Note: The following discussion is provided for informational purposes only and is not intended to serve as legal or tax advice. For specific information about unemployment taxes for 501(c)(3) organizations, consult an attorney or tax advisor.
In all states, 501(c)(3) organizations are required to pay for unemployment claims in one of two ways: through state unemployment insurance tax (SUI) or as a reimbursing employer paying the state only for claims paid out to former employees.
Many nonprofit organizations still do not realize they have the second option. Here are the pros and cons of paying SUI taxes vs. reimbursing the state.