Page 275 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
9. Maximum credit (Part II,Line 2). Multiply the total taxable wages
calculated on line 7 by 5.4 percent to arrive at the maximum
possible FUTA tax credit.

10. Computation of credit (Part II, Line 3). This is a table requiring
entries in a number of columns. The information to be entered

in these columns is:
• Name of state. Enter the two-letter abbreviation repre-

senting the state in which wages were paid.
• State reporting number. Enter the State Identification
Number assigned to the company by the state refer-
enced in the first column.
• Taxable payroll. Enter the total wages paid within the
identified state that the state has defined as being sub-
ject to unemployment taxes.
• State experience rate period. Enter the beginning and
ending dates covered by the state experience rate that
is listed in the following column. If an experience rate
is granted partway through a year, then enter one line
for the period of the calendar year covered by the first
experience rate and a second line for the period cov-
ered by the succeeding experience rate.
• State experience rate. Enter the experience rate per-

centage. This is the percentage assigned to a company
by each state in which it does business. It is based on
the amount of unemployment tax paid, as well as the
amount of unemployment compensation paid to for-
mer employees. The latest experience rate is usually
mailed to an employer once a year, but you may also
call the state unemployment office to obtain it.
• Contributions if rate had been 5.4 percent. Multiply the
taxable payroll from the third column by 5.4 percent.

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