Illinois Unemployment Taxes (Insurance)

[Bgreer5050]

I beleive an Illinois employer pays the state a percent of wages per quarter
to cover unemployment insurance. If a worker is laid off and collects
unemployment, does the employer have to pay more or does the state pick up
the tab at this point?

Thanks

[Paul Thomas, CPA]

"Bgreer5050" <bgree...@yahoo.com> wrote

These generalities are the same among all states.

The tax rate is levied upon only a portion of wages, say the first $8500, or
$12,000 per employee. That dollar cap and the state rate vary according to
state law. Wages above the dollar cap are still reported, but no tax is
due. The dollar cap is static across all employers, while the tax rate will
vary with each employers experience rating.

When someone files an unemployment claim, the most recent employer or
employers are "charged" for that claim. What happens is that their
"experience rating" gets impacted. The experience rating is part of what
sets the tax rate for that employer. Generally the tax rate doesn't change
during the year based on claims made in that year, but it most likely would
impact the next years rate.

Regardless of what dollar amount of unemployment tax is paid by the former
employers, the unemployed person will receive unemployment based on state
laws and have nothing to do with how much is paid in (if any) on their
behalf by the employers. Generally the amount of unemployment is based on
wage earnings and length of employment (among other factors), so working two
days and getting laid off probably won't qualify you for 13 weeks of
unemployment at $300 a week. It probably won't qualify you for unemployment
at all.

In theory, all of the unemployment collected would go into a "pool" and
payments come from that same "pool". If the pool runs dry, meaning their
are more claims and payments out than employers paying in, then the state
general fund would pick up the slack. But, expect a huge jump in
unemployment tax rates across the board in the following years to allow the
state to recoup that deficit.

The only time I've seen mid year jumps in the tax rate is with employers
that continue to default on filing reports or paying tax.

--
Paul A. Thomas, CPA
Athens, Georgia