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Tax tips are provided as a resource for helpful hints and time-saving suggestions when registering, filing and paying your unemployment taxes and managing your unemployment tax account.
A Limited Liability Company is a unique legal entity that meets the definition of an employer.
Any persons receiving remuneration for services rendered to a Limited Liability Company – including owners or members – are defined as employees and their wages are reportable and taxable.
Distributions of profits based on formulas established in the Limited Liability Company's articles of organization are exempt from reporting to TWC.
Federal law and IRS classification has no bearing on the state interpretation of an LLC in Texas since LLCs were recognized in Texas under state legislative action. For a detailed explanation of the Tax Department’s interpretation of this issue, please visit the following link:
If you have questions or concerns about this issue, please contact your regional tax representative: http://www.twc.state.tx.us/unemployment-tax-contact-information#Unemployment_Tax_Offices
Employers must submit their employers’ quarterly wage reports electronically in the month that follows each calendar quarter (April, July, October and January). The employer must report the gross wages of each employee paid during the quarter.
Taxable wages are calculated and tax is paid only on the first $9000.00 of wages paid to each employee during the calendar year. Employers should ensure they are properly calculating the wage base used to compute their unemployment taxes.
Use of Unemployment Tax Services to file wage reports will ensure proper calculation of the wage base as long as the employee wage information has been entered correctly.
By using Unemployment Tax Services you:
• Eliminate overpayment of unemployment taxes;
• Help resolve the misreporting of information to the Internal Revenue Service regarding your unemployment tax account;
• Help eliminate the need for corrections to your tax account.
If you have questions, please contact your nearest tax office.
The Texas Workforce Commission (TWC) Tax Department receives periodic requests from employers, employers’ designated representatives and the IRS for re-certification of TWC tax accounts.
• Please be aware that TWC can only verify to the IRS information that we have received.
• Account information should be verified by logging into Unemployment Tax Services
• It is the employer’s responsibility to update changes to the TWC tax account.
• Request a 940 Certification using the Unemployment Tax Services System or by emailing email@example.com
Summer is fast approaching and students will soon be out in full-force looking for part-time or temporary summer jobs.
Please note that the Texas Unemployment Compensation Act does not exempt a worker from the definition of employment simply because of his temporary or part-time status. Employers are responsible for reporting wages paid to any temporary or part-time employees, including students.
If you employ students under a Distributive Education (DE) or Vocational Office Education (VOE) contract with a school, please remember that the exemption from employment for those students applies during the contract dates included in the academic school year only. Services provided outside of those dates, i.e. in the summer, by those students are reportable as wages.
If you need help finding workers, consider registering with WorkinTexas.com, our no cost job-matching service. We can help you find the best candidate to fit your needs.
Let’s have a great summer and keep Texas working.
Unemployment Tax Services offers a self-reset password process for users who have either forgotten or revoked their password.
The Reset Password page automatically appears when a user revokes their password or fails to correctly answer their security question after two attempts.
The Unemployment Insurance State Information Data Exchange System (SIDES) Web Services and SIDES E-Response allow users to quickly and efficiently respond to unemployment benefit claim notices. The systems allow users to attach documents to their response, confirm receipt of the documents, and eliminate paper notices. To find out more information about the SIDES program please visit the SIDES web site at http://info.uisides.org/ or contact a TWC SIDES E-Response representative at SIDESERESPONSE@twc.state.tx.us
Registered users of Unemployment Tax Services, the free Texas Workforce Commission (TWC) online system, should update their profile any time they change their email address. Maintaining an updated email address allows you to reset your password by email instead of having to call for assistance. TWC also uses the email address as a means of communicating with employers.
Updating a profile is quick and easy. After logging in to Unemployment Tax Services, select the “My Profile” link from the upper right hand corner of any page. Next, enter the new email address and then submit.
The annual report and contribution for domestic accounts that have requested annual filing is due on or before January 31, 2016.
The online version of the annual report is available now for those domestic employers who elected to file and pay their state unemployment tax annually. TWC encourages Annual Domestic Filers to file their annual report and pay their tax due online by using Unemployment Tax Services, a free online service. During the quick and simple registration process, new users create a User ID and password that will be used each time they access the online system. To register for access and to learn about other online services, visit our Unemployment Tax Services website.
Domestic employers electing to file reports annually will receive 2016 tax rates in March of 2016.
Tax Rate notices have been mailed. When you receive your notice, please forward a copy to your Service Agent, CPA, or bookkeeper so they can update their files. If you use "QuickFile or Intuit" you will need to update your software to show the correct Tax Rate.
With continued economic growth and prosperity in our state, Texas Workforce Commission (TWC) has taken steps to minimize increases in the overall unemployment insurance tax bill to Texas employers and to make responsible decisions that will result in savings to businesses in Texas.
At the end of 2010 and 2014, TWC sold bonds through the Texas Public Finance Authority in order to avoid interest that would have become due on federal advances. Although employers will see an obligation assessment added to the unemployment tax bills to repay the bonds, we are keeping employers’ taxes as low as possible by spreading this over a period of several years. The bonds, originally due to mature in July 2020, are on schedule to be retired in July 2017.
The components of your 2016 tax rate are:
You may be able to reduce your taxes for 2016. If TWC paid benefits to your employees who were laid off or separated through no fault of their own, you may find it beneficial to “buy down” the tax rate. Please visit our web site at www.texasworkforce.org and click on the Businesses and Employers menu link for more information or access the voluntary contribution analysis through Unemployment Tax Services.
At TWC, we work hard to minimize your unemployment insurance costs. In addition to lowering the tax burden, TWC is taking an aggressive approach to eliminate fraud, waste, and abuse of all kinds in the programs the agency administers. By reporting new hires immediately to the state Attorney General’s office, responding promptly to notices when a former employee applies for unemployment benefits and responding to earnings information requests on claimants, you can help us avoid overpayments and fraud which costs all employers.
TWC works closely with local workforce development boards across Texas to fill job openings with qualified unemployed workers, and we fund training to upgrade the skills of workers to better match area employers’ needs. TWC also works closely with economic development organizations to support existing Texas companies and to bring new business to the state. We pledge our continued efforts in helping to keep taxes as low as possible in order to promote a thriving Texas economy.
Texas Workforce Commission
Austin, Texas 78778
In accordance with Texas Labor Code 104.004 (a) and HB 2360 passed during the 81st Texas Legislative Regular Session, employers (a person who employs 1 or more employees) must notify all of their employees (an individual who is employed by an employer for compensation) of the federal earned income tax credit (EITC) general eligibility requirements, no later than March 1st of each year. The EITC is a refundable federal income tax credit for low to moderate income working individuals and families.
How may an Employer provide notice to its employees?
1. In person;
2. Electronically at the employee’s last known e-mail address;
3. Through a written or electronic flyer included as a payroll stuffer; or
4. By mailing the information to the employee at the employee’s last known address by United States first class mail.
Employers may use IRS Notice 797, or a written statement with the same wording as IRS Notice 797 when notifying employees. IRS – Notice 797 provides employees with the basic information for EITC. For more information and guidelines visit: http://www.eitc.irs.gov/Partner-Toolkit/employer .
There are several websites created to assist employees with additional information, eligibility requirements, general overview and income guidelines for EITC.
For more information, go to: http://www.eitc.irs.gov/ or, http://www.twc.state.tx.us/welref/wrjseek.html .
Computation of the 2016 unemployment insurance tax rate is based on your employment experience for the past twelve calendar quarters. Benefit payments charged to your tax account and taxable wages, which you have reported and on which you have paid taxes, are used in the computation.
The Labor Code, Texas Unemployment Compensation Act, provides that only taxable wages on which taxes have been paid by October 31, 2015 can be used to compute your tax rate. If you have unreported wages or unpaid taxes that are due from the twelve quarters proceeding October 1, 2015, you are encouraged to submit your report(s) and payment by October 31, 2015. Failure to pay unemployment insurance taxes may cause your 2016 tax rate to increase.
Workers should be properly classified as employees or independent contractors. Penalties could be imposed on a person who contracts for certain services with a governmental entity and who fails to properly classify their workers. This applies to subcontractors as well. Contractors and subcontractors who fail to properly classify individuals performing work under a governmental contract will be penalized $200 for each individual that has been misclassified. Governmental entities may want to include information on this new misclassification penalty in their contracts with entities that are providing services covered by this requirement.
Review our 20-point comparative approach as a guide to determine if a worker is an employee or an independent contractor.
Misclassification of certain workers is outlined in the Texas Unemployment Tax Act (TUCA), Section 214.008.
If you have questions about penalties for worker misclassifications, please contact your nearest Texas Workforce Commission Tax office.
Each employer must keep employment and payroll records that include all the information in TWC’s Payroll Records Requirements. The records may be inspected and copied by TWC or an authorized representative at any reasonable time and as often as necessary. Section 301.081 of the Texas Unemployment Compensation Act (TUCA) authorizes TWC to conduct a tax audit.
TWC may require reports regarding employees as necessary for the effective administration of the Texas Unemployment Compensation Act (TUCA).
Employment and payroll information TWC obtains may not be published and is not open to public inspection. However, a public employee may access the information as required for the proper administration of their duties, consistent with TWC rule and federal law.
The primary objectives of an unemployment insurance employer tax audit are to:
If you have questions about the audit process, contact your nearest Unemployment Tax Office