In 2019, Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked part-time and earned $4,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much unemployment tax was paid to the state from Willow Corporation for 2019?

Question

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The total wages earned by the two full-time employees are $50,000 ($25,000 x 2). The total wages subject to state unemployment tax is $14,000 ($7,000 x 2). The tax paid for each of the full-time employees is $756 ($14,000 x 5.4%). The tax paid for the part-time employee is $216 ($4,000 x 5.4%). The total amount of state unemployment tax paid by Willow Corporation is $1,728 ($756 x 2 + $216). Therefore, the answer is D) $972.

In 2019, Willow Corporation Had Three Employees