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Posted 1/5/2012
Additional Tax Due On Form 940 FUTA Return For 'Credit Reduction States'
Employers in some states must pay an additional tax when submitting their 2011 tax year Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Any state that has not repaid money it borrowed from the federal government to pay unemployment benefits is a "credit reduction state." The Department of Labor determines these states. The list for 2011 is provided below. If an employer pays wages subject to the unemployment laws in these states, the employer must pay an additional amount when filing Form 940. The additional amount is the amount by which the 5.4% credit is reduced. Schedule A of Form 940 must be filled out with information on the states in which the employer had to pay unemployment tax. Then, the computed credit reduction is entered on Line 11 of Form 940.
List of FUTA Credit Reduction States for 2011
The Department of Labor determines the credit reduction states for each year. For 2011, employers in these states must reduce their .054 credit on their Form 940 by the following amounts:
| States | Reduction Rate |
| Arkansas | .003 |
| California | .003 |
| Connecticut | .003 |
| Florida | .003 |
| Georgia | .003 |
| Illinois | .003 |
| Indiana | .006 |
| Kentucky | .003 |
| Michigan | .009 |
| Minnesota | .003 |
| Missouri | .003 |
| Nevada | .003 |
| New Jersey | .003 |
| New York | .003 |
| North Carolina | .003 |
| Ohio | .003 |
| Pennsylvania | .003 |
| Rhode Island | .003 |
| Virginia | .003 |
| Virgin Islands | .003 |
| Wisconsin | .003 |