Tom James has cumulative earnings of $6,825 and earned $750 during the current payroll period. The FUTA tax is 0.6%, with a ceiling of $7,000. What is the employers federal unemployment tax liability for the current payroll:

Question

Quizplus · Accepted Answer

The FUTA tax applies only to the first $7,000 of earnings. Tom's cumulative earnings before the current payroll were $6,825. With the additional $750, his total earnings become $7,575. However, only $175 of the $750 is subject to FUTA tax, as it brings his total to the $7,000 ceiling. Therefore, the tax liability is 0.6% of $175, which is $1.05.

Tom James Has Cumulative Earnings of $6,825 and Earned $750