Question

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages

Answer 1

Answer:

=$434

Explanation:

FUTA and SUTA tax rate are applied to the first $7,000 of an employee's pay. Here the employee earned $8,900 but we will only tax the $7,000 due to the pre-condition of taxing the initial $7,000 amount.

FUTA tax rate = 0.8%

SUTA tax rate = 5.4%

Taxable pay = $7,000

Payable Tax = 7000(0.8%) + 7000(5.4%)

= 56 + 378

=$434

The amount of total unemployment taxes the employer must pay on this employee's wages is $434.

Answer 2

Answer:

The employeer will pay $ 56 dollar for FUTA and $ 378 for SUTA for a grand total of 434 dollars

Explanation:

As it earned above the ceilling of 7,000 the employer only pays for the first 7,000:

Federal Unemployment Tax Act

7,000 x 0.8% = 56

State  Unemployment Tax Act

7,000 x 5.4% = 378

Total amount for FUTA and SUTA 434