2019 Unemployment Tax, Deposits, EFTPS and Earned Income Tax Credit

Annual Payroll and Withholding Update Part 5 of 5

Part 5 of the 2019 Payroll and Withholding Update provides information employers need to know about federal and state unemployment tax, tax deposits, the electronic federal tax payment system and earned income credit.

Federal Unemployment Tax (FUTA)

For 2019, the maximum taxable wage base remains unchanged at the first $7,000 of wages.  The tax rate will remain at 6% with the credit for payment of state unemployment tax remaining at 5.4%.  This results in the effective rate remaining at 0.6%.

State Unemployment Tax (SUTA)

The taxable wage base for Missouri will decrease to $12,000 in 2019 and Illinois will remain at $12,960. Each state will issue your new contribution rate, effective January 1, 2019 based on your employment history.  If advantageous, Missouri permits a voluntary payment to reduce the rate as long as the payment is received by January 15, 2019.

Both states require employers, who no longer have unemployment tax liability, to formally close their unemployment accounts.  Severe penalties accrue if quarterly reports are not filed and accounts are not formally closed – even if no unemployment tax liability exists.

Tax Deposits

The IRS has two deposit schedules—monthly and semi-weekly—for determining when to deposit Social Security and Medicare taxes and withheld federal income tax.  The required schedule is determined by the employer’s tax liability during a “look-back” period (July 1 to June 30 of the previous year).  Employers with less than $50,000 of deposit liability during the “look-back” period are assigned a monthly schedule and will be required to make a deposit on or before the 15th of the following month.

Employers who report $50,000 or more in total employment tax liability during the “look-back” period will be designated as semi-weekly depositors.  For semi-weekly depositors, the due date depends on when wages are paid.  For pay days on Wednesday, Thursday, or Friday, the deposit is due on or before the following Wednesday.  For pay days on Saturday, Sunday, Monday, or Tuesday, the deposit is due on or before the following Friday.

Accumulated federal withholding, Social Security and Medicare taxes of $100,000 or more in one single day must be deposited the next business day, whether you are a monthly or semi-weekly schedule depositor.  If you are a monthly schedule depositor and accumulate a $100,000 tax liability on any day, you become a semi-weekly schedule depositor on the next day and remain so for the rest of the calendar year and for the following calendar year.

Electronic Federal Tax Payment System (EFTPS)

Employers must make deposits electronically.  If your required tax deposits are not made via EFTPS, a penalty of 10% of the taxes deposited will be incurred.  The IRS has begun enforcing penalties for non-compliance.  If you have not enrolled in the EFTPS program, please contact us immediately.

Earned Income Credit

Each employer is required to notify any employee who has not had income tax withheld from wages and who has not claimed to be exempt from withholding that they may be eligible for the earned income credit.  The notice must be given by hand or delivered by first class mail within a week, before or after the Form W-2 is furnished, or included with the Form W-2.  The notification must contain all information described in Notice 797 from the IRS.

Contact an Anders advisor with any questions on how these amounts affect you.

Read Part 1 of the Annual Payroll and Withholding Update.
Read Part 2 of the Annual Payroll and Withholding Update.
Read Part 3 of the Annual Payroll and Withholding Update.
Read Part 4 of the Annual Payroll and Withholding Update.