2015 Year-End Payroll Tax Highlights & Updates

Nov 19, 2015

940 FUTA Unemployment Tax

The 2015 FUTA rate remains at 0.6%. This rate includes the 5.4% credit for State Unemployment paid. There are still credit reduction states published by the IRS and listed on Schedule A (Form 940). A “credit reduction state” is a state that has borrowed money from the federal government to pay unemployment benefits and has yet to repay the money owed. In 2015, there are 4 states listed on this credit reduction list. Some of the state changes include:

  • Ohio .015 – still owes on the loan
  • Indiana .00 – repaid loan
  • New York .00 – repaid loan
  • North Carolina .00 – repaid loan

This means that instead of paying the 0.6% in 2015 for Ohio, there is an additional 1.5 % added, for a total of 2.1% for Ohio. The credit reduction will add up to approximately $105 of extra tax liability per employee for this year. Each year the % will increase another .003 until the state is no longer on the list published by the IRS each fall. Tax deposits must be made at the end of each quarter if your liability is more than $500. Line 11 of the 2015 Form 940 is where the amount from Schedule A, calculating your state credit reduction amount is entered. The extra 940 deposit will need to be paid thru EFTPS.gov by January 31, 2016 along with any other outstanding liability.

Social Security and Medicare Withholding The employee’s and employer’s portion of social security taxes withheld has remained unchanged (6.2%). The wage base for 2015 is $118,500. In 2016 the wage base will remain the same at $118,500.

For 2015 the Medicare tax calculation rates are unchanged. The employee’s and employer’s Medicare tax remains at 1.45% with no wage limits. Earners making more than $200,000 in a year are subject to an extra 0.9% Medicare tax. The extra 0.9% tax is not matched by the employer like the 1.45% Medicare tax.


Ohio Wages and Withholding The Ohio minimum wage is $8.10 per hour for 2015 and will remain the same for 2016. The tipped employee minimum wage is $4.05 per hour. The Ohio withholding tables were updated as of August 1, 2015, if your software has not been updated or manual payroll calculations, please check www.tax.ohio.gov for the new amounts.

If you have any other questions, please contact William Vaughan Company. Sandra Stone, Accountant

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