The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay.
- Assume that an employee earned total wages of $2,900 in the current period and had cumulative pay for prior periods of $5,800. What is the amount of unemployment taxes the employer must pay on this employee's wages for the current period?

Question

Quizplus · Accepted Answer

The total wages subject to unemployment taxes are $7,000. The employee's cumulative pay before the current period is $5,800, so only $1,200 ($7,000 - $5,800) of the current period's wages are subject to unemployment taxes. The FUTA tax is 0.6% and the SUTA tax is 5.4%, totaling 6%. Therefore, the unemployment tax is 6% of $1,200, which is $72.00.

The Current FUTA Tax Rate Is 0