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7 Replies Latest reply: Dec 1, 2010 3:41 PM by Compugeek RSS

Multi-state Emp - SUTA wage limits?

PRGirl Newbie
Currently Being Moderated
I process payroll for a company that hires employees from different states and they work where we have projects (multi-state). I understand that there is a $7000 earnings limit for SUTA. Is that $7000 for each state or $7000 annual cap?
For example Joe earns:
$5,000 in Florida in January
$10,000 in S Carolina in March
$2,000 in Georgia in July

Does the limit get met after working in Florida ($5,000) and $2000 from S Carolina wages? Or do I need to pay SUTA in Florida and Georgia for all wages and S Carolina up to the $7000 limit?

Please help! Much thanks!
  • Re: Multi-state Emp - SUTA wage limits?
    PRGirl Newbie
    Currently Being Moderated
    Come on! Someone has to have some information! :) The ALL KNOWING internet is not helping!!
  • Re: Multi-state Emp - SUTA wage limits?
    dexvert Newbie
    Currently Being Moderated

    The FUTA (Federal Unemployment Tax Act) wage base is currently $7,000. However, SUTA (State Unemployment Insurance Tax Act) wage bases vary by state. http://www.americanpayroll.org/members/stateui/

    If your question pertains to FUTA, then it doesn't matter how many work states there are, you would only pay the FUTA tax on the first $7,000 of wages. The FUTA wage base applies to each employee's earnings per legal entity, so that if you are only paying under one employer ID number, then you would only calculate FUTA taxes on the first $7,000 for each employee for the tax year.

    If your question pertains to SUTA, the majority of states allow for a type of crediting of SUTA wages that were already subject to another states SUTA tax under the same employer ID number for the same tax year. This 'crediting' is referred to as SUI Wage Tranferability. There are some states that do not allow for this 'crediting' such as Minnesota.

    Also, keep in mind that the rules that define "taxable wages" may vary by state. The types of payments included as taxable wages by states are generally those considered taxable wages for FUTA purposes. But several states differ from the FUTA approach when it comes to sick and disability pay, cafeteria plan benefits, tips, and others. Employers must check the state laws and rules in the states where they have employees to determine whether the payments made to them are taxable wages.

    For your example, you would pay:

    • FL tax at your assigned employer rate on the $5,000 earned in FL.
    • SC tax at your assigned employer rate on $2,000 ($7,000 SC wage base less $5,000 already subject to the tax in FL)
    • GA tax at your assigned employer rate on $1,500 ($8,500 GA wage base less $5,000 subject to FL, less $2,000 subject to SC)

    The fact that the 'collective' limit is met depends on the order of the states that the employee worked in for the year. For the example above, if the employee worked in GA first, then FL, then SC, you would pay:

    • GA tax on $2,000 (full earnings in GA is taxable because it is still under the $8,500 GA wage base limit)
    • FL tax on $5,000 ($7,000 FL wage base less $2,000 already subject to GA)
    • $0 SC tax ($7,000 SC wage base less $2,000 subject to GA, less $5,000 subject to FL)

    Note that only the amount that is applied towards the next state's wage base limit is the amount that was subject to the previous state's tax (and not the full wages earned in the previous state).
  • Re: Multi-state Emp - SUTA wage limits?
    bpfinance Novice
    Currently Being Moderated
    The $5,000 earned in Florida in January is all subject to Florida state unemployment. Then, $2,000 of that made in South Carolina is subject to South Carolina unemployment tax and the next $8,000 made in South Carolina is not subject to any state unemployment tax. I do not have any clients in Georgia, so I do not know the Georgia law, so it is possible that the $2,000 earned in Georgia is subject to state unemployment; however, I would doubt it. If you have any more tax or business management questions, feel free to contact me.

    Jeremy Barfield
    forumresponse@brienprivatefinance.com

    Chief Forum Response Correspondent
    http://www.BrienPrivateFinance.com
    • Re: Multi-state Emp - SUTA wage limits?
      PRGirl Newbie
      Currently Being Moderated
      After more research, it turns out that the $7000 limit is FUTA. Each state has their own limit. And for my example the limits are actually this: FL $8500, SC - $7000, GA - $8500. So my example needs to be changed to this:

      Joe earns:
      $15,000 in Florida in January (FL limit is $8500)
      $12,000 in S Carolina in March (SC limit is $7000)
      $12,000 in Georgia in July (GA limit is $8500)

      Does the limit get met after working in Florida ($8,500)? Or do I need to pay SUTA in all of the states up to their limits? Do any of the balances get carried over? For example as the SC limit was met with FL earnings and the same with GA, do I need to still pay SUTA for those wages?

       


      And on a side note, I have all the guidelines in terms of where I should pay for each state we were/are in (worked in, lived in, state of corporation, etc). And can break up the time by pay cycle by state. I just need to know about the limits.
      • Re: Multi-state Emp - SUTA wage limits?
        bpfinance Novice
        Currently Being Moderated
        As I mentioned previously, of the three states you mentioned, I only know about South Carolina State Unemployment Tax, and I assumed that you already determined the limit for FL and GA were $7,000 (as SC is $7,000). You would pay whatever you owe to Florida since that was the first state that the employee worked in. You would not have to pay any state unemployment tax to South Carolina due to the SC SUTA regulations. I am not familiar with GA SUTA law. My guess is that you would not have to pay anything to them either (as that is how most states operate), but I cannot give you a definite answer on GA. It is possible you will owe tax to GA on the full $8500.
      • Re: Multi-state Emp - SUTA wage limits?
        dexvert Newbie
        Currently Being Moderated

        For the new example that you posted, you would only pay FL unemployment tax on $7,000 for the entire year. (The current FL wage base is $7,000. It was previously set to $8,500, however, legislation passed in March 2010 set it back to $7,000 effective 1/1/2010). http://dor.myflorida.com/dor/taxes/ut_rates.html

         


        • Only the first $7,000 is taxable in FL for January
        • $0 is taxable for SC in March because SC's wage base is $7,000 and the employer is allowed to apply wages previously subject to another state's state unemployment tax, in this case FL. ($7,000 SC wage base less $7,000 already subject in FL.
        • $1,500 is taxable for GA in July ($8,500 GA wage base less $7,000 already subject in FL).
  • Re: Multi-state Emp - SUTA wage limits?
    Compugeek Newbie
    Currently Being Moderated
    I realize this is reviving a thread from the dead and the original postal will never see it, but I wanted to add this in case others come across it in searches (like i did).

    Use Florida's method for determine where to pay SUTA. it'll make it a lot simpler than trying to break it across the different states and credit one state toward another, but only if that state allows it, and so on.

    https://taxlaw.state.fl.us/ut/eh/sect2.pdf

    Tax & Wage Reporting, page 11 (PDF page 3). There is a 4 point test to determine where to report the employees wages.
    1) Localization of services (if employee works more than 50% in Florida, you report to Florida)
    2) Base of Operations (Main office where employee works)
    3) Place of Direction or Control (Main office where employee receives instructions)
    4) Place of Residence.

    The only time you'd need to change which state you are paying SUTA to is if the employee transfers to a new office (see page 14). Then you worry about applying SUTA wages paid in one state against another.

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