Instructions For Futa Credit Reduction - 2012
ADVERTISEMENT
1State of Michigan
Department of Licensing and
Regulatory Affairs
UNEMPLOYMENT
2012 FUTA Credit Reduction
INSURANCE
AGENCY
Normal FUTA Tax
,
R
S
Governor
Employers pay FUTA on the first $7,000 of each employee’s annual wages. The FUTA tax
ICK
NYDER
State of Michigan
was a flat rate of 6.2% up to June 30, 2011. As of July 1, 2011, the FUTA tax rate is 6.0%,
but employers who pay their state unemployment tax timely and in full will still receive a
Steven H. Hilfinger,
Director
Department of Licensing and
5.4% credit if their state is not a credit reduction state. Therefore, the net FUTA tax rate is
Regulatory Affairs
currently is 0.6%.
Steve Arwood
, Deputy Director
Department of Licensing and
Michigan is a Credit Reduction State
Regulatory Affairs
Federal law provides for a reduction in the FUTA tax credit when a state has outstanding
federal loans for two years. The reduction in the FUTA tax credit is 0.3% for the first year,
Steve Arwood
,
Director
Unemployment Insurance Agency
and an additional 0.3% for each succeeding year until the loan is repaid. 2011 is the third
year that Michigan has had an outstanding federal loan. The credit reduction for 2011,
which is due January 31, 2012, is 0.9%. Therefore, the net FUTA tax is 1.7%, prior to July
st
st
1
, (a maximum of $119 per employee) and 1.5% on or after July 1
, (a maximum of $105
per employee). The FUTA credit reduction results in a net increase in FUTA taxes and
applies to all Michigan contributing employers (except to Indian Tribes, nonprofit
organizations, and governmental entities).
The FUTA credit reduction resulted in an additional $21 per employee ($7,000 X 0.3% =
$21) in 2009 (first year loans were un-repaid), which reduced the FUTA credit to 5.1%. In
2010 (second year loans remained un-repaid), it cost Michigan employers an additional $42
per employee ($7,000 x 0.6% = $42), which reduced the FUTA credit to 4.8%. In 2012 (third
year loans will remain un-repaid), it will cost Michigan employers an additional $63 per
employee ($7000 x 0.9% = $63), which will reduce the FUTA credit to 4.5%.
From January 1, 2011 to June 30, 2011
FUTA tax rate……….……………....... 6.2%
Minus Credit allowed……….…….….. 5.4%
(if state unemployment tax paid timely)
Equals Net FUTA tax………………… 0.8%
rd
FUTA Credit Reduction in 3
year… 0.9%
Total FUTA tax……………………….. 1.7%
From July1, 2011 to December 31, 2011
FUTA tax rate……….……………....... 6.0%
Minus Credit allowed……….…….….. 5.4%
(if state unemployment tax paid timely)
Equals Net FUTA tax………………… 0.6%
rd
FUTA Credit Reduction in 3
year… 0.9%
Total FUTA tax…………….………….. 1.5%
To offset this cost, Michigan offers a Michigan Unemployment Tax Credit to fully
experienced employers (unemployment experience of 5 years or more), who have a
positive reserve balance, a credit of either 50% of the additional FUTA taxes paid or the
taxable wages for the year of the credit multiplied by the employer’s Nonchargeable
Benefits Component (NBC), which ever results in the lessor amount.
For more information about the FUTA credit reduction or the Michigan Unemployment Tax Credit,
employers may call the UIA Office of Employer Ombudsman (OEO) at either 1-855-484-2636 (4-
UIAOEO) or 1-313-456-2300, or email OEO@michigan.gov.
LARA is an equal opportunity
Michigan Department of Licensing
employer/program. Auxiliary aids,
and Regulatory Affairs
services and other reasonable
Unemployment Insurance Agency
accommodations are available upon
Authority: UIA Director
request to individuals with disabilities.
Quantity: 1,000 Cost: $14 (1.4¢/copy).
Fact Sheet #143
Paid for with federal funds.
November 2011
CADILLAC PLACE 3024 WEST GRAND BOULEVARD DETROIT, MICHIGAN 48202
TTY: 1-866-366-0004
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial