Can Employers Make Voluntary Contributions to Their State Unemployment Reserve Accounts?
Employers are required to pay taxes each year, though tax rates and amounts vary by state and other factors specific to each business. These include the type of business, the number of employees and other factors like unemployment reserve contributions. Employers are allowed to make voluntary or extra contributions to their state's unemployment reserve account.
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Making Extra Contributions
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Making additional, or voluntary, contributions as a business to your state's unemployment reserve account is an option, though there are restrictions, which vary by state. It helps support your state's economy and helps unemployed people in your state collect unemployment benefits faster. In general, it is a good thing to do for your local and state-wide business community, but there are benefits to you as well.
Benefits to Business
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In most states, making voluntary contributions to your state's unemployment reserve helps you secure a better tax rate. For example, in California, employers can reduce their unemployment insurance tax rate by up to three rate steps, which equates to a fraction of 1 percent. Also, employers can only make voluntary contributions in California during good economic times. Other states have similar restrictions and deadlines for making voluntary contributions. In Wisconsin, for example, a voluntary contribution affects your tax rates for the following calendar year.
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Cautions
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While, in theory, making a voluntary contribution to your state's unemployment reserve account to reduce tax rates seems like a good idea, business owners and employers should use caution. First, do not make a voluntary contribution unless you can afford to do so. If your business is struggling, or if you have a need to invest the money to benefit the company directly, consider using the money for company purchases instead. Also, according to Wisconsin's Department of Workforce Development, the voluntary payment might actually be higher than the savings you get from a lower tax rate. In that case, the voluntary contribution is essentially the same as throwing your money away.
How to Make Voluntary Comtributions
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Deadlines and payment locations for voluntary contributions to state unemployment reserve accounts vary by state. For example, in North Carolina, voluntary contributions must be made to the Employment Security Commission in Raleigh and must be submitted no later than 30 days after your Form NCUI 104 was submitted. In Wisconsin, employers may only make voluntary contributions for the coming year in November of the current year; no other month is acceptable for voluntary contributions. Contact your state's unemployment office for specific deadlines and locations for your state.
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