Frequently Asked Questions About Tax & Account Reporting

What wages are covered for Unemployment Tax purposes?
Any payment in kind or similar advantage received from an individuals employing unit for personal services are covered for Wisconsin Unemployment Tax purposes. Wages include achievement awards, tips, deferred compensation and salary reduction arrangements and payments by corporations electing to be taxed as partnerships under subchapter S of the IRS code, that are reasonable compensation for services performed for the corporation.
How do I calculate line 10, the wage base exclusion?
Employers pay Unemployment taxes on each employee's wages up to the taxable wage base. You need to keep track of employee's wages for the year to determine at what point (quarter) the employee reaches the wage base plateau. The taxable wage base is $12,000 for 2010, $13,000 for 2011 and 2012 and $14,000 for 2013 and later years. All wages after the taxable wage base has been reached are excludable wages and are reported on line 10 and subtracted from gross wages to determine taxable wages for the quarter (line 11). Example: when taxable wage base is $12,000: Employee earns $5,000 each quarter.
1Q 2Q 3Q 4Q
Gross $5,000 $5,000 $5,000 $5,000
Exclusion 0 0 $3,000 $5,000
Taxable $5,000 $5,000 $2,000 0
How do I make an adjustment to a prior quarters report?
You should complete Form UCT-7842-E Contribution Adjustment Report. See the Handbook for Employers, Section 2 - Tax, Part 4 - Account Reporting, for more information.
When my business closes, what happens to the remaining account balance?
Your account balance is the accumulation of all taxes paid for prior quarters less any unemployment benefits chargeable against the account while the account was active. This account can only be used for payment of benefits to former employee's and remaining funds are not refundable to the employer. Conversely, if the account were overdrawn at the time of closure, we would not collect that deficit. The balance is maintained only for purposes of determining the employers annual tax rate.
How do benefit charges affect my tax rate?
Since one of the factors used to calculate your tax rate is the account balance, benefit charges decreasing your account balance has a direct impact on your tax rate. The amount and duration of the benefits are important factors in determining how much of an impact they may have.
Are Corporate Officers eligible for Unemployment Benefits?
Generally the answer is no. Since the officer has ownership interest in the corporation they are not eligible to collect benefits in a normal layoff situation. Should the corporation cease operations, the officer/owner may be eligible for 4 weeks of benefits. See Section 108.04 of the Wisconsin UI Law for disqualification and limitations.
How do I compute a voluntary contribution?
From the tax rate notice sent in October of each year, see section E the reserve percentage and section J the total rate. Find the minimum reserve percentage of the next lowest rate on the schedule provided on the reverse side of the form and multiply that reserve percentage by the fiscal year taxable payroll shown in section A. This will give you the balance necessary to get the next lowest rate. From that amount subtract the current account balance from section C and this number is the voluntary contribution necessary. Possible savings are calculated taking the difference between the two rates and multiplying by the fiscal payroll as shown. This will give you the gross savings and by subtracting the amount of payment to be made you will see the net savings in taxes.
Will the Corporate Officer Exclusion benefit my business?
Not all employers will benefit from the corporate officer exclusion. The FUTA (940) tax does not recognize Wisconsin's exclusion so since state UI taxes are not paid on the officers wages, the employer is required to pay the FUTA tax on the officers wages at the full rate of 6.2%. Employers contemplating whether or not to exclude those wages should contact the department for an election form and a worksheet. The worksheet will help the employer determine possible savings or if the net effect would be an increase in total taxes.

You can obtain the form and worksheet by calling 608-261-6700 or by writing:

Employer Service Team
P.O. Box 7942
Madison WI 53707
Questions Reading Your Account Statement?
See the Handbook for Employers Section 2 - Tax, Part 4 - Account Reporting.

If you have questions or comments about the statements on this page or other Unemployment Tax questions, you may direct a message to:

UI Tax Email Comments or Questions
FAX (608) 267-1400

(Please include your name, phone number, and email address in the body of the message.)

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