Question

Assuming the state is in good standing, what is the amount an employer will pay in FUTA tax per employee for 2018?

a) 2.5% of the employee's wages
b) 6% of the employee's wages
c) 0.6% of the employee's wages
d) 1.45% of the employee's wages

Answer 1

The amount an employer will pay in FUTA tax per employee for 2018 is 0.6% of the employee's wages.

Step-by-step explanation:

The amount an employer will pay in FUTA (Federal Unemployment Tax Act) tax per employee for 2018 is c) 0.6% of the employee's wages.

The FUTA tax is a federal tax that employers pay to fund unemployment benefits for workers who have lost their jobs. The tax is calculated based on the first $7,000 of each employee's wages in a calendar year. The standard FUTA tax rate is 6.0% of the first $7,000 of an employee's wages, but employers can claim a credit of up to 5.4% if they pay state unemployment taxes on time.

For example, if an employee earns $50,000 in wages, the employer would pay $300 ($50,000 x 0.6%) in FUTA taxes for that employee.