Mississippi Employer’s Guide to Unemployment Insurance Tax

Everything Mississippi employers need to know about paying unemployment insurance taxes.

If your small company employs people in Mississippi, you must pay the Mississippi unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Mississippi, 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.

Become a member of the Department of Employment Security.

Your small company, as a Mississippi employer liable to UI tax, must open a Mississippi UI tax account with the Mississippi Department of Employment Security (MDES). You may open an account with MDES either online or in person. Form UI-1, Status Registration, must be completed in any situation. After you register, you will be given a state UI account number. To register online, go to the MDES website’s Register area. To register on paper, go to the MDES website and obtain Form UI-1 from the Downloadable Forms area. There is no cost to register your company with MDES.

You will need a federal employer identification number to open a Mississippi 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

In Mississippi, most for-profit firms are subject to state unemployment insurance fees as soon as they:

pay $1500 in compensation in a single calendar quarter, or have at least one worker (does not have to be the same person) who provides services in some part of a day in each of the 20 calendar weeks in a calendar year.

These are essentially the same provisions that apply to federal unemployment tax liabilities under the Federal Unemployment Tax Act (FUTA). Domestic (in-home) workers, agricultural (farm) workers, and employees of certain (but not all) non-profit organizations are subject to other restrictions that are not mentioned 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 previous years, the taxable salary base in Mississippi has been $14,000 per year. However, the quantity might alter at any time.

The state UI tax rate for new employers might also alter from year to year. In recent years, it has been little more than 1%, with.1% rises in an employer’s second and third 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.

File UI Tax Reports and Payments on Time

Wage reports and payments for UI in Mississippi are due on the last day of the month after the end of each calendar quarter. In other words, reports and payments are required by the dates listed below:

The first quarter is due on April 30th, the second quarter is due on July 31st, the third quarter is due on October 31st, and the fourth quarter is due on January 31st.

If the due date of a report falls on a Saturday, Sunday, or a state or federal holiday, you may submit and pay on the next weekday.

You have the option of filing your reports and payments online or on paper. Go to the Employer Services portion of the MDES website to file and pay online. Before you may utilize the online reporting and payment system, you must first register an online account. You may pay with an e-check or a debit/credit card online. To file on paper, utilize Forms UI-2 and UI-3 (also referred to as UI-2/3), which include the Employer’s Quarterly Contribution Report and the Employer’s Quarterly Wage Report. Blank forms may be downloaded from the MDES website’s Downloadable Forms section.

Make a Public Notice (Poster)

You must display a notification (poster) about state unemployment claims in a visible location for all workers. The billboard informs workers that the employer is registered with MDES, that they are protected by UI, and who they may contact to submit a UI claim. You may download a legally required notification from the MDES website’s Required 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.