In 2014, Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked only part-time and earned $3,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much unemployment tax was paid to the state from Willow Corporation for 2014?

Question

Quizplus · Accepted Answer

The total wages paid by Willow Corporation were ($25,000 * 2) + $3,000 = $53,000.
The state unemployment tax rate is 5.4%, and the taxable wage base is $7,000 per employee.
For each of the two full-time employees, the taxable wages are capped at $7,000, so the unemployment tax for each of them is 5.4% * $7,000 = $378.
For the part-time employee, the taxable wages are $3,000, so the unemployment tax for that employee is 5.4% * $3,000 = $162.
Adding up the unemployment tax payments for all three employees, we get a total of $378 + $378 + $162 = $918. Therefore, the correct answer is C.

In 2014, Willow Corporation Had Three Employees