1. Implementing Payroll for the United States
  2. Federal Unemployment Tax Act Calculations

Federal Unemployment Tax Act Calculations

The payroll process supports the calculation of Federal Unemployment Tax Act (FUTA) liabilities.

There are several configurations you can perform in support of these calculations.

What you can do

What this means

How you do it

Override the FUTA credit reduction rate

FUTA credit reductions rates are predefined for each of the states that require a credit reduction. They are updated annually during end-of-year legislative updates.

If a state continues to have an outstanding loan through November, an additional 0.3% credit reduction might apply. An additional benefit cost rate add-on tax might also potentially apply. In certain circumstances, you must override these rates.

  1. Start the Calculation Value Definitions task.

  2. Perform an advanced search for the name that contains Credit Reduction in your legislative data group (LDG).

    Be sure to search with the effective date that you want to update the rate.

  3. Select the appropriate FUTA reduction rate from the search results.

  4. From the Actions menu, select Add Row.

  5. Enter values for From Value, To Value, and Rate.

  6. Click Submit and Done.

Override the FUTA rate

You can override the standard FUTA rates at the payroll statutory unit or tax reporting unit levels.

  1. Navigate to one of the following from your implementation project, depending on which level you're configuring.

    • Legal Entity Calculation Cards

    • Legal Reporting Unit Calculation Cards

  2. Start the Calculation Rules for Tax Reporting and Payroll Statutory Unit task.

  3. Enter the appropriate effective as-of-date.

  4. Click Federal Unemployment Calculation Component.

  5. Select Enterable Calculation Values on Calculation Cards.

  6. Click Create.

  7. Select Federal Unemployment Employer Rate for the name.

  8. Enter the rate as a decimal.

    For example, enter 1% as 0.01.

  9. Save and submit.

Override the FUTA standard value definitions

The standard value definitions for FUTA tax and FUTA wage limit are predefined. You can view these definitions and override their values at the LDG level.

  1. Start the Calculation Value Definitions task.

  2. Search for Federal Unemployment Tax.

  3. Select either the rate or wage limit link.

  4. In Calculation Values, add an effective dated row.

  5. Enter the new info.

  6. Save and submit.

Perform a tax adjustment for employees impacted by a FUTA rate change

You set the FUTA tax self-adjustment configurations on the organization calculation cards. The Department of Labor typically announces the year's FUTA credit reduction rates in the November to December time frame. Despite the rate being announced late in the year, you're responsible for ensuring the new rate is applied to the full year's taxes.

The payroll process doesn't self-adjust if the employees have already reached their wage limit or have been terminated.

Use the US Tax Balance Adjustment flow for any employee requiring FUTA tax adjustment due such a rate change.

  1. Run the US Tax Balance Adjustment flow.

    This flow creates a balance adjustment batch. The batch uses the same name as the flow you used when you ran the process.

    For further info, see US Tax Balance Adjustment Flow in the Help Center.

  2. Download the batch to the HCM Data Loader (HDL).

    There's no separate audit report.

  3. Verify the batch through HDL.

  4. Run the Transfer Batch Process.

  5. Run the Adjust Multiple Balances process.

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