FUTA Rate Decrease Means Changes for Dynamics GP

Effective July 1, 2011, the Federal Unemployment Tax (FUTA) rate decreased from 6.2 percent to 6.0 percent, due to the expiration of a 0.2 percent surtax on wages created in 1976. This change means you need to take action in Microsoft Dynamics GP.

The new tax rate will affect wages after July 1, so it is important not to change anything in GP until you calculate second quarter taxes.

Unlike other federal taxes, the FUTA rate is maintained manually and not downloaded as part of the tax update process. It is used by the system when you print the FUTA Summary Report—the tax rate in the system at the time the report is printed is the one the report uses. Therefore, if you change your tax rate before you calculate FUTA taxes for the second quarter, your tax calculation will be incorrect.

To change the tax rate, go to Microsoft Dynamics GP menu | Tools | Setup | Payroll | Unemployment Tax. Select “FED” as the tax code, as shown here.

If you are using the 6.2 percent rate, change it to 6.0 percent. If you are using the 0.8 percent rate, change it to 0.6 percent. Of course, you should consult your tax professional to verify which rate you should use.

Save the record.

To see the effect of the tax rate, run the FUTA Summary report. Go to Reports | Payroll | Period-End. Select “FUTA Summary” from the list as shown here.

Go to the end of the generated report. Notice the tax rate reflects the tax rate on the Unemployment Tax Setup window.

If you have any questions, please contact our support center at 877.253.7778 or gpsupport@bkd.com.

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