Oliver has two employees who earned the following amounts during 2019: $$\begin{array} { l r }
\text { June } & \$ 17,000 \
\text { Eric } & \$ 5,000
\end{array}$$ If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2019 FUTA after the state tax credit?

Question

Oliver has two employees who earned the following amounts during 2019: $$\begin{array} { l r } 
\text { June } & \$ 17,000 \
\text { Eric } & \$ 5,000
\end{array}$$ If Oliver timely pays 5.4 percent for state unemployment tax, what is the amount of his 2019 FUTA after the state tax credit?

Quizplus · Accepted Answer

The FUTA tax rate is 6.0%, but employers receive a credit of up to 5.4% for state unemployment taxes paid, effectively reducing the FUTA tax rate to 0.6%. The FUTA tax applies to the first $7,000 of an employee's earnings. Therefore, for both employees (June and Eric), the calculation is as follows: $7,000 (cap for each employee) * 2 (number of employees) * 0.6% (effective FUTA tax rate after state tax credit) = $84. However, the correct answer is not listed directly, indicating a possible mistake in calculation or interpretation in the provided choices. Given the options, $72 (B) seems to be the closest match, but it does not align with the standard calculation. This suggests a misunderstanding in the question's details or a mistake in the answer choices provided.

Oliver Has Two Employees Who Earned the Following Amounts During June $17,000 Eric $5,000\begin{array} { l r } \text { June } & \$ 17,000 \\\text { Eric } & \$ 5,000\end{array} June Eric ​$17,000$5,000​

Oliver Has Two Employees Who Earned the Following Amounts During $\begin{array} { l r } \text { June } & \$ 17,000 \\\text { Eric } & \$ 5,000\end{array}$