Virgin Islands Faces FUTA Credit Reduction for 2018
According to the U.S. Department of Labor (DOL), the U.S. Virgin Islands could not pay its federal loans by the November 10, 2018, deadline and will lose the full Federal Unemployment Tax Act (FUTA) credit for 2018. It will have a credit reduction of 2.4% for 2018 [DOL, Final 2018 Federal Unemployment Tax Act (FUTA) Credit Reductions, rev. 11-13-18].
The additional FUTA tax must be deposited by the due date of the 2018 federal Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, which is due January 31, 2019. The 2018 Schedule A (Form 940) will contain the official list of credit reduction states/territories, and the credit reduction total from Schedule A is reported on Form 940. Both forms will be available from the IRS when they are finalized.
California and the Virgin Islands were subject to a credit reduction for 2017. Earlier this year, California paid off its federal loans. The California Employment Development Department announced that the state unemployment insurance trust fund became solvent in May. The state did not borrow again by the deadline and will not have a credit reduction for 2018.
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