Kim works part-time for Medical Assistants Inc. ,and earned $6,385 for 2017.What amount of FUTA tax must her employer remit to the IRS? Assume her employer receives the maximum credit for state unemployment taxes.

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Quizplus · Accepted Answer

The FUTA tax rate for 2017 is 0.6% of the first $7,000 of wages paid to each employee. Therefore, the maximum FUTA tax for each employee is $42 ($7,000 x 0.6%). However, employers can receive a credit for state unemployment taxes paid, up to a maximum of 5.4%. Therefore, the net FUTA tax rate is 0.6% - 5.4% = -4.8%. Since the maximum amount of wages subject to FUTA tax is $7,000, the maximum FUTA tax per employee is $420. However, since the net FUTA tax rate is negative, the employer will receive a credit of $420 x 4.8% = $20.16. Therefore, the actual FUTA tax for each employee is $420 - $20.16 = $399.84. The FUTA tax for Kim is 0.6% x $6,385 = $38.31.

Kim Works Part-Time for Medical Assistants Inc