the federal unemployment tax act (futa) specifies that an employer pay 6% unemployment tax on the first…

the federal unemployment tax act (futa) specifies that an employer pay 6% unemployment tax on the first $7000 of 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 125 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.

the federal unemployment tax act (futa) specifies that an employer pay 6% unemployment tax on the first $7000 of 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 125 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.

Answer

Explanation:

Step1: Identify taxable income per employee

Each employee's taxable income is $7000 as the tax is on the first $7000 of earned income per employee.

Step2: Calculate total taxable income for all employees

Total taxable income = Number of employees × Tax - able income per employee. So, $125\times7000 = 875000$.

Step3: Calculate FUTA tax payment

The FUTA tax rate after - credit is 0.6% or 0.006. Tax payment = Total taxable income×Tax rate. So, $875000\times0.006=5250$.

Answer:

$5250.00$