Question

Black Robot Grill of Andrews, Texas, has the following employees as of December 31:

Employee Name	Annual Taxable Wages
Mark English	$	30,000
Shelly Morris	$	10,000
TL Radford	$	22,000
James Morrow	$	31,000
Trella Lyons	$	27,000

Required:

The company's SUTA tax rate is 6.25 percent and wage base is $8,000. Black Robot's Grill's FUTA tax rate of 6 percent is subject to a 5.4 percent reduction and applies to the first $7,000 of employee wages. What is the annual amount of FUTA and SUTA taxes due for each employee? (Round your answers for "SUTA Due" to 2 decimal places.)

	Employee FUTA Due SUTA Due Mark English Shelly Morris TL Radford James Morrow Trella Lyons

Answer 1

Hi there,

FUTA : Federal Unmployment Tax Act = Base Wage * FUTA rate

SUTA : State Unemployment Tax Act = Base Wage* SUTA rate

Employee	FUTA Due (0.6%)	SUTA Due (6.25%)
Mark English	7,000*0.60% = $ 42	8,000*6.25% = $ 500
Shelly Morris	$ 42	$ 500
TL Radford	$ 42	$ 500
James Morrow	$ 42	$ 500
Trella Lyons	$ 42	$ 500

Total FUTA to be paid by the employer = $ 210
Total SUTA to be paid by the employer = $ 2500

Note:
1) Annual wage over and above the base wage is not chargeble to FUTA/SUTA.
2) FUTA is to subject to a credit of 5.4%, so the final rate implied = 0.6% i.e. 6% -5.4%

Thank you