Question

Truson company paid a 4% suta tax on the taxable wages of $108,500. the taxable wages under futa were $89,400. what was the net futa tax of truson company

Answer 1

Truson Company's net Federal Unemployment Tax Act (FUTA) tax, assuming they are eligible for the full SUTA credit, would be $536.40. This calculation was done by applying the FUTA tax rate to the taxable wages, then subtracting the SUTA tax credit.

Step-by-step explanation:

To calculate the net Federal Unemployment Tax Act (FUTA) tax for Truson Company, we first need to know the FUTA tax rate. The IRS sets this rate, and although it can change, as of the most recent data available, it is typically at 6.0%. However, businesses can receive a credit of up to 5.4% if they've paid state unemployment taxes on time, which is the State Unemployment Tax Act (SUTA) tax paid by the company. Let's assume Truson Company is eligible for this full credit.

First, calculate the FUTA tax before the credit:

1. FUTA tax rate = 6.0%
2. Taxable wages for FUTA = $89,400
3. Gross FUTA tax = Taxable wages * FUTA tax rate
4. Gross FUTA tax = $89,400 * 6.0% = $5,364

Next, apply the FUTA credit:

1. FUTA tax credit maximum is 5.4%, which Truson is assumed to be eligible for
2. Net FUTA tax = Gross FUTA tax - (Taxable wages * Credit)
3. Net FUTA tax = $5,364 - ($89,400 * 5.4%)
4. Net FUTA tax = $5,364 - $4,827.60
5. Net FUTA tax = $536.40

Therefore, Truson Company's net FUTA tax would be $536.40.