Florida Reemployment Tax and Form 940: How Late State Payments Raise Your FUTA Bill

Most Tampa business owners think of payroll taxes as one problem: the Form 941 deposits for withholding, Social Security and Medicare. That is the big one, and it is the one that produces the trust fund recovery penalty. But there is a second, quieter payroll tax system running alongside it: unemployment tax.

In Florida, unemployment tax has a state half, called reemployment tax, and a federal half, the Federal Unemployment Tax Act tax reported on Form 940. They are linked by statute. When a business falls behind on the Florida half, the federal half can get more expensive. Here is how.

The federal tax: FUTA

IRC 3301 imposes the federal unemployment tax on employers. For 2025, the Form 940 instructions state the FUTA tax rate is 6.0 percent, applied to the first $7,000 of each employee’s wages for the year, after excluding payments exempt from FUTA.

Very few employers actually pay 6.0 percent. IRC 3302 gives a credit against FUTA for contributions paid into a state unemployment fund. The Form 940 instructions say most employers receive a maximum credit of up to 5.4 percent. That leaves a typical net federal rate of 0.6 percent, or $42 per employee per year on a $7,000 wage base.

The credit is the key. It is earned by paying the state.

The Florida tax: reemployment tax

Florida’s unemployment tax is called reemployment tax, under Chapter 443 of the Florida Statutes. The program is administered through the Florida Department of Commerce, with the Department of Revenue acting as the tax collection service provider. Employers report wages and pay the tax quarterly on the Employer’s Quarterly Report, commonly called the RT-6.

The wage base matches the federal one. Under Fla. Stat. 443.1217, for calendar years beginning in 2015, reemployment tax applies to the first $7,000 of remuneration paid to each employee in a calendar year. Each employer’s rate is set by Florida based on its experience and the program’s rules.

Florida also charges interest on late contributions and penalties for late reports. Fla. Stat. 443.141 provides, for example, a penalty for each delinquent report for each 30 days or fraction it is late, unless the employer has good reason.

How late Florida payments cost you federal credit

This is the part most business owners never hear about until their CPA mentions it. The federal credit under IRC 3302 depends on when the state contributions were paid.

The Form 940 instructions split state unemployment tax into two buckets: tax paid on time, meaning by the due date for filing Form 940, and tax paid late, meaning after that due date. Under IRC 3302(a)(3), credit for contributions paid after the Form 940 due date is limited to 90 percent of the amount that would have been allowed if paid on time. The Form 940 worksheet in the instructions applies that 90 percent factor to late payments.

In practical terms: if a Tampa employer does not pay its Florida reemployment tax for the year by the Form 940 due date, it loses part of its federal credit and owes more FUTA. The amounts per employee are not enormous, but for a business with many employees, or several years of late state payments, the extra federal tax adds up. And it comes on top of Florida’s own interest and penalties.

There is a second, harsher version. If wages are excluded from state unemployment tax, or no state contributions are paid at all, the employer may be liable for FUTA at the full 6.0 percent on those wages.

An example in words

Take a hypothetical Tampa landscaping company with a dozen seasonal workers, each paid more than $7,000 during the year. Its FUTA wages are $7,000 per worker. At the gross rate of 6.0 percent, before credit, the federal tax would be $420 per worker. With the full 5.4 percent state credit, the net federal tax is $42 per worker.

Now suppose the company fell behind and did not pay its Florida reemployment tax for the year until after the Form 940 due date. Under IRC 3302(a)(3) and the Form 940 worksheet, credit for those late contributions is limited to 90 percent of what would have been allowed. The company’s net federal FUTA bill goes up, on top of the Florida interest and late-report penalties it already owes.

If the company never paid Florida at all, the credit would not be available for those contributions, and FUTA could approach the full 6.0 percent on the wages involved. For a seasonal business that is already short on cash, that is the worst possible direction for the federal number to move.

The fix is unglamorous: catch up the Florida reemployment tax before the Form 940 deadline, even if other bills wait.

Credit reduction states, and why Florida is not one for 2025

A state that borrows from the federal government to pay unemployment benefits and does not repay on time becomes a credit reduction state, as determined by the U.S. Department of Labor. Employers in those states lose part of their FUTA credit and report the reduction on Schedule A (Form 940).

For 2025, the IRS Schedule A materials list California and the U.S. Virgin Islands as the credit reduction states. Florida was not on the list for 2025. That can change from year to year, so check the current Schedule A. A single-state Florida employer generally does not need Schedule A unless it paid wages subject to the unemployment laws of a credit reduction state.

Form 940 itself

Form 940 is filed annually. FUTA tax is deposited quarterly once the accumulated liability exceeds $500, with any smaller remainder paid with the return or carried forward under the deposit rules in the instructions. Missing Form 940 deposits and filings brings the usual federal failure-to-file and failure-to-pay penalties under IRC 6651 and failure-to-deposit penalties under IRC 6656.

FUTA is paid entirely by the employer. Nothing is withheld from employees, so it is not a trust fund tax, and the trust fund recovery penalty under IRC 6672 does not apply to it. That makes it less dangerous to individual owners than Form 941 taxes. It still becomes a business liability with a federal tax lien attached.

What Tampa employers should do

• Pay Florida reemployment tax by the Form 940 due date. Even if you are behind during the year, catching up before the Form 940 deadline preserves the full credit.
• File every RT-6. Florida’s late-report penalties accrue separately from the tax.
• Reconcile the two systems. The wages reported to Florida on RT-6 reports and the FUTA wages on Form 940 should tell the same story.
• Treat FUTA as part of the payroll plan. When negotiating with the IRS over payroll taxes, include Form 940 liabilities in the picture. See payroll tax problems in Tampa.
• Keep sales tax in view too. A business behind on reemployment tax is often behind on sales tax. See Florida sales tax and IRS debt.

Why this belongs on a Florida tax site

Florida has no personal income tax, so Tampa business owners often think of the IRS as their only real tax relationship. Reemployment tax is a reminder that the state is still in the payroll picture, and that the state and federal systems are designed to reward employers who pay the state on time. My guide on Florida’s lack of an income tax covers the other Florida taxes that touch federal problems.

GetIRSHelp.com has more on resolving payroll tax problems.

Pay Tallahassee on time and Washington gives you a 5.4 percent discount. Pay late and the discount shrinks. It is one of the few places in tax law where being prompt is rewarded in cash.