Tuesday, July 5, 2011

FUTA Rate Changes to .6% July 1, 2011

Congress has announced that the 0.2% FUTA surcharge will not be extended before June 30, 2011

Employers have been required to pay a flat rate of 6.2% on the first $7,000.00 of each employee’s annual wages for FUTA. The 6.2% FUTA rate included a temporary 0.2% surcharge that was first added in the 1970’s. This temporary surcharge has been extended many times over the past three decades. The last extension, set to expire effective 7/1/2011, was included in The Worker, Homeownership and Business Assistance Act of 2009 signed into law on November 6, 2009.

The FUTA rate will be reduced from 6.2% to 6.0% effective July 1, 2011. Employers will still receive the 5.4% credit for paying state unemployment on time, reducing the FUTA rate to .6% on wages paid up to the annual FUTA limit of $7,000.00.

The IRS is currently revising Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to accommodate the two different FUTA rates for calendar year 2011.

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