUTA tax payment now? (c). 20X1. 3.Group Discussion Question Problems and Exercises Examination 4 follows Module 6.000 of the SUTA taxes were late and were paid after February 2.960 per year for the past two years. Use the practice exam to prepare for the scored exam. Robert did fall asleep at his job the week before and was reprimanded. © Craig Pence. March 1. Now suppose $1.4%. What is the amount of FUTA taxes that Johnson will pay? (b). and that the introductory SUTA rate given the company in 20X1 was 3. 1. Assume that the taxable wages for SUTA purposes in each of these years are $100. or $480 per week. During the year she employed her niece. roughly what amount should he expect to receive per week and on what date would his unemployment expire (assume no extension of the standard benefit period has occurred)? Suppose Robert does begin receiving benefits. Redo parts (a) and (b) assuming the SUTA tax rate is 6.5% instead of 5. Candace Kernel. (a). The 2. You should wait until you have received your scored discussion question answer before taking examination 4. earning $24.4% rate) on time prior to filing Federal Form 940 on January 31. but injures his back while playing golf and is unable to return to work when recalled by his employer. 4. Johnson Company has annual taxable wages for SUTA and FUTA purposes of $50. Candace worked only on Fridays. Abercrombie Company has been in business from 20X1 through 20X8. She was paid $100 each Friday that she worked. 20X1. (d). in the business.000 and has made all the required SUTA contributions (at a 5.4%.3%. All rights reserved. Now redo parts (a) and (b) assuming the SUTA tax rate is 3% instead of 5. Assume there are 4 Friday workdays in each calendar month during 20X3. Robert had been employed for six years at Cosmic Collar. Robert Rotweiler was laid off from his job at Cosmic Collar Company on February 15. due to downsizing of the labor force. but such infractions of company policy do not usually result in firing. Right to Receive Unemployment Benefits. helping Carolyn on her bigger cleaning jobs. 2009. Should Robert expect to receive unemployment benefits as a result of his termination? Why or why not? If Robert does quality for benefits and begins receiving them on Monday. (HINT: See the supplement above for a guide to the solution of this problem).000.

and the maximum SUTA rate is 7. No other employees have drawn against the company. All rights reserved.800 in earnings.980 500 30.8% of the first $7.2%. (c). Assume further that Abercrombie qualifies as an Illinois small business. David Johnson. Complete the table. Janice Total SUTA Taxes FUTA Taxes 6. and that the State Experience Factor is 110% throughout the period. Payroll Register Accumulated Earnings. -End- © Craig Pence.4% throughout the period. How much additional SUTA tax was paid because of the layoff? 5. Assume the Illinois experience factor is 118%. What is the total amount of SUTA taxes paid over the 8 year period? (b). Calculate the SUTA tax rates and the amount of SUTA taxes paid for each of the years 20X1 through 20X8 assuming that no employees were laid off during the 8 year period. Module 6 23 fund building premium is . calculating the SUTA and FUTA tax expense for the company’s current payroll. The minimum SUTA rate is . . Assume the state Benefit Conversion Factor is 140% for each of the years in question.Payroll Accounting Course Manual. 2009. Assume a fund building premium of . Determining SUTA and FUTA Tax Expense. Gwen Jamison.599 1.000 of state unemployment benefits during the first half of 20X3. John Janson. Calculate the SUTA rate paid by the company in each of the 8 years.749 Employee Jackson.573 562 4.000 of earnings. and its FUTA tax rate is . Redo your work assuming now that in the third year of operations an employee was laid off and drew $5. Calculation of Minimum and Maximum SUTA rate. YTD (excluding Current current wages) Wages 9.7% is in effect.6%.524 433 9. Calculate the maximum and minimum SUTA tax rates for the year. Jetoff Travel Company employs four workers. (a).5% of the first $9. Compare your answers in (a) and (b). The company’s SUTA tax rate is 3.522 254 6.

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