Am I in a Credit Reduction State for 2014?

FUTA credit reduction occurs when a state fails to pay back loans taken to meet state unemployment liabilities to that federal government. The normal amount of credit you receive is 5.4% on the FUTA tax rate of 6.0%. Each year the loan is not paid back the credit is reduced by 0.3% with additional reductions after the 3rd and 5th year if certain criteria are not met.

Credit-reduction-stateThe Credit Reduction States are:


  • California
  • Kentucky
  • North Carolina
  • New York
  • Ohio
  • Virgin Islands


  • Indiana


  • Connecticut

Credit Reduction is reported on Form 940.

Our 1099-etc Software already has Form 940 in our Forms Filer Plus module and will be generated in the AMS Payroll module based on the payroll information you entered.

Advanced Micro Solutions offers a free DEMO so that you can make sure the software fits your needs.  Free Technical Support is offered Monday thru Friday from 8 AM to 6 PM central time, with extended hours in January and April.

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.