Everything employers need to know about paying New Jersey unemployment insurance taxes.
If your small company employs people in New Jersey, you must pay the New Jersey unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In New Jersey, 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 New Jersey’s UI tax.
Register with the Departments of Revenue and Labor and Workforce Development.
As a New Jersey employer liable to UI tax, your small company must open an account with the state’s UI administrator, the New Jersey Department of Labor and Workforce Development (LWD). The New Jersey Division of Revenue and Enterprise Services is where you register for UI tax and other company taxes (DOR). You may register with the DOR online or in person. To complete the registration procedure for New Jersey firms (corporations, LLCs, registered partnerships), you will require your New Jersey-issued company ID number.
Go to the DOR’s NJ Business Gateway Services website to register online. Fill out Form NJ-REG, Business Registration Application, to register on paper. The DOR website has a business forms area where you may obtain a blank Form NJ-REG with instructions. Form NJ-REG may be sent or delivered in person. There is no cost to register your company with the DOR.
You will need a federal employer identification number to set up your New Jersey 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.
Shortly after registering, the DOR will send you a confirmation letter with your EIN and a Personal Identification Number (PIN) that you will need to complete employer taxes online.
Unemployment Insurance Tax Liability Regulations
In New Jersey, most for-profit companies are subject to state unemployment insurance fees if one of the following conditions is met:
If the employer is subject to the Federal Unemployment Tax Act (FUTA), or if the company purchases another firm that is already subject to New Jersey’s UI tax statute, the employer will be liable to the FUTA.
To be liable under FUTA, and hence under New Jersey law, you must typically either:
Employ someone for a part of a day in at least 20 distinct calendar weeks throughout the calendar year, or have a quarterly payroll of $1,500 or more.
In New Jersey, if you form a company, employ one or more people, and pay salaries of $1,000 or more in a calendar year, you “may” be liable to the state’s UI tax and, in any event, must register with the DOR as mentioned above. 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 New Jersey, this sum, known as the taxable wage base, normally rises by $500 or $600 per year. It has recently neared and then surpassed $32,000.
The state unemployment insurance tax rate for new employers, often known as the normal starting tax rate, might alter from year to year. It has ranged between 3.0% and 3.5% 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 most other states, New Jersey mixes UI tax reporting and payments with withholding tax payments. Reports and payments are due 30 days after the conclusion of the fiscal quarter. (This, too, differs from many other states, which require reporting on the last day of the month following the calendar quarter.) In other words, UI tax returns in New Jersey are required by the following dates:
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 30.
Third-quarter returns and payments are due by October 30, and fourth-quarter returns and payments are due by January 30.
The filing deadline is absolute. If a due date comes on a weekend or holiday, there is no extension. Employers will not be notified of upcoming deadlines.
Reports and payments must be submitted electronically (online). This usually entails using the DOR’s On-Line Filing Service. You may, however, upload reports via a Secure File Transfer Protocol (SFTP) system. Form NJ-927, Employer’s Quarterly Report, and Form WR-30, Employer Report of Wages Paid, shall be filed. These reports, however, are no longer accessible in digital or print formats. Payment must be made using Electronic Fund Transfer (EFT), credit card, or E-check. Check out the DOR’s Guide to Electronic Filing and Payment Services for a more in-depth explanation of online filing and payment choices.
Even if you have no payroll for a quarter, you must submit quarterly returns. If you fail to file or file late, you will be penalized.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment claims in a visible location for all workers. The poster includes basic information on who is eligible for unemployment benefits and how to submit a claim. You may download a notice that fits all legal standards from the LWD website’s Posters section.
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 New Jersey UI taxes. Check the IRS, DOR, and LWD websites for the most up-to-date information to avoid any fines. Employers must also pay federal unemployment insurance, state and federal withholding taxes, and record new employees, in addition to state unemployment insurance.