Question

Storm Murphy is the owner of Stormy Banana Films in West Hollywood, California. Stormy Banana Films had 15 employees with a total annual wage of $214,750. No one exceeded the Medicare tax surcharge or Social Security cap. The FUTA rate for California in 2022 is 0.6%. Stormy Banana Films has a SUTA rate of 3.2% for 2022 with a wage base of $7,000. What is the total amount of FUTA tax that Stormy Banana Films will owe for 2022?

1) $1,288.50
2) $2,577.00
3) $3,865.50
4) $5,154.00

Answer 1

The total FUTA tax owed by Stormy Banana Films for 2022 is calculated as $7,000 multiplied by 15 employees and then by the FUTA rate of 0.6%, which equals $630. None of the given options are correct.

Step-by-step explanation:

The Federal Unemployment Tax Act (FUTA) is a payroll tax paid by employers on employee wages. The tax is calculated by multiplying the total annual wage base by the FUTA rate. In this case, the total annual wage of Stormy Banana Films is $214,750, and the FUTA rate for California in 2022 is 0.6%. However, only the first $7,000 of each employee's wages are subject to FUTA tax. With 15 employees, and assuming all of them earned more than the wage base, the calculation for the total FUTA tax would be $7,000 (wage base) * 15 (number of employees) * 0.006 (FUTA rate).

The total FUTA tax owed by Stormy Banana Films for 2022 would be:

$7,000 * 15 * 0.006 = $630.

Therefore, the correct answer is none of the provided options, as the calculated amount is $630.