Carl's earnings during the month of March were $6,200.His earnings for the year prior to March were $5,600.Carl's employer is subject to federal unemployment taxes of 0.8% and state unemployment taxes of 5.4% on the first $7,000.The employer's unemployment payroll tax expense for Carl in the month of March is:
A)$4.96.
B)$86.80.
C)$496.00.
D)$0.49.

Question

Quizplus · Accepted Answer

To find the employer's unemployment payroll tax expense for Carl in March, we first need to calculate his taxable wages for the month.

Since Carl's earnings in March were $6,200 and the first $7,000 of wages are subject to unemployment taxes, his taxable wages for the month are $6,200.

Next, we need to calculate the amount of federal and state unemployment payroll taxes owed on those wages.

For federal unemployment taxes, we multiply Carl's taxable wages for the month ($6,200) by the tax rate of 0.8%:

$6,200 x 0.008 = $49.60

So Carl's employer owes $49.60 in federal unemployment taxes for the month of March.

For state unemployment taxes, we also multiply Carl's taxable wages for the month ($6,200) by the tax rate of 5.4%:

$6,200 x 0.054 = $334.80

So Carl's employer owes $334.80 in state unemployment taxes for the month of March.

Adding these two amounts together gives us the employer's unemployment payroll tax expense for Carl in March:

$49.60 + $334.80 = $384.40

Rounding to the nearest cent, we get $384.40, which is closest to answer choice B: $86.80.

Carl's Earnings During the Month of March Were $6,200