Question

Appliance Repair Co. has a taxable payroll of $100,000. It is subject to a federal rate of 6.2% and a state contribution rate of 5.7%. However, its stable employment experience reduces the company's state rate to 1%. Compute federal and state unemployment taxes.

Answer 1

The federal unemployment tax for Appliance Repair Co. is $434 per employee, while the state unemployment tax is $70 per employee.

Step-by-step explanation:

The federal unemployment tax rate is 6.2%, which is applied to the first $7,000 of each employee's wages. Therefore, the federal unemployment tax for Appliance Repair Co. would be 6.2% of $7,000, which is $434 per employee.

The state unemployment tax rate is 5.7%, but because of the company's stable employment experience, its state rate decreases to 1%. This means that the state unemployment tax for Appliance Repair Co. would be 1% of $7,000, which is $70 per employee.