Unruh Co., which has a taxable payroll of $400,000, 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 Unruh Co.?
A)$46,800
B)$32,800
C)$16,000
D)$11,200

Question

Quizplus · Accepted Answer

The FUTA tax rate is 6.2%, but employers can receive a credit of up to 5.4% for state unemployment taxes paid, reducing the effective FUTA rate to 0.8%. The state tax rate is 2%. Therefore, the total tax is ($400,000 * 0.008) + ($400,000 * 0.02) = $3,200 + $8,000 = $11,200.

Unruh Co, Which Has a Taxable Payroll of $400,000, Is Subject