Timmons Co., which has a taxable payroll of $500,000, is subject to FUTA tax of 6.2% and a state contribution rate of 5.4%.However, because of stable employment experience, the company's state rate has been reduced to 2%.What is the total amount of federal and state unemployment tax for Timmons Co.?

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Quizplus · Accepted Answer

The FUTA tax is 0.6% (after the 5.4% credit for state taxes), and the state tax is 2%. Therefore, the total tax is (0.6% + 2%) of $500,000, which equals $14,000.