News & Information

CCH® UNEMPLOYMENT INSURANCE — 11/13/09

Michigan releases Fact Sheets on 2009 credit reduction/tax credit for employers

For the 2009 tax year, many Michigan employers will not receive the usual full FUTA tax credit because the state has had outstanding federal loans for two years. The reduction will be 0.3% this year, which means that Michigan employers, except Indian tribes, nonprofit organizations and governmental entities, will pay a FUTA tax of 1.1% instead of 0.8%. If the loans remain unpaid, an additional 0.3% credit reduction will be added for the 2010 tax year. It is due on the federal Form 940 by January 31, 2010. For further information, call the UIA Employer Customer Relations Hotline at 800-638-3994 or email TaxSupport@michigan.gov.

Note that positive reserve balance employers can apply for a state unemployment tax credit of either (1) 50% of the extra FUTA tax paid on their Form 940 for the previous year or (2) the employer's taxable wages for the previous calendar year multiplied by the Nonchargeable Benefits Component of its tax rate for that year, whichever is the lesser amount. An employer must have paid Michigan UI taxes for five or more years and have a positive balance in its experience account (Michigan Fact Sheets #126/#130, June/July 2009).