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 50 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 50 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 the taxable amount per employee

The taxable amount per employee is $7000 as per FUTA rules.

Step2: Calculate the total taxable amount for all employees

The business has 50 employees. So the total taxable amount is $7000\times50 = 350000$.

Step3: Calculate the FUTA tax payment

The after - credit FUTA tax rate is 0.6% or 0.006 in decimal form. The FUTA tax payment is the total taxable amount times the tax rate, so $350000\times0.006= 2100$.

Answer:

$2100.00$