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FUTA Credit Reduction States Subtask

Use this subtask to track FUTA credit reduction amounts for your states.

A state that has not repaid money it borrowed from the federal government to pay unemployment benefits is considered a "credit reduction state." The Department of Labor determines these states. In accordance with Title XII of the Social Security Act, a reduction in the FUTA tax credit is required when a state has outstanding federal loans for two consecutive Januaries. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940.

You can indicate which state and payroll year combinations are subject to the FUTA credit reduction and specify the FUTA credit reduction percentage.

Note: Before running the federal 940 report, you must flag the proper states as a FUTA credit reduction states.

Click to enter a new row.

Contents

Field Description
Payroll Year

This non-editable field displays the payroll year in which the state is subject to a credit reduction. This is the Payroll Year on the main screen.  

If you are reporting data for this payroll year on the Print Quarterly Federal Payroll Tax Report application, any states listed in this subtask, along with the Credit Reduction %, are used to determine the FUTA credit reduction amount.

State

Enter, or click to select, the state that is affected by the FUTA credit reduction in this Payroll Year. The state value must be a U.S. state, DC (District of Columbia), PR (Puerto Rico), or VI (the U.S. Virgin Islands). GU (Guam) is not a valid entry. All entries must exist in the State table.

If you are reporting FUTA tax information on the Print Quarterly Federal Payroll Tax Report application, FUTA wages paid in this state are subject to the state’s FUTA credit reduction percentage.  

State Name

This non-editable field displays the name of the State.

Credit Reduction %

Enter the FUTA credit reduction percentage for this row’s State. This value is specified by the federal government. You can enter up to four digits after the decimal point. After you enter a value and tab out of the field, a % is automatically inserted in the field.

This field is automatically populated if you loaded the latest Tax Table update provided by Deltek.

Tax Service Code

Enter, or click to select, the tax code that identifies the FUTA Credit Reduction in your payroll tax service system. This field is enabled and required if you select the Require Tax Codes check box on the Configure Payroll Tax Export Settings screen.