What is a credit reduction state?
765 views | Last modified 5/25/2020 8:08:28 AM EST

Applicable To
94X 1099 W-2 ACA W-4

A state that hasn't repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940.

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