Question

The current federal unemployment taxes (futa) tax rate is 0.6%, and the state unemployment taxes (suta) tax rate is 5.4%. both taxes are applied to the first $7,000 of an employee's pay. assume that an employee earned total wages of $12,500. what is the amount of total unemployment taxes the employer must pay on this employee's wages? multiple choice $0.00. $750.00. $75.00. $675.00. $420.00

Answer 1

The total amount of unemployment taxes an employer must pay for an employee with $12,500 in wages, given a FUTA tax rate of 0.6% and a SUTA tax rate of 5.4%, is $420.00. This is calculated by multiplying the taxable wage base of $7,000 by each tax rate.

Step-by-step explanation:

The question concerns the calculation of the total unemployment taxes an employer must pay for an employee, given specific Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) tax rates. Both taxes are applied only to the first $7,000 of an employee's wages. With the FUTA tax rate at 0.6% and the SUTA tax rate at 5.4%, we calculate each tax by multiplying the respective tax rate by $7,000, which is the taxable wage base for an employee with a total wage of $12,500.

FUTA tax = 0.6% of $7,000 = $42
SUTA tax = 5.4% of $7,000 = $378
Total unemployment taxes = FUTA tax + SUTA tax = $42 + $378 = $420

Therefore, the total amount of unemployment taxes the employer must pay on this employee's wages is $420.00.