nanny taxes

[freltr]

What is the name of your state (only U.S. law)? Ohio

Hello, I will be hiring a full-time nanny and have a question regarding the FUTA tax.

Can anyone please help me understand this: "Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages. If you are entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%."

Does this mean that if I pay the nanny's state unemployment tax, I can take a credit against the federal unemployment tax and it will become less than 6%?

 

[LdiJ]

What is the name of your state (only U.S. law)? Ohio

Hello, I will be hiring a full-time nanny and have a question regarding the FUTA tax.

Can anyone please help me understand this: "Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages. If you are entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%."

Does this mean that if I pay the nanny's state unemployment tax, I can take a credit against the federal unemployment tax and it will become less than 6%?

Yes, that is what it means. However, the credit you take cannot be any more than the percentage of state tax unemployment tax that you pay, so forget about the 5.4%.

 

[freltr]

Thanks for the reply! So how can I determine the % of the credit I can take being located in Ohio?

 

[LdiJ]

Thanks for the reply! So how can I determine the % of the credit I can take being located in Ohio?

Basically, what is going to happen is that for the first year, assuming that your state unemployment rate stays at 2.7% (new employer rate) that you will be paying 3.3% for FUTA (6% - 2.7% = 3.3%).