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 business's yearly FUTA tax payment? FUTA Tax Payment $$ =\$[?] $$ Round to the nearest hundredth.

Question

UpStudy AI · Accepted Answer

To calculate the yearly FUTA tax payment for the business, follow these steps:

1. **Determine the Taxable Wages per Employee:**
   - Since each employee earns more than \$7,000, the taxable wage per employee is \$7,000.

2. **Calculate the Total Taxable Wages for All Employees:**
   $$
   \text{Total Taxable Wages} = 75 \text{ employees} \times \$7,000/\text{employee} = \$525,000
   $$

3. **Apply the After-Credit FUTA Tax Rate:**
   - The after-credit FUTA tax rate is $$0.6\%$$.
   $$
   \text{FUTA Tax Payment} = 0.006 \times \$525,000 = \$3,150.00
   $$

**Final Answer:**
$$
\boxed{\$3150.00}
$$
The business's yearly FUTA tax payment is \$3,150.00.

Real Tutor Solution

Answer

Solution

Bonus Knowledge

Related Questions

Latest Economics Questions