More UI FAQs
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, corporate officers are limited to 4 weeks of benefits depending on their percentage of ownership and/or relationship to owners of the business. Should the corporation cease operations due to economic inviability, the officer/owner may be eligible for unreduced benefits. Certain corporations can elect to exclude the wages of certain principal corporate officers by filing an
election with Tax
& Accounting by March 31st of the year affected. See Section Wis. Stat.
108.02(15)
&
108.04 for disqualifications 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 6.0%. 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.
The election form and worksheet are available at
http://dwd.wisconsin.gov/uitax/forms_publications.htm.
Or contact us at:
Employer Service Team
P.O. Box 7942
Madison WI 53707
taxnet@dwd.wisconsin.gov
608-261-6700
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.)
