Unemployment Insurance Tax (FUTA/SUTA): Indiana

Federal law and guidance on this subject should be reviewed together with this section.

Authors: Stuart R. Buttrick and Tareen Zafrullah, Faegre Drinker Biddle & Reath LLP

Summary

• Indiana uses the ABC test to determine whether a worker is an employee or an independent contractor for unemployment insurance purposes. See ABC Test.
• Indiana defines wages for state unemployment insurance (SUI) purposes as all compensation including commissions, bonuses and tips. See SUI Taxable Wages; Taxable Wage Base.
• Generally, an employer's unemployment insurance contribution rate is based on the employer's experience account status. See Contribution Rates and Experience Rating.
• Indiana law prohibits SUTA dumping, which is the practice of trying to evade or deceive the unemployment insurance system to qualify for a reduced contribution rate. Penalties are imposed for violations. See SUTA Dumping.
• Employers may make voluntary contributions to lower their SUI contribution rates. See Voluntary Contributions.
• A successor employer must assume the experience account of a predecessor employer if certain requirements are met. See Joint or Combined Accounts.
• Employers must file quarterly contribution and wage reports to report employee wages subject to unemployment insurance taxes. Electronic filing is optional. See Quarterly Reporting Requirements.
• An employer's account may be charged for an overpayment caused by the employer's failure to properly respond to requests for information. If an overpayment claim has been established, an employer may be required to withhold the overpaid amount from the employee's income and remit it to the Department of Workforce Development (DWD). See Benefit Overpayments.
• Employers are required to keep records containing certain information for each employee for at least five years. See Recordkeeping Requirements.