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    Basic Payroll: FAQs for 2014 FUTA Credit Reduction States

    Article ID: 1000919

    Overview

    This article explains how the Federal Unemployment Tax Act (FUTA) credit reduction affects your FUTA taxes, Form 940, and Schedule A for 2014.

    For calendar year 2014, 8 states have been identified as credit reduction states: 

    State
    Credit Reduction
    California
    1.2%
    Connecticut 1.7%
    Indiana 1.5%
    Kentucky 1.2%
    New York 1.2%
    North Carolina 1.2%
    Ohio 1.2%
    Virgin Islands 1.2%
     

    Expected Outcome

    You will know how to complete your tax filings with the FUTA credit reduction for the 2014 credit reduction states.

    Assumptions

    You have an active, up-to-date Basic Payroll subscription and version of QuickBooks.

    Details

    To make adjustments as a result of the credit reduction:

    Manually extract the numbers you need to fill out the form by opening a tax form worksheet in Excel.

    1. Click Reports on the top menu bar.
    2. Move your pointer over Employees and Payroll and then again over More Payroll Reports in Excel.
    3. Select Tax Form Worksheets.
    4. Select the 940 worksheet and a timeframe.
    5. Click on Create Report.

    Fill out your Form 940 and Schedule A. To ensure you complete your forms accurately, review the "Specific Instructions" on page 3 of the Instructions for Form 940, as well as the "Instructions for Schedule A" on page 2 of the Form 940 Schedule A.

    Make the necessary payroll liability adjustment in QuickBooks to account for the additional taxes due to credit reduction (see Form 940, line 11, if credit reduction applies):

    Attach your Schedule A to your Form 940. File your forms and pay your taxes due as provided in the instructions for Form 940.

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