Updated Federal Payroll Forms Released

Form W-4: The IRS has issued the 2015 version of Form W-4, which can be downloaded from the IRS website by clicking here.

Remember that employees who claimed exempt status in 2014 and want to continue that exemption for 2015 must complete a new form not later than February 17, 2015. The withholding status for all other employees should be based on the last Form W-4 they completed. If an employee does not complete a Form W-4, withhold at the Single/no withholding allowances rate until they submit a form.

Individuals cannot claim “Exempt” in 2015 if:

1) Their income exceeds $1,050 and includes more than $350 of unearned income (interest and dividends) and
2) They can be claimed as a dependent on someone else’s tax return.

Form 940: The IRS has also released the 2014 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return and related forms. The updated form and instructions can be found here.

During the recent economic downturn, many states took out loans from the federal government in order to pay unemployment claims. These loans were paid back through additional FUTA tax assessed to employers in those “credit reduction” states. At the height of this program, there were 21 “credit reduction” states, and eight states remain that have not fully repaid those loans, meaning that employers in those states have a higher FUTA tax rate than the normal 6%. Here’s the list along with the applicable credit reduction amount:

 California – 1.2%  New York – 1.2%
 Connecticut – 1.7%  North Carolina – 1.2%
 Indiana – 1.5%  Ohio – 1.2%
 Kentucky – 1.2%  Virgin Islands – 1.2%

More information about credit reduction states is available on the IRS website by clicking here.