Johnny's Tavern had 16 employees and total annual wages of $376,948 during the previous year.All employees earned more than $7,000 during the year.What is Johnny's Tavern's FUTA tax liability?

Question

Quizplus · Accepted Answer

The FUTA tax rate is 6.0% on the first $7,000 of wages per employee. With 16 employees, the taxable wage base is 16 x $7,000 = $112,000. The FUTA tax liability is 6.0% of $112,000, which equals $6,720. However, employers can receive a credit of up to 5.4% for state unemployment taxes, reducing the effective FUTA rate to 0.6%. Therefore, the liability is 0.6% of $112,000, which is $672.00.

Johnny's Tavern Had 16 Employees and Total Annual Wages of $376,948