Question

An employer that pays all of its state unemployment taxes in a timely manner and is not in a credit reduction state may be entitled to a credit on its federal unemployment tax return of:

Answer 1

An employer that pays all of its state unemployment taxes in a timely manner and is not in a credit reduction state may be entitled to a credit on its federal unemployment tax return.

Step-by-step explanation:

An employer that pays all of its state unemployment taxes in a timely manner and is not in a credit reduction state may be entitled to a credit on its federal unemployment tax return. This credit is known as the Federal Unemployment Tax Act (FUTA) credit. This credit is calculated by multiplying the state unemployment tax rate by the taxable wages paid to each worker, up to the federal unemployment tax wage base of $7,000. The FUTA credit can reduce the employer's federal unemployment tax liability on a dollar-for-dollar basis.