George's Gameroom had two employees with the following earnings information:

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Use the table above to calculate how much of Barbara's December 15 paycheck is still subject to state unemployment tax given that the rate is 4% and federal unemployment tax is 0.6% and both taxes are levied on only the first $7,000 of each employee's annual earnings.

Question

George's Gameroom had two employees with the following earnings information:

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Use the table above to calculate how much of Barbara's December 15 paycheck is still subject to state unemployment tax given that the rate is 4% and federal unemployment tax is 0.6% and both taxes are levied on only the first $7,000 of each employee's annual earnings.

Quizplus · Accepted Answer

Barbara's annual earnings are $22,800 and $7,000 of that is subject to state unemployment tax. Therefore, the amount subject to state unemployment tax is $7,000. Barbara's earnings are also subject to federal unemployment tax, which is levied on only the first $7,000 of each employee's annual earnings. So, $7,000 of Barbara's earnings are also subject to federal unemployment tax. Therefore, the total amount subject to unemployment tax is $7,000 + $7,000 = $14,000. The state unemployment tax rate is 4%, so Barbara's state unemployment tax is $7,000 * 0.04 = $280. Therefore, the amount of Barbara's paycheck subject to state unemployment tax is $280. The remaining earnings subject to state unemployment tax are ($7,000 - $280) = $6,720.

George's Gameroom Had Two Employees with the Following Earnings Information