The IRS has released the 2022 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, Schedule A (Form 940). 

Four States and Virgin Islands Subject to FUTA Credit Reduction.

California, Connecticut, Illinois, and New York, along with the Virgin Islands, did not pay back their federal loans by the November 10, 2022, deadline and will lose the full Federal Unemployment Tax Act (FUTA) credit for 2022. 

Credit reduction states for 2022: The credit reduction rate for  California, Connecticut, Illinois, and New York is 0.003 (0.3%). The credit reduction rate for the U.S. Virgin Islands is 0.036 (3.6%).

IRS Form 940 Guide

https://www.irs.gov/pub/irs-pdf/f940.pdf

We have update ezPaycheck 2022 payroll software with the new Form 940. Current ezPaycheck 2022 clients can get this update for free. New clients are welcome to download ezPaycheck and test drive with no obligation and no cost.

How to update ezPaycheck 2022

https://www.halfpricesoft.com/payroll-software/ezPaycheck_update.asp

How to File Form 940?

https://www.halfpricesoft.com/payroll-software/print-940-form.asp

Beginning July 1, 2011, the FUTA tax rate will decrease to 6.0%. This change will reduce the effective tax rate for most employers payroll calculation from .8% to .6%. 

Federal Unemployment Tax    

The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax. Only the employer pays FUTA tax; it is not deducted from the employee's wages. (For more information, refer to the Instructions for Form 940 )

 FUTA Calulations:

The FUTA tax rate was 6.2% of taxable wages before. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state.  

Before July 1, 2011

For most employers, the net FUTA tax rate is generally 0.8% (6.2% – 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00).

After July 1, 2011 

For most employers, the net FUTA tax rate is generally 0.8% (6.0% – 5.4%), for a maximum FUTA tax of $42.00 per employee, per year (.006 X $7,000. = $42.00).

ezPaycheck Payroll software

Halfpricesoft.com will release the updated version of ezPaycheck Payroll Software after we get new instructions of Form 940.