Unemployment Insurance Tax (FUTA/SUTA): Kentucky

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

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Kentucky determines whether an individual worker is an employee or an independent contractor for unemployment insurance coverage purposes based on common law rules. See Common Law Test.
• Several different rules apply to determine whether wages are taxable for state unemployment insurance (SUI) purposes. See SUI Taxable Wage.
• Kentucky uses the Reserve Ratio method of determining the employer SUI contribution rate. Form UI-29, Notice of Contribution Rate, is issued annually in February to each employer indicating the new rate and the information used to calculate it. See Experience Rating Method.
• Kentucky's SUTA dumping law adopts the federal model law. See SUTA Dumping.
• Negative balance employers may make additional payments into their reserve accounts to reduce their SUI tax rate. See Voluntary Contributions.
• Kentucky employers must file quarterly wage and tax reports by the last day of the month following the end of each quarter. See Quarterly Reporting Requirements.
• Multiple worksite reporting is optional for Kentucky employers. See Multiple Worksite Reporting.
• Employers must keep certain SUI records for six years and certain weekly records on each employee for at least two years. See Recordkeeping Requirements.
• Employers are subject to penalties for failing to file quarterly wage and tax reports when they are due. In addition, an employer's account will be charged for overpayments caused by the employer's failure to properly respond to requests for information about benefit claims. See Penalties.