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American Payroll Association (APA) Basic Guide to Payroll, 2013 Edition
It's more important than ever to be in compliance with payroll laws and regulations! How do you stay in compliance and avoid penalties? The APA Basic Guide to Payroll is written to make understanding the laws and regulations as easy as possible. And this single-volume guide is filled with tools to help you apply the law and make proper calculations – with ease!

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CCH® PAYROLL — 1/31/12

FUTA reminders for 2012

All of the states have now announced their taxable wage bases for 2012. As usual, there are a number of increases over the wage bases set last year. In addition, Nevada has a decrease in its taxable wage base for 2012. In the table below, states having higher 2012 wage bases than the 2011 wage bases are printed in bold. Nevada, with its lower amount, appears in italics.

FUTA tax figures for 2012

The taxable wage base under the Federal Unemployment Tax Act remains $7,000 for 2012. In addition, all 50 states, as well as the District of Columbia, Puerto Rico and the Virgin Islands, have received certifications for the maximum additional credit allowable based on the 12-month period ending on October 31, 2011.

0.2% surtax expires

The FUTA tax rate is 6.2% for wages paid on or after January 1, 2011, through June 30, 2011. It decreases to 6.0% for wages paid after July 1, 2011, through December 31, 2011, because of the mid-year expiration of the FUTA surtax. As we go to press, there has been no legislation reenacting the surtax for either the latter part of 2011 or for 2012.

Credit reduction states

Employers that pay their state unemployment tax timely and in full receive a 5.4% credit. However, that credit is reduced when a state has outstanding federal loans for two consecutive Januarys. The reduction is 0.3% for the first year and an additional 0.3% for each succeeding year until the loan is repaid. A state that has not repaid the money it has borrowed is called a credit reduction state.

The 0.3% credit reduction states for 2011 (for taxes paid in 2012) are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin, plus the U.S. Virgin Islands. Indiana is a 0.6% credit reduction state and Michigan is a 0.9% credit reduction state. South Carolina has received conditional approval for the full FUTA credit.

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