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 for the current period ($2,900) plus the cumulative pay for prior periods ($5,800) equals $8,700, which exceeds the $7,000 limit for unemployment taxes. Therefore, only $1,200 ($7,000 - $5,800) of the current period's wages are subject to FUTA and SUTA taxes. The FUTA tax is 0.6% of $1,200, which is $7.20, and the SUTA tax is 5.4% of $1,200, which is $64.80. The total unemployment tax is $7.20 + $64.80 = $72.00.

The Current FUTA Tax Rate Is 0