Question

(Federal Unemployment Tax Act/State Unemployment Tax Act)

a required payroll tax that all employers must pay. The money goes into the state unemployment fund on behalf of their employees.
a) Federal Unemployment Tax Act
b) State Unemployment Tax Act
c) Social Security Tax
d) Medicare Tax

Answer 1

The tax paid by all employers for their workers into the state unemployment fund is both the Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA). FUTA is a federal tax, whereas SUTA is a state-level tax that provides funding for unemployment benefits.

Step-by-step explanation:

The payroll tax that all employers must pay into the state unemployment fund on behalf of their employees is known as both the Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA). However, FUTA is the federal-level tax that employers pay to the IRS, which goes into federal funds used to oversee state unemployment insurance programs. On the other hand, SUTA is the state-level tax that employers pay into their individual state's unemployment fund, which directly provides benefits to workers in that state who lose their jobs.

The money collected from these taxes is used to fund unemployment benefits for workers who have lost their job through no fault of their own. The federal government mandates collection on the first $7,000 in wages to each worker with the option for states to set a higher taxable wage base. Benefits vary by state, but they are generally a portion of the worker's previous earnings for a set period, typically up to 26 weeks, with possible extensions.