If your small business has employees working in Kansas, you’ll need to pay Kansas unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Kansas, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.
Different states have different rules and rates for UI taxes. Here are the basic rules for Kansas’s UI tax.
As a Kansas employer, your small business must establish a Kansas UI tax account with the Kansas Department of Labor (KDOL). You must register within 15 days of hiring your first employee. When you register, KDOL will determine whether you’re liable for UI taxes. (Most employers are liable.) If you’re liable, KDOL will issue you a six-digit employer serial number.
You can register for an account with KDOL either online or on paper. To register online, go to KDOL’s User Registration website. To register on paper, use Form K-CNS 010, Status Determination Report. Blank forms are available for download from the Reports and Publications section of the KDOL website. There is no fee to register your business with IDES.
Note: To establish your Kansas UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.
As a Kansas for-profit employer, you generally are liable for state UI taxes if you meet any of the following conditions:
The first three listed items are essentially the same rules that apply for liability under FUTA. Therefore, if you’re liable under FUTA, you’re likely also liable for state UI taxes, and vice versa. Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.
One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.
UI tax is paid on each employee’s wages up to a maximum annual amount. That amount, known as the taxable wage base, was stable in Kansas for many years at $8,000. However, in recent years, it has increased first to $12,000 and then to $14,000. The amount continues to be subject to change in the future.
The state UI tax rate for new employers also is subject to change from one year to the next. After many years holding stable at 4.0%, in recent years it has gone down to 2.7%. (Employers in the construction industry pay a higher rate.) Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.
For both current and historical information about wage bases and tax rates, check the Employer Tax Rates section of the KDOL website.
In Kansas, UI tax reports and payments are due on the last day of the month following the end of each calendar quarter. In other words:
Reports filed by mail are considered filed as of the date they are placed in the mail (postmark date).
Larger employers (50 or more employees) are required to file and pay electronically. Smaller employers can file and pay electronically or on paper. Electronic filing usually means filing online, and you can do this by going to KDOL’s KansasEmployer.gov website. However, there is also an option, not covered here, to upload information electronically.
To file on paper, use Form K-CNS 100, Quarterly Wage Report & Unemployment Tax Return. Each quarter, KDOL mails the quarterly report to each registered employer. You also can download blank forms from the Reports and Publications section of the KDOL website.
If you meet the requirements for UI tax liability at any time during a year, you must file a quarterly report for all quarters of that year. You also must file a quarterly report for every subsequent quarter, even if there were no reportable wages or contributions (payments) due for the quarter. You will be subject to a penalty if you fail to file.
You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster provides employees with basic information on how to apply for unemployment benefits. You can download a notice that meets all legal requirements (Form K-CNS 405, Unemployment Insurance) from the Posters section of the KDOL website.
Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.
You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.
This article touches on only the most basic elements of Kansas UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and KDOL websites for the latest information. KDOL also has a helpful publication, Unemployment Insurance Employer Handbook: A Guide to the Kansas Employment Security Law, that you can download from the KDOL website. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, required reporting of new hires, and required retention of employee records. You can get more information about other small business tax issues in other articles here on Nolo.