State Unemployment Insurance (SUI) Overview
State Unemployment Insurance (SUI) provides financial assistance to workers who find themselves unemployed, helping them navigate temporary periods without work. This tax is generally paid by employers, not employees.
Here are a few key facts:
State-Specific Unemployment Rates: After you register your company with a state, you will be assigned an unemployment tax rate.
Tax Rate Determination: Your company’s unemployment tax rate is based on your history with unemployment claims and the nature of your business. For new employers there will be a new employer tax rate assigned once you register for a State SUI account.
Wage Base Limits: Each state has a wage base limit, which is the maximum amount of an employee's income that can be taxed for SUI. These limits often change annually.
All Changes related to your State SUI Account's tax rate and wage base limit will be communicated to you by a letter (also called a notice) from the state agency or you will be alerted in your state agency portal. Rates from the upcoming year are released from December of the current year through the beginning of the next year so keep an eye out for this important updates.
Unemployment Deductions and Payments with GoCo Embedded
GoCo's Embedded Payroll automatically calculates and deducts your SUI liability based on the state’s assigned rate you provide. Payments are made alongside your quarterly or annual tax filings, such as Form 941 for quarterly reporting or Form 944 for annual filings.
For guidance on where to view your tax filings, refer to Company Payroll Documents
What if I have employees that move states?
When an employee relocates to a new state, the wage base limit for State Unemployment Insurance (SUI) taxes will change based on the new state's regulations. Here’s how it works:
If the new state's wage limit is lower:
The employee won’t owe additional SUI taxes in the new state, but any taxes already paid in the previous state won’t be refunded.
If the new state's wage limit is higher:
The employee will continue to pay SUI taxes until the higher wage limit in the new state is reached. Typically, they’ll receive credit for the SUI taxes already paid in the previous state.
Most states (except Minnesota and Louisiana) allow employers to credit wages paid in another state when calculating unemployment taxes. However, some states require additional steps to claim this credit, including reporting out-of-state wages. As of 2024, the states that require this are: AK, AR, DC, FL, IN, MA, MD, MI, NM, OH, and WI.
Out-of-State Wage Reporting
Each state has its own method for collecting out-of-state wages after a filing period closes. Some may request that employers report wages from other states in quarterly wage reports. These states may ask for:
- The employee's name and Social Security Number (SSN).
- The wages reported to the previous state within the same year, and the state the taxes were paid too.
- Additional documentation, such as special forms or adjustments to tax filings, to claim the credit.
When using GoCo's Embedded Payroll, it’s essential that if an employee moves, updates to their home and work location addresses are made immediately.
This provides GoCo's Embedded Payroll the proper information to accurately prepare SUI tax calculations and reporting. If your employee moves to a new state, but has not updated their locations within a pay period, please reach out to GoCo Support, as a correction may need to be processed to ensure proper taxation of your Employee's earnings.
Please note that while an employee can update their home address and the new resident state will populate accordingly in the tax field (employee should update their new resident state taxes), work locations must be updated by the admin. Please refer to this article for steps on updating.
For any additional questions, please reach out to us at help@goco.io 💚
Disclaimer:
This article is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.