NYS Department of Labor employer asking about federal unemployment tax rate 2024 - confused about FUTA
I'm trying to figure out the federal unemployment tax rate for 2024 since I need to calculate what I owe as a small business owner in NY. My payroll company mentioned FUTA but I'm getting confused about how this affects my NYS Department of Labor obligations too. Does anyone know what the current federal rate is and how it works with the state unemployment taxes I'm already paying? I have 8 employees and want to make sure I'm calculating everything correctly.
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Aisha Ali
The federal unemployment tax rate (FUTA) for 2024 is 6.0% on the first $7,000 of each employee's wages. However, you can get a credit of up to 5.4% if your state unemployment taxes are paid on time, bringing the effective rate down to 0.6%. Since you're in NY and paying into the NYS Department of Labor system, you should qualify for this credit as long as your state taxes are current.
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Mateo Gonzalez
•Thank you! So basically I'm looking at 0.6% if I stay current with my NYS Department of Labor payments? That makes way more sense than the 6% I was panicking about.
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Ethan Moore
Yeah the federal rate is 0.6% effective rate for most employers. Just make sure you're keeping up with your quarterly NYS Department of Labor filings because if you fall behind on state unemployment taxes, you lose that 5.4% credit and get hit with the full 6%. I learned this the hard way a few years back when I was late on my state filing.
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Yuki Nakamura
•Ouch, that must have been expensive! How much extra did you end up paying when you lost the credit?
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Ethan Moore
•It was brutal - went from paying about $300 per quarter to over $2,000 until I got caught up with NYS Department of Labor. Definitely learned to set reminders for all my unemployment tax deadlines after that.
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StarSurfer
I'm confused though - if I'm already paying unemployment taxes to NYS Department of Labor for my employees, why do I also have to pay federal? Seems like double taxation to me. And what happens if one of my employees files for unemployment benefits - does it come from the state fund or federal fund?
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Aisha Ali
•They serve different purposes. Your NYS Department of Labor taxes fund the actual unemployment benefits your employees receive. The federal FUTA tax funds the administrative costs of the unemployment system and provides loans to states when their unemployment funds run low. When your employee files a claim, the benefits come from the state fund that you've been paying into.
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Carmen Reyes
Just a heads up - if you're having trouble getting through to NYS Department of Labor for any employer-related questions, I discovered this service called Claimyr at claimyr.com that helps people actually reach agents by phone. They have a demo video at https://youtu.be/qyftW-mnTNI showing how it works. Saved me hours of being on hold when I needed to resolve an issue with my unemployment account last year.
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Mateo Gonzalez
•Thanks for the tip! I've definitely struggled getting through to NYS Department of Labor in the past. Does it work for employer questions too or just for people filing claims?
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Carmen Reyes
•It works for getting through to the general NYS Department of Labor phone lines, so it should help with employer questions too. The main thing is it handles the waiting and gets you connected to an actual person instead of dealing with busy signals.
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