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View Full Version : How do I find out my employees state unemployment taxable wages for previous periods?



JessicaLee
11-16-2012, 01:00 PM
The business I work for has not been filing their taxes correctly (unintentionally) for several years. How do I find out the taxable wages for passed periods? I am going to pass it on to the tax professional that does the owners personal and S-corp taxes annually before I file anything, but I want to be prepared before I get everything to him.

Freelancier
11-16-2012, 08:31 PM
Go back to the quarterly 941's that were submitted to the IRS. Surprised if the tax pro wouldn't have them... and also surprised that this would have escaped a professional's attention.

Evan
11-16-2012, 09:43 PM
You may need to contact the state department about this to find out certain rates. Some of the state unemployment rates, when you first become an employer, start at a "base rate", meaning everyone starts at say 3%, and then goes up or down based on the number of claims. Rates can generally vary by state, from as low as 1.25% to as high as 15% depending on the industry you operate in. The rates also usually fluctuate based on your specific contributions from year-to-year, and claims against it. This is known as an "experience rate".

Generally, those rates will seem insignificant to the interest and penalties you'll incur for everything owed, which usually exceed the tax liability without much of a problem.

I would NOT recommend contacting the state regarding this matter, and you are best to let a CPA handle this matter. As you are going to have to deal with an individual at the state department who can handle this, likely there will be some questions and it's best to have a professional respond.

jamesray50
11-17-2012, 04:13 PM
Go back to the quarterly 941's that were submitted to the IRS. Surprised if the tax pro wouldn't have them... and also surprised that this would have escaped a professional's attention.

The 941's don't have anything to do with the unemployment. Check your state's unemployment website to see what the taxable wage limit is. Some states have increased their limits in recent years due to the economy. A tax professional can tell you that. As Evan stated the unemployment rate varies from industry to industry and on the amount of claims. In Kentucky the rate for new contracting (such as builders) businesses start at a much higher rate than most other businesses.

I just looked up Massachusetts and it is $14,000. Here is a link with more information.Contribution Rate (http://www.mass.gov/lwd/unemployment-insur/filing-ui-contribution/employer-contributions/contribution-rate.html)

nealrm
11-17-2012, 04:57 PM
The company should have the hours reported and salaries for each employee over the past several years. From those, the tax professional should be able to determine the correct employment taxes due. If he/she cannot, fire him/her. If the company does not those record, The bulk wages paid would be recorded on the 941's. But this would be the bulk wages paid and not broken down by individual. Using those numbers you could determine that max amount due, but not necessary the correct amount due.

jamesray50
11-17-2012, 08:35 PM
The wages on the 941 has nothing to do with unemployment wages. All it tells you is the total number of employees for the quarter, total wages, total taxable wages for federal and total taxable wages for social security and medicare. What it doesn't tell you is the taxable wage per employee and there isn't a way to get this information from the 941. It may be that all the employees went over the limit, or only some of them went over and the rest of them reach the limit in the next quarter. It may be in a later quarter that all employees reached the limit in a prior quarter and none of the wages are taxable, or they had a big turnover in employees and all wages are taxable in a later quarter.

The only way to get this information is to check the payroll reports. If the payroll is processed by a payroll company, they can give you the reports you need. If the business processes the payroll on some kind of accounting program, there should be a report available through the program. If they do it manually, it will have to be calculated manually. You would just need quarterly wages for each employee for each quarter. If you need help, I'll be glad to help you.

nealrm
11-17-2012, 09:01 PM
The initial post did not ask for unemployment wage it asked for taxable wages. As you stated, the total taxable wages are on the 941.

I do agree, the payroll reports are the best source for this information. Given that she is posting the question here I am assuming that information is not available.

I do hope that I am wrong and they have those record, because the other option is a very poor choice. IF the 941s are only source of information, you could determine a potential max amount due by assuming all the wages are taxable. Not a good option, but one that would give you the the max potential liability. Compare that against what you paid. If it is a small amount, just pay it. You could easily run up a larger bill trying to determine the correct amount owed. If it is a really large amount, then you can start planning on how to pay the larger amount with the knowledge that when you determine the correct amount it will be smaller than that.

Evan
11-17-2012, 11:21 PM
It asked for taxable wages for unemployment tax purposes. The 941 will report ONE calculation of taxable wages. For unemployment purposes, there are adjustments to this number, and the caps are often different. For example, for MA unemployment taxes, all employer contributions to retirement plans are added to employees pay to determine unemployment taxes.

jamesray50
11-17-2012, 11:47 PM
I agree with Evan, the original question was how to find taxable wages for unemployment purposes. Another way to figure it out would be to look at copies of the W2's (they do have copies?). You can then see which employees are over the limit and which one are under. Then you can calculate the taxable wages. This will just give you the total for the year. The tax preparer can call the unemployment office to see how to handle it. There will be penalties for not paying on time and they won't get the discount for the FUTA.

nealrm
11-18-2012, 12:41 AM
I went back and reread the post. The unemployment was in the title but not in the body. I missed that, and based my response on the body.

You are right, the 941 would not give the information required.

JessicaLee
11-19-2012, 11:03 AM
Basically what happened is this. There is a single employee now. His records are all on the computer until 2009. Everything else is on paper. There were 12 employees here for a few years, and previous to that there were 24 employees. I have only been in this office since June, and have been filing the way I was supposed to since then.
When I went to pay the quarterly online state payment, the website showed an estimated payment due of over 11000 dollars from previous unpaid quarters, none of which were ever filed. I have filed and paid everything I was supposed to for the time I have been here, but seeing that number (considering there is only one employee now) made me curious and that is why I began looking. I brought it up with my employer who says he knows nothing about how the taxes are filed or ever have been filed and wants me to figure out how much is due, and how far back before I contact the tax professional.
As of right now, the tax professional is only used for annual personal filing for the owner. So he knows nothing of this. I wonder at what point I can say to my employer: This is out of my realm of experience and I do not have the education needed to complete this task. I do not want to be held liable when he is audited.

Freelancier
11-19-2012, 11:23 AM
I wonder at what point I can say to my employer: This is out of my realm of experience and I do not have the education needed to complete this task. I do not want to be held liable when he is audited.

Unless you represent yourself as an accountant or sign the state forms concerning this, you can't be held liable (basically, it's the company and its directors that are liable), but you can be fired (you can be fired anyway, but I just thought you should chill on that part).

If you're truly over your head figuring this out, then tell him to call the tax professional to step in and take care of it. If you're just worried about getting the numbers wrong... they're already wrong. You get to try to find the documentation to figure it out. Think of it as a puzzle to be solved for your employer. Do you have the paycheck info for all those past employees?

jamesray50
11-20-2012, 02:35 PM
Jessica - First of all, don't let the notice with the $11,000 due worry you. Most likely the state just made an estimated guess, or picked a number out of the air, or some other illogical method of calculating the tax due. The states do this all the time. What it accomplishes it that the scares the tax paper into resolving the issue.

Second, don't ignore the notice, states don't like that and they can attach a levy to the companies bank account. Call them and at least let them know you are working on finding the information you need to file the returns and make payments. Ask them if you can file just one return for each year if you can't find quarterly payroll information. If they say they need a return for each quarter, file a zero return for the first, second, and third quarters. On the fourth quarter return, enter all the info. Don't calculate any penalties, they will send you an adjusted notice with what you still owe for penalties.

To find the information you need for the return, use the W2s. I'm assuming that payroll was done in house? There should be copies of the W2s somewhere in the office. You may have to look for them, maybe in storage somewhere. You may have to do some calculatons to figure out the actual wages. There are several different boxes on the W2 that show wages. The wages in these boxes may be different depending on what benefits the company offered. You need to find out what wages are taxable for unemployment. Here in KY it's all wages, and the local cities also require tax paid on all wages. So I would use the total wages from the local box here in KY. You only need to report $14,000 per employee. I don't know what the return looks like, but you will probably have to report the total wages and then the taxable wages.

Sorry if I have made sound really complicated, but it's really not. Just dig your heels in and do it. Like I said earlier, if you need help let me know.