Everything employers need to know about paying Wisconsin unemployment insurance taxes.
If your small company employs people in Wisconsin, you must pay the Wisconsin unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Wisconsin, 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 Wisconsin’s UI tax are as follows.
Become a member of the Department of Workforce Development.
Your small company, as a Wisconsin employer liable to UI tax, must open a Wisconsin UI tax account with the Wisconsin Department of Workforce Development (DWD). You should open an account as soon as you suspect you may be subject to UI taxes (see below). You may open an account with the DWD either online or in person. If your company is found to be responsible for UI taxes after registration, you will be given an Unemployment Account Number.
Use the DWD’s UI Employer Online Services to register online. Use Form UCT-1-E, Wisconsin Employer Report, to register on paper. Blank forms may be downloaded from the DWD website’s Forms and Publications area. There is no cost to register your company with the DWD.
You will need a federal employment identification number to set up your Wisconsin 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
If you are a for-profit employer in Wisconsin, you are typically required to pay state unemployment taxes if you fulfill any of the following conditions:
you paid $1,500 or more in salaries in a calendar quarter in any calendar year you hired one or more people for some portion of a day in 20 or more weeks in any calendar year (the weeks need not be consecutive and part-time employees must be included in the employee count)
You’ve taken over part or all of an employer’s company that is already covered by unemployment compensation legislation, or you’ve paid any pay for Wisconsin employment and have an obligation for that year under the Federal Unemployment Tax Act (FUTA).
The first three items on the list are largely the same regulations that govern liability under FUTA. As a result, if you are due under FUTA, you are very certainly also liable under Wisconsin UI taxes, and vice versa. 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 recent years, Wisconsin’s taxable salary base has remained stable at $14,000 per year. However, the quantity is always subject to change.
The state UI tax rate for new employers might also alter from year to year. The rate has lately reduced. Wisconsin, unlike other states, has a two-tiered pricing structure. New employers with less than $500,000 in payroll pay a lower rate than those with more than $500,000 in payroll. In recent years, the lower-tier rate has ranged from 3.25% to 3.60%, while the higher-tier rate has ranged from 3.40% to 4.10%. The latter rates are applicable to new employers in the majority of businesses. New construction employers are liable to a much higher rate.
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.
Check the DWD website for the most up-to-date pay base and tax rate information.
Submit UI Tax Reports and Payments Quarterly
In Wisconsin, unemployment insurance tax reports and payments are due at the end of the calendar quarter.
Larger businesses must file electronically (online). Smaller businesses (fewer than 25 workers) may file on paper. If you are compelled to file online, you must do so in the future.
To file online, go to the DWD’s UI Employer Online Services website and log in to the Tax and Wage Reporting System. Use Form UCT-101, Quarterly Contribution Report, and Form UC-7823, Quarterly Wage Report, to submit on paper. Blank forms may be downloaded from the DWD website’s Forms and Publications area.
You may pay online using Electronic Funds Transfer (EFT) using either ACH debit or ACH credit transactions. Payment may also be made by cheque or money order.
Even if you did not have payroll during the quarter, you must complete a quarterly report. 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 sign informs employees on when and how to apply for Wisconsin unemployment benefits. From the Workplace Posters part of the DWD website, you may obtain a notice that satisfies all legal requirements (Form UCB-7-P, Notice to Employees).
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.
