Asked by NIDHI THOMAS on Jul 01, 2024
Verified
Kim works part-time for Medical Assistants Inc. ,and earned $6,385 for 2017.What amount of FUTA tax must her employer remit to the IRS? Assume her employer receives the maximum credit for state unemployment taxes.
A) $38.31.
B) $39.58.
C) $44.70.
D) $51.08.
FUTA Tax
The Federal Unemployment Tax Act (FUTA) tax is a payroll tax paid by employers to fund state workforce agencies and unemployment insurance.
State Unemployment Taxes
Taxes paid by employers to their state government to fund unemployment insurance benefits for workers who have lost their jobs.
- Recognize and quantify the duties of employers pertaining to the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA).
Verified Answer
SS
Spencer Sklar6 days ago
Final Answer :
A
Explanation :
The FUTA tax rate for 2017 is 0.6% of the first $7,000 of wages paid to each employee. Therefore, the maximum FUTA tax for each employee is $42 ($7,000 x 0.6%). However, employers can receive a credit for state unemployment taxes paid, up to a maximum of 5.4%. Therefore, the net FUTA tax rate is 0.6% - 5.4% = -4.8%. Since the maximum amount of wages subject to FUTA tax is $7,000, the maximum FUTA tax per employee is $420. However, since the net FUTA tax rate is negative, the employer will receive a credit of $420 x 4.8% = $20.16. Therefore, the actual FUTA tax for each employee is $420 - $20.16 = $399.84. The FUTA tax for Kim is 0.6% x $6,385 = $38.31.
Learning Objectives
- Recognize and quantify the duties of employers pertaining to the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA).
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