Due to the depletion of state unemployment tax insurance funds, many states have had to borrow from the federal government to cover unemployment benefits. When these loans remain unpaid for over two years, a surtax is triggered and employers must pay additional FUTA taxes. The FUTA surtax for Virginia is 0.3%.

Virginia employers who paid employees more than $7,000 in 2011 will have to pay an additional $21 ($7,000 x 0.3%) in FUTA taxes per employee when filing their annual 2011 Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return).

In addition, employers must prepare and attach Schedule A (Form 940) to calculate the additional FUTA. Employers in twenty states, including Virginia, plus the Virgin Islands, are subject to the FUTA surtax.

-John Scaglione