The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

A) $336.00.
B) $420.00.
C) $534.60.
D) $594.00.
E) $0.00.

Question

Marcus Miller · Accepted Answer

Final Answer : B, Explanation :  The FUTA tax is applied to the first $7,000 of an employee's wages, so the maximum FUTA tax owed per employee is 0.6% of $7,000, which is $42. The employee earned $9,900, so the employer would owe the maximum FUTA tax on the first $7,000 of wages ($42) and no FUTA tax on the remaining $2,900 of wages.The SUTA tax is also applied to the first $7,000 of an employee's wages, but the tax rate is 5.4%. Therefore, the employer would owe 5.4% of the employee's first $7,000 of wages, which is $378, and no SUTA tax on the remaining $2,900 of wages.To find the total unemployment taxes owed on this employee's wages, we add the FUTA tax ($42) and the SUTA tax ($378) together, for a total of $420. Therefore, the correct answer is B: $420.00.

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