Washington ESD employer asking about federal unemployment tax rate for 2024 - need clarification
I'm a small business owner in Washington state and I'm trying to figure out what the federal unemployment tax rate is for 2024. My accountant mentioned something about it but I want to double-check since I need to make sure I'm paying the right amount for my employees. Does anyone know the current FUTA rate? I know Washington ESD handles the state portion but I'm confused about the federal side. My business had some layoffs last year and I want to make sure I'm compliant with all the unemployment tax requirements.
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Jayden Hill
The federal unemployment tax rate (FUTA) for 2024 is 6.0% on the first $7,000 of each employee's wages. However, employers can get a credit of up to 5.4% if they pay their state unemployment taxes on time, which brings the effective rate down to 0.6% in most cases. Since you're in Washington, as long as you're current with your Washington ESD quarterly filings, you should qualify for that credit.
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Isabella Tucker
•Thanks! So if I understand correctly, I only pay 0.6% as long as I'm current with Washington ESD? That's much better than the full 6%.
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Jayden Hill
•Exactly! Washington state isn't on the federal credit reduction list, so you get the full 5.4% credit as long as your state taxes are paid on time.
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LordCommander
Just to add to what was said above - make sure you're also keeping track of your Washington ESD experience rating. If you've had layoffs recently, that could affect your state unemployment tax rate for next year. The federal rate stays the same but your state rate with Washington ESD might go up.
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Isabella Tucker
•Oh no, I didn't think about that. How do I check my experience rating with Washington ESD?
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LordCommander
•You can log into your Washington ESD employer account online or call them directly. They'll send you a notice with your new rate usually in December for the following year.
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Lucy Lam
•Good luck getting through to Washington ESD on the phone though. I've been trying to reach them about my business account for weeks.
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Aidan Hudson
If you're having trouble reaching Washington ESD by phone, I recently discovered this service called Claimyr that helps you get through to ESD agents. Check out claimyr.com - they have a video demo at https://youtu.be/7DieNd3C7zQ that shows exactly how it works. I used it when I needed to resolve some issues with my business account and it saved me hours of trying to call.
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Lucy Lam
•Really? How does that work exactly? I'm desperate at this point.
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Aidan Hudson
•They basically handle the calling and waiting for you. Much easier than sitting on hold for hours only to get disconnected.
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Zoe Wang
•Sounds too good to be true but I might have to try it. Washington ESD's phone system is terrible.
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Connor Richards
For 2024, don't forget that the wage base is still $7,000 per employee for FUTA. Some people think it's higher but it's been stuck at $7K for years while state wage bases keep going up. Washington's wage base is much higher than the federal one.
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Isabella Tucker
•What's Washington's wage base for 2024? I know it's different from the federal.
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Connor Richards
•Washington ESD's wage base for 2024 is $71,000 per employee. Big difference from the federal $7,000!
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Grace Durand
Wait, I'm confused. Are we talking about what employers pay or what employees pay? I thought employees don't pay federal unemployment tax?
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Jayden Hill
•You're right - employees don't pay FUTA. That's employer-only. Employees only pay into Social Security and Medicare through payroll deductions. The unemployment taxes are entirely on the employer side.
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Grace Durand
•Ok that makes sense. I was mixing it up with the other payroll taxes. Thanks for clarifying!
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Steven Adams
Make sure you're filing your 940 form by January 31st if you owe more than $500 in FUTA tax for the year. If you owe less than $500, you have until the end of February. I learned this the hard way when I got hit with penalties.
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Isabella Tucker
•Good to know! I'll make sure to check my total for the year. Do I need to make quarterly payments or just pay it all at once?
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Steven Adams
•If you owe more than $500 in any quarter, you need to make quarterly deposits. Otherwise you can just pay it all when you file the 940.
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Alice Fleming
Just wanted to mention that some states have credit reduction issues where the federal rate is higher, but Washington isn't one of them. We're in good shape here compared to some other states that borrowed money from the federal government during the recession.
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Isabella Tucker
•What happens in those states with credit reduction?
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Alice Fleming
•They lose part of the 5.4% credit, so employers end up paying more in federal unemployment tax. It's a way for the federal government to get repaid for loans to state unemployment funds.
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Hassan Khoury
•California and New York have dealt with this in the past. Not fun for businesses there.
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Victoria Stark
The 0.6% rate is pretty standard if you're paying your state taxes on time. I've been running a business for 15 years and it's been consistent. The bigger variable is your Washington ESD state rate which can really fluctuate based on your layoff history.
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Isabella Tucker
•How much can the Washington ESD rate vary? I'm worried about those layoffs I had last year.
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Victoria Stark
•It can range from around 0.18% for businesses with no layoffs up to 5.4% or higher for businesses with lots of claims. Your rate is based on your experience over several years though, so one bad year won't kill you.
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Benjamin Kim
I use a payroll service and they handle all this automatically. Might be worth considering if you're getting overwhelmed with all the different rates and deadlines. They know all the Washington ESD requirements too.
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Isabella Tucker
•I've been thinking about that. Do you think it's worth the cost for a small business?
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Benjamin Kim
•For me it was worth it just for the peace of mind. No more worrying about missing deadlines or calculating rates wrong.
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Samantha Howard
Don't forget about the additional 0.6% rate - that's after the credit. Without the credit it would be 6.0%. Most people don't realize how much that credit saves them until they see the actual calculation.
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Isabella Tucker
•Yeah, 6% would be brutal. Glad Washington qualifies for the credit.
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Samantha Howard
•Absolutely. It's one of those things where being in a well-managed state really helps your business bottom line.
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Megan D'Acosta
I had to call Washington ESD last month about my quarterly filing and used that Claimyr service someone mentioned earlier. Worked great - got through to an actual person instead of being on hold forever. Definitely recommend it if you need to talk to ESD about your employer account.
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Lucy Lam
•I'm definitely going to try Claimyr. I've wasted so many hours trying to get through to Washington ESD.
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Megan D'Acosta
•The video demo on their site shows exactly how it works. Much better than the runaround you get calling ESD directly.
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Sarah Ali
For what it's worth, I've found Washington ESD's employer handbook pretty helpful for understanding all the tax requirements. It's available on their website and covers both the state and federal obligations.
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Isabella Tucker
•Thanks, I'll check that out. I probably should have read that before posting here!
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Sarah Ali
•No worries, it's a lot of information to digest. The handbook is pretty comprehensive though.
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Ryan Vasquez
Just remember that the FUTA tax is separate from your Washington ESD state unemployment tax. You'll be paying both, but they're calculated differently and have different wage bases. Don't mix them up when you're doing your bookkeeping.
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Isabella Tucker
•Good point. I need to make sure I'm tracking them separately in my accounting software.
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Ryan Vasquez
•Exactly. Your accountant will thank you for keeping them separate from the start.
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Avery Saint
The federal rate hasn't changed in years but some people think it fluctuates. It's been 6.0% with the 5.4% credit for a long time. The state rates are what really vary year to year.
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Isabella Tucker
•That's helpful to know. At least I can count on the federal side being predictable.
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Avery Saint
•Yep, it's one less thing to worry about when planning your payroll costs.
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Taylor Chen
If you're doing your own payroll, make sure you're also staying on top of your Washington ESD quarterly reports. Missing those deadlines can affect your credit eligibility for the federal tax.
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Isabella Tucker
•When are the quarterly deadlines? I want to make sure I have them in my calendar.
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Taylor Chen
•They're due the last day of the month following the end of each quarter. So January 31, April 30, July 31, and October 31.
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Keith Davidson
One more thing - if you're just starting out as an employer, you might qualify for a reduced rate with Washington ESD for your first few years. It's worth asking about when you register.
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Isabella Tucker
•I've been in business for about 3 years now, so probably past that point. But good to know for other new employers reading this.
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Keith Davidson
•Yeah, the new employer rate is usually lower than the standard rate. It's one of the few breaks small businesses get.
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Ezra Bates
•I wish I had known about that when I started my business. Could have saved some money in those early years.
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