Deadline to opt out of unemployment taxes is Nov. 30

From Unemployment Services Trust

The Nov. 30 deadline to opt out of the state unemployment tax system for 2012 is quickly approaching. Unemployment taxes are increasing in Hawaii and across the U.S. for nonprofit organizations and it may benefit your organization to become a direct-reimbursing employer.

Last year, the taxable wage base for Hawaii unemployment taxes nearly tripled to $34,200 – third highest in the nation. Many employers did not make the deadline to opt out last year and are reeling from the increase.

Employers who opt out of the state unemployment tax system to become direct-reimbursing employers save by reimbursing the state only for unemployment benefits paid out, instead of paying quarterly taxes per employee. Funds paid into the state tax system are gone whether or not an organization has unemployment claims filed against it.

In 2010, Hawaii employers overpaid unemployment benefits by $9.5 million – employers typically pay in $2 in taxes for every $1 paid out in benefits. Therefore, employers participating in the state unemployment tax system often pay out more than necessary.  Becoming a direct-reimbursing employer can protect your organization from paying wrongful unemployment claims, subsidizing other employers and ever-rising state tax rates. 

The Unemployment Services Trust, a partner of Hawaii Alliance of Nonprofit Organizations, can help you determine whether opting out would benefit your organization.  All nonprofit organizations with 10 or more full-time employees are encouraged to explore the UST program. 

The deadline to opt out of the Hawai’i unemployment tax system is fast approaching. To speak with a knowledgeable UST representative, contact Bill Downey at (888) 249-4788 or info@ChooseUST.org.