Question

Sung Khang worked for two different employers. Until May, he worked for Wonderman Construction Company in Kansas City, Kansas, and earned $21,500. The state unemployment rate for Wonderman is 4.6%. He then changed jobs and worked for Buxmont Improvement Company in Mobile, Alabama, and earned $33,100 for the rest of the year. The state unemployment rate for Buxmont is 5.1%. Determine the unemployment taxes (FUTA and SUTA) that would be paid by each company.

Round your answers to the nearest cent.

Use Figure 5.1 to determine SUTA caps in Alabama and Kansas.

a. Wonderman Construction Company $fill in the blank 1
b. Buxmont Improvement Company

Answer 1

The FUTA tax for Wonderman Construction Company and Buxmont Improvement Company would be $420 each. The SUTA tax amounts cannot be determined without information on the SUTA caps in Kansas and Alabama.

Step-by-step explanation:

For Wonderman Construction Company, the FUTA tax would be calculated by multiplying the FUTA tax rate of 6% by the first $7,000 in wages. Therefore, the FUTA tax for Wonderman Construction Company would be $7,000 x 6% = $420.

For Buxmont Improvement Company, the FUTA tax would also be calculated by multiplying the FUTA tax rate of 6% by the first $7,000 in wages. Therefore, the FUTA tax for Buxmont Improvement Company would also be $7,000 x 6% = $420.

The SUTA tax rates and caps vary by state. Without information on the SUTA caps in Kansas and Alabama, it is not possible to determine the exact SUTA taxes for each company.

Answer 2

The FUTA tax for both Wonderman Construction Company and Buxmont Improvement Company is $42, as it is 0.6% of the first $7,000 of wages. The SUTA taxes cannot be calculated without knowing specific state wage base caps, but rates of 4.6% for Kansas and 5.1% for Alabama are provided.

Step-by-step explanation:

The student's question involves calculating the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes that would have been paid by Sung Khang's employers in Kansas and Alabama. To begin the calculation, it's important to note that the FUTA tax rate is typically 6% (which can be credited up to 5.4% if the employer pays state unemployment taxes on time, effectively making the FUTA tax rate 0.6%), and it's charged on the first $7,000 of each employee's wages. Then, each state has different wage bases and rates for SUTA taxes.

Without the specific SUTA caps for Kansas and Alabama, we cannot compute exact SUTA amounts for the companies. Nevertheless, we can provide the calculation for FUTA: For Wonderman Construction Company, the FUTA tax would be 0.6% of $7,000 (since $21,500 is well above the $7,000 threshold), which equals $42. For Buxmont Improvement Company, the calculation is the same: 0.6% of $7,000, equating to $42. The SUTA tax would depend on the respective state-imposed wage base limit and the unemployment rates provided (4.6% for Kansas and 5.1% for Alabama).