The U.S. Department of Labor announced on Tuesday, November 10, 2009, that Michigan is the only state subject to federal unemployment tax credit reduction for tax year 2009.

The Federal government is reducing the amount of the tax credit it gives employers who paid unemployment taxes in the State of Michigan in calendar year 2009. The FUTA offset credit is being reduced by 0.3%. Instead of paying a net FUTA rate of 0.8% for 2009, the rate will be 1.1%.

This means that even if you paid all of your state unemployment taxes on time in 2009, you will now owe the federal government additional money to make up for the new, retroactive rate change. Intuit Payroll is making the necessary changes to support the credit reduction on the Form 940 and Schedule A for 2009 in its products and services.

What does this mean for you? Instead of the $56 cap paid per employee by every MI employer – an additional $21.00 will be due by the end of January when filing the annual FUTA return (7,000 maximum wages X 1.1% = $77 vs. 7.000 maximum wages X .8% = $56).

Make sure you have the latest tax table update from QuickBooks before preparing your 940 return for 2009. To read the official State bulletin – click here.

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