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The Curious Bag
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Suta stands for the state unemployment tax act. Employers located in the United States are required by law, to pay state unemployment taxes, as regulated by the state where the business is located.
Significance
As an employer, your Suta tax rate is determined by the number of unemployment claims filed by your terminated employees. For new businesses, the Suta tax rate begins at the maximum allowable amount, and declines based on having few unemployment claims.
Effects
Suta taxes aren't withheld from employee earnings, unless you have employees working in Alaska or New Jersey. Taxes due for employees are limited by a maximum wage amount.
States
Every state has its own unemployment compensation system funded primarily by tax payments made by employers. Each state has its own unemployment laws, Suta tax rate and threshold amounts.
Computation
In order to compute the correct amount you owe in state unemployment taxes, multiply the wages paid to each employee, by your corresponding Suta tax rate. Suta tax rates are assigned to employers throughout a given state, on an individual basis.
Forms
An employer must report Suta taxes on form 940 or 941, on a quarterly basis. Some states may require employers to submit tax reports and employee wage levels on CD's or other magnetic media.
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