Question

earned income per employee. if the employer pays into a state unemployment insurance program, they will receive a 5.4% credit. the after-credit futa tax rate is therefore 0.6%. if a business has 25 employees, who each earn more than $7000 per year in wages, what is the businesss yearly futa tax payment? futa tax payment = $? round to the nearest hundredth.

Explanation:

Step1: Determine taxable wage per employee

Each employee earns more than $7000, so taxable wage per employee is $7000.

Step2: Calculate total taxable wages

Total taxable wages = Number of employees × Taxable wage per employee = 25 × 7000 = 175000

Step3: Apply FUTA tax rate

FUTA tax rate is 0.6% or 0.006.
FUTA tax payment = Total taxable wages × Tax rate = 175000 × 0.006 = 1050

Answer:

1050.00