In this Edition... Tax Season!

It’s that time of the year again…tax season! The Department has plenty of information and tips to help ease the stress of completing your taxes. This issue highlights how to make submitting unemployment insurance benefits tax forms easier, keep unemployment tax rates low for businesses, and keep workers’ compensation rates low while making sure your employees are safe.

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Employer Contribution Tax Rates 101 - For Employers

Employer Contribution Tax Rates 101 - For Employers

There are many things employers must complete in order to be in compliance with the state. This includes contributing to the Missouri Unemployment Tax Fund. Each quarter, employers may contribute to the fund and must provide the Division of Employment Security (DES) with information on the wages of their covered employees.

The DES establishes and maintains separate experience rate accounts for each employer. All employers, except those making reimbursable payments, have an assigned tax rate. An employer's rate may change from year to year.

However, there are several ways employers can keep tax rates low:

  • Employers must file Quarterly Contribution and Wage Reports on time each quarter to avoid costly late penalties on their account. To see due dates for each quarter and for more information on Quarterly Contribution and Wage Reports, visit the Quarterly Reports page.
  • Another way to keep tax rates low is to properly classify employees. Worker misclassification occurs when employers fail to report employees by paying them under the table or paying in cash, or by classifying them as independent contractors. By properly classifying and reporting workers, employers avoid penalties associated with 1099 Fraud. To avoid misclassifying your workers, you can learn more about Are You Off The Books and take an online assessment. The Department also provides free educational training to businesses that have questions about misclassification.
  • Limiting layoffs can also affect employer unemployment tax rates. Employers can avoid laying off workers by signing up for the Shared Work Program. The program allows employers to divide available work among a specified group of affected employees instead of a layoff. Employees can then receive partial unemployment benefits while working reduced hours. If you are facing layoffs, you can now submit a plan application online!
  • Be sure to provide information about a former employee to the DES when requested. This will help determine whether or not a claimant is eligible for benefits, which could have an impact on your tax rate.

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Unemployment Benefits are Taxable - For Claimants

Unemployment Benefits are Taxable - For Claimants

Did you know - Unemployment Insurance benefits are subject to federal and state income taxes? Those receiving unemployment benefits must report the amount of payments received during the calendar year on their state and federal income tax returns. The federal Form 1099-G contains this benefit information. If you had taxes withheld from your claim and did not receive a Form 1099-G, you can now access the form online.

While claiming unemployment, you can choose to have the DES withhold 10 percent of your weekly benefits for federal income tax. If you choose not to have the DES withhold your taxes, you must submit the tax amount at the end of the year. 

You must authorize with the DES to request or change federal tax withholding from benefit payments by filling out an “Authorization for Federal Income Tax Withholding from Unemployment Benefits” form. You can change your withholding information at any time. The changes will be effective the week your authorization is received.

If you have questions about Federal Form 1099-G, you can e-mail questions or concerns to esuiclaims@labor.mo.gov.

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Workers' Compensation Tax Rates

Workers' Compensation Tax Rates

Each year, new workers’ compensation rates are determined to support the system to provide benefits to workers injured on the job. The revenue from the administrative tax and the administrative surcharge is used to fund expenses associated with the administration of the Missouri Workers’ Compensation Law.

The following tax and surcharge rates are in effect for 2013:

  • Administrative Tax (authorized under Sec. 287.690) - 1.0 percent
  • Administrative Surcharge (authorized under Sec. 287.716) - 1.0 percent
  • Second Injury Fund Surcharge (authorized under Sec. 287.715) - 3.0 percent

The Missouri Workers’ Compensation Law applies to:

  • Employers with five or more employees
  • Employers in the construction industry with one or more employees

There are other factors that figure into employer’s workers’ compensation tax rates. Another way employers can keep rates low is to reduce the amount of potential injuries in the workplace by taking advantage of the Department’s free On-Site Safety and Health Consultation Service. Having a consultant perform a walk-through of your workplace can identify potential safety hazards to protect your workers. During the consultation, there are no penalties for any hazards found. Consultants can also help employers create and implement safety programs, which could allow employers to be eligible for additional premium credits to be applied to the tax rate.

Resources:
If you are working with a subcontractor, avoid being stuck with the bill by using our Are You Covered application and ensuring that they also have workers’ compensation coverage.

You can also calculate your workers’ compensation rates by using our workers’ compensation rate calculator.  The calculator allows you to compare your current rate with the lowest rates filed in your industry.

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