Question

(Federal Unemployment Tax Act/State Unemployment Tax Act)

tax rate is 6.0%. The tax applies to the first $7,000 you paid to each employee as wages during the year.
a) Federal Unemployment Tax Act
b) State Unemployment Tax Act
c) Social Security Tax
d) Medicare Tax

Answer 1

The tax being asked about in the student's question is the Federal Unemployment Tax Act (FUTA), which is a 6.0% federal tax on the first $7,000 in wages paid to each employee. States can set higher wage limits for their collections, and 41 states do so. Unemployment benefits typically last 26 weeks and average around a third of the workers' previous wage, with variations by state.

Step-by-step explanation:

The tax rate being referred to in the question is associated with the Federal Unemployment Tax Act (FUTA), which is a federal tax collected from employers. This tax is set at 6.0% and applies to the first $7,000 in wages that an employer pays to each employee within the year. The funds collected under FUTA are used in conjunction with state-level programs to provide unemployment benefits to workers who have lost their jobs. Although FUTA sets a wage limit, states have the autonomy to set higher wage limits for their unemployment tax collections, and many states do so. Most states provide unemployment benefits for a standard duration of 26 weeks, with possible extensions during periods of high unemployment. The benefits typically amount to about a third of the worker's previous earnings, but this can vary by state.