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 75 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 75 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

Answer:

$3150.00$

Explanation:

Step1: Determine taxable income per employee

Each employee's taxable income is $7000$ since the tax is on the first $7000$ of earned income and they earn more than that.

Step2: Calculate total taxable income for all employees

Total taxable income = $7000\times75 = 525000$

Step3: Calculate FUTA tax payment

FUTA tax rate is $0.6%$ or $0.006$ in decimal form. Tax payment = $525000\times0.006=3150.00$