Everything employers need to know about paying New York unemployment insurance taxes.
If your small company employs people in New York, you must pay the New York unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In New York, 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. Here are the fundamentals of New York’s UI tax.
Become a member of the Department of Labor.
Your small company, as a New York employer liable to UI tax, must open a New York UI tax account with the New York Department of Labor (DOL). You must open a UI tax account as soon as your company is subject to UI taxes. After you register, you will be given a UI employer registration number.
You may register with the DOL online or in person. However, keep in mind that the DOL is leaning toward exclusively accepting online registrations, so you should check the DOL website before submitting a paper registration. Go to the DOL’s Employer Registration website to register online. Fill out Form NYS-100, New York State Employer Registration for Unemployment Insurance, Withholding, and Wage Reporting, to register on paper. Blank forms may be downloaded from the DOL website’s Employer Forms and Publications area. Form NYS-100 may be sent by ordinary mail or fax.
The DOL typically takes 4-6 weeks to complete a registration and provide an account number. There is no cost to register your company with the DOL.
You will need a federal employer identification number to open a New York 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.
Unemployment Insurance Tax Liability Regulations
As a for-profit employer in New York, you are subject to state unemployment insurance taxes at any of the following times:
the first day of the calendar quarter in which you pay compensation (wages) of $300 or more, or the day on which you acquire some or all of a responsible employer’s business.
It should be noted that these standards vary from those that apply to responsibility under the Federal Unemployment Tax Act (FUTA). Furthermore, additional laws 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. This sum, known as the taxable wage base, is now slated to rise by $200 or $300 every year until at least 2026. It will approach, then surpass, $11,000 in the next years.
The state unemployment insurance tax rate for new employers, often known as the normal starting tax rate, might alter from year to year. The starting rate is really a combination of three additional rates: the regular contribution rate, the subsidiary contribution rate, and the Re-employment Service Fund rate. The total rate of new employers has been approximately 4% in previous years. 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
Unlike other states, New York mixes UI tax reporting and payments with withholding tax payments. Reports and payments are due on the last day of the month after the quarter’s conclusion.
When the due date occurs on a Saturday, Sunday, or legal holiday, you may file on the next working day.
Your reports must be submitted online. To be more explicit, you have three electronic filing options:
Web Upload Web Upload, or FSET-compatible software (commercially available software that enables you to file your quarterly return information via the Federal/State Employment Taxes (FSET) program).
Check out the tax filing methods page on the New York Department of Taxation and Finance (DOTF) website for further information on each of these ways. In certain circumstances, you may submit a report online but then print a payment voucher and pay with a physical check.
Even if you did not make any payroll during the quarter, you must complete reporting forms as a New York employer. Late contributions result in interest charges, which may raise your UI tax rate in future years.
Make a Public Notice (Poster)
You must publish a notification (poster) about state unemployment claims in a prominent area in each company. The billboard explains that the company’s workers are protected by New York’s UI statute and gives very basic information on how to apply for UI benefits. When you initially register your company with the DOL, they should give you the requisite 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.
Further Information
This article simply covers the most fundamental aspects of New York UI taxes. Check the IRS and DOL websites for the most up-to-date information to avoid potential fines for errors. Employers must also pay federal unemployment insurance, state and federal withholding taxes, and record new employees, in addition to state unemployment insurance.