Everything an employer needs to know about paying Idaho unemployment insurance taxes.
If your small company employs people in Idaho, you must pay the Idaho unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Idaho, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.
Varied states have different UI tax policies and rates. The fundamental regulations for Idaho’s UI tax are as follows.
Become a member of the Department of Labor.
You must register with the state as an Idaho employer. Registration gives information to numerous state agencies, including the State Tax Commission (STC) and the Idaho Department of Labor for UI tax reasons (DOL). You may sign up online or on paper. You will be given a state account number after you have enrolled.
Use the Idaho Business Registration System to register online. Use Form IBR-1, Idaho Business Registration Form, to register on paper. Blank forms may be downloaded from the STC website. There is no cost to register your company with IDES.
You will need a federal employer identification number to set up your Idaho UI tax account (EIN). You may get an EIN by visiting IRS.gov. In most cases, if you apply online, you will obtain your EIN very instantly.
UI Tax Liability Regulations
As an Idaho for-profit employer, you are typically responsible for state unemployment taxes if you fulfill any of the following criteria:
If you pay total wages of $1,500 or more in a calendar quarter during the current or preceding year, or if you employ one or more people for some portion of a week in 20 different weeks during the current or preceding year, or if you take over an existing business or acquire the assets of another business that was covered by UI at the time of acquisition, you are covered by UI.
These are the same standards that govern liability under the Federal Unemployment Tax Act (FUTA). Different restrictions apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
One piece of good news is that state UI tax payments are often deductible from FUTA taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. In Idaho, this sum, known as the taxable wage base, rises every year, sometimes by more than $1,000. Check the DOL website’s Unemployment Tax Rate page for current and historical information on wage bases and tax rates.
The state unemployment insurance tax rate for new employers, generally known as the standard rate, varies from year to year. It has been dropping in recent years, and has normally been between 1.5% and 1.9%. Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.
Submit UI Tax Reports and Payments Quarterly
In Idaho, UI tax reports and payments are due on the last day of the months of April, July, October, and January for the prior month’s quarter. To put it another way:
Returns and payments for the first quarter are due on or before April 30.
Returns and payments for the second quarter are due on or before July 31.
Third-quarter returns and payments are due by October 31, and fourth-quarter returns and payments are due by January 31.
If the final day of the month comes on a weekend or holiday, the deadline is pushed back to the next working day.
You have the option of filing your reports and payments online or on paper. (You may also file using magnetic media, such as a CD, although it isn’t addressed here.) Use the DOL’s Employer Portal to file online. Payments may be made online using electronic check (free) or credit or debit card (3% charge applies). You may also print a voucher and send it in with your payment.
Form TAX020, Unemployment Insurance Tax Report, and Form TAX026, Unemployment Insurance Wage Report, are required to be filed on paper. At the conclusion of each quarter, the DOL will send you the two-part form. You may also get blank forms from the DOL website.
If you are still in business, you must submit reports for the full year. Even if no salaries were received, you must complete quarterly reports as long as your UI account is open. Contact your local Tax Representative if you terminate operations or feel you no longer need to submit reports. If you do not file, you will face a penalty.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment claims in a visible location for all workers. The poster gives basic information on how to make an unemployment benefit claim. From the DOL’s Required Posters site, you may obtain a collection of all posters that Idaho requires employers to display, including the UI notification.
Employees should not be misclassified as independent contractors.
Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.
Using Payroll Service Providers
You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.