FUTA Tax for Household Employees

IMPORTANT NOTICE – Retroactive Payroll Tax Increase for 2014!

Employers – including household employers – in seven (7) states will pay increased Federal Unemployment Tax (FUTA) retroactively for 2014, to repay state unemployment insurance loans due to the Federal Government.

When state unemployment funds are depleted, as occurred in many states in recent years, states draw from a designated federal loan account. If such loans are not repaid within two years, employers lose this part of this FUTA tax credit, in effect increasing the FUTA tax for household employees for wages paid in affected states.

The FUTA tax rate is 0.6% of wages paid, up to $7000, or $42 per employee per year. With this reduction, household employers outlined in the states below will see an increase ranging from $84.00 to $119.00 per employee for the tax year 2014.

Please reference your state on the grid for the Credit Reduction Rate & increase in liability per employee.

If you are a GTM client located in one of the above states, the total of additional liabilities due for FUTA will be collected from your bank account along with any other 4th quarter 2014 adjustment. We ask that you refer to your Quarter Reconciliation Report that is included with your quarterly packet.

To learn more about how GTM can help you meet your obligations as a household employer, please contact us at (888) 432-7972.