Tax Tip of the Week | No. 285 | Ohio Employers' Federal Unemployment Tax Increased for 2014

Tax Tip of the Week | Jan 14, 2015 | No. 285 | Ohio Employers' Federal Unemployment Tax Increased for 2014In case you didn't hear...

The federal unemployment tax rate for employers increased for the fourth year for 2014 due to an automatic repayment system for states that haven’t repaid their debts.This credit reduction results in additional tax on the first $7,000 of wages.  The additional federal tax is now up to 1.2% (up from .9% in 2013) and will cost employers an additional $84 per employee for 2014, an increase of $21 above 2013.  In all, the state’s lingering debt has cost Ohio businesses $558 million in added taxes the past three years.Most Ohio employers pay both  state (SUTA) and federal (FUTA) unemployment tax. The federal portion is returned to the state to pay administrative costs, and the state tax pays benefits to unemployed workers. Without sufficient reserves when the recession hit, Ohio and 35 other states were forced to borrow from a federal trust fund to continue paying jobless benefits to unemployed workers.Ohio began borrowing in 2009, and the state’s debt peaked at $2.6 billion.According to the U. S. Department of Labor, most states have repaid the money.  Ohio is among nine states and the Virgin Islands that still owe nearly $13.2 billion combined.Despite the rising federal tax, Ohio state tax rate is dropping.  That’s because state law specifies that as the economy improves, the state tax must be reduced.Don’t you love tax laws?! You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTW...until next week.