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The Problem

Universal Exporting has three warehouse employees: John Abner earns $422 per week, Anne Clark earns $510 per week, and Todd Corbin earns $625 per week. The company's SUTA tax rate is 5.4%, and the FUTA rate is 6.2% minus the SUTA. As usual, these taxes are paid on the first $7,000 of each employee's earnings. How much FUTA tax did the company pay on these employees in the first quarter of the year?

Answer provided by our tutors

Total FUTA Taxes = $152.93

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John Abner = 13 weeks * $422/week = $5,486 * (6.2% - 5.4%) = $43.89

Anne Clark = 13 weeks * $510/week = $6,630 * (6.2% - 5.4%) = $53.04

Todd Corbin = 13 weeks * $625/week = $8,125 (taxes only subject to first $7,000 so taxes based on $7,000) * (6.2% - 5.4%) = $56.00

Total = $152.93

 

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