Everything employers need to know about paying Utah unemployment insurance taxes.
If your small company employs people in Utah, you must pay the Utah unemployment insurance (UI) tax. The UI tax pays for unemployment insurance programs for qualifying workers. In Utah, 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 fundamental guidelines for Utah’s UI tax.
Become a member of the Department of Workforce Services.
As a Utah employer, you must open a Utah UI tax account with the Utah Department of Workforce Services (DWS). DWS allows you to open an account either online or on paper. You will be assigned a UI account number after you have registered.
You may register online using either:
provided you haven’t already registered your firm with any Utah state government), or the UI Employer Registration website (if your business is already registered with other state agencies and you only need to register for a UI account number).
Use Form 1, Status Report to register on paper. Blank forms may be downloaded from the DWS website’s Tax Forms area.
There is no cost to register your company with DWS. DWS will not open an account for your company until wages are received.
You will need a federal employer identification number to set up your Utah 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 a Utah for-profit employer, you are typically liable to the state’s Employment Security Act (Utah’s UI-related statutes) if any of the following requirements are met:
If you employ one or more people for a part of a day throughout a calendar year, you either purchased your company from an employer who was already subject to the Act, or you are deemed an employer subject to the Federal Unemployment Tax Act (FUTA).
Regarding the final point, you are typically deemed an employer liable to FUTA if you:
You pay $1,500 or more in salaries in each calendar quarter, or you employ one or more people at any time throughout each of the 20 calendar weeks.
Different state and federal 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 Utah, this sum, known as the taxable wage base, has been increased by at least $500 every year. The total has now crossed $32,000.
The state UI tax rate for new employers, commonly called as the standard commencing tax rate, varies from year to year. In Utah, the starting wage is determined by an employer’s “industry.” In other words, it is dependent on the kind of your company. In the most basic terms, your beginning rate will be based on the average rate for your industry. An established employer is subject to an earned rate, which may be lower or higher than a new employer’s rate based on the experience rating of the existing employer. This includes if the formed employer has ever had any workers file claims for state unemployment benefits.
Check the Tax Rates section of the DWS website for up-to-date information and additional specifics regarding the salary base and tax rates.
Submit UI Tax Reports and Payments Quarterly
In Utah, UI tax reports and payments are due on the last day of the month after the calendar quarter’s end, as follows:
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.
Most employers may submit reports electronically or on paper. Large employers are required to submit electronically. To file online, go to the DWS website’s Employer Login area. You will need to establish a user account and provide information about your personnel for your first online filing. Use Form 794, Insured Employment and Wage Report, to file on paper. Blank forms may be downloaded from the DWS website’s Tax Forms area.
Payments may be made electronically using Electronic Funds Transfer (EFT) via the Employer Login page. You may also pay by cheque.
Even if no salaries are received during the quarter, you must make quarterly reports until DWS shuts your account or deems that your firm is exempt from reporting obligations. 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 informs workers on how to make an unemployment claim and what kind of benefits may be available. You may get an Unemployment Insurance Notice to Workers that satisfies all legal criteria by visiting the UI Publications area of the DWS website.
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 page simply covers the most fundamental aspects of Utah UI taxes. Check the IRS and DWS websites for the most up-to-date information to avoid any fines. DWS also has an Employer Handbook/FAQ page online. Employers must also pay federal unemployment insurance, state and federal withholding taxes, and record new employees, in addition to state unemployment insurance.