Question

In: Accounting

Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. ​...

Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.

​

a. Complete Part 2 of Form 940 based on the following information:

Total payroll for the year                                                   $913,590

Payroll to employees in excess of $7,000                         $421,930

Employer contributions into employees' 401(k) plans        $23,710

​

Source: Internal Revenue Service

​

b. If the employer is located in California, which has a credit reduction of 1.5%,

     what would be the amount of the credit reduction?

​

c. Complete Part 5 of Form 940 for the California employer given the breakdown of FUTA taxable

    wages for the year to be:

​

First quarter      $237,000

Second quarter                  $168,000

Third quarter   $54,000

Fourth quarter                   $8,950

   Yearly total      $467,950

Solutions

Expert Solution

Answer to a.

Form 940 Calculation

Part 2 of Form 940 determines your FUTA tax before adjustments. You will need the following information:

  1. The total payments to all employees for the calendar year.

i.e. 913,590

  1. The total amount of payments exempt from FUTA tax and the source of those payments. These exempt payments might include some fringe benefits, group life insurance, and retirement plan benefits.

i.e. 23,710

  1. The total of payments made to all employees in excess of $7000 for the year.

i.e. 421,930

Subtract 2. and 3. from 1. to get the total FUTA taxable wages, then multiply by 0.006 (0.6%) to get the total FUTA tax owed.

= 913,590 - 23,710 – 421,930

= 467,950

Answer to b.

If the employer is located in California, which has a credit reduction of 1.5%,

    the amount of the credit reduction would be credit reduction multiplied by FUTA eligible amount

therefore, 467,950 * 1.5% comes to 7019.25

Answer to c.

FUTA rate calculation

FUTA rate

0.60%

Add: Credit reduction rate

1.50%

Rate to be considered

2.10%

Number

FUTA @2.1%

16a

First quarter     

$237,000

4977

16b

Second quarter                  

$168,000

3528

16c

Third quarter  

$54,000

1134

16d

Fourth quarter                   

$8,950

187.95

17

   Yearly total     

$467,950

9826.95

ekkarill92 answered 3 years ago
Next > < Previous

Related Solutions

FUTA is: paid by employers only; however, the tax is only paid on the first $7,000...
FUTA is: paid by employers only; however, the tax is only paid on the first $7,000 of each employee’s earnings for the year paid by employees only; however, the tax is only paid on the first $7,000 of their earnings for the year paid by employees only (on all of their wages) paid by both employees and employers; however, the tax is only paid on the first $7,000 of the employee’s earnings for the year paid by employers only (on...
For each of the described pay periods, determine the taxable earnings subject to FUTA tax: NOTE:...
For each of the described pay periods, determine the taxable earnings subject to FUTA tax: NOTE: For simplicity, all calculations throughout this exercise, both intermediate and final, should be rounded to two decimal places at each calculation. A business employs two individuals, whose taxable earnings to date (prior to the current pay period) are $3,000 and $31,400. During the current pay period, these employees earn $3,300 and $1,450, respectively. Taxable earnings subject to FUTA tax:
Consider another hypothetical tax code. Assume the tax rate on the first $15,000 of taxable income...
Consider another hypothetical tax code. Assume the tax rate on the first $15,000 of taxable income is 10% and the tax rate on any additional income is 18%. The standard deduction ($6,350) and personal exemption ($4,050) still apply. In other words: • For taxable income from $0 to $15,000, you pay 10% of your taxable income in taxes, plus • For taxable income above $15,000, you pay 18% of your taxable income. If your total income before exemptions were $10,000...
Peroni Company paid wages of $162,300 this year. Of this amount, $108,400 was taxable for net...
Peroni Company paid wages of $162,300 this year. Of this amount, $108,400 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for Peroni Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent. the rate 0.6% was used for the FUTA tax rate for employers. a. Amount of credit the company would receive...
Peroni Company paid wages of $160,100 this year. Of this amount, $114,700 was taxable for net...
Peroni Company paid wages of $160,100 this year. Of this amount, $114,700 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for Peroni Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent. a. Amount of credit the company would receive against the FUTA tax for its SUTA contributions $________ b. Amount that...
Lopez Company paid wages of $178,200 this year. Of this amount, $107,500 was taxable for net...
Lopez Company paid wages of $178,200 this year. Of this amount, $107,500 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for lopez Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent. a. Amount of credit the company would receive against the FUTA tax for its SUTA contributions $ b. Amount that...
31. Use Table A to complete Table B. TABLE A On Taxable Income The Tax Rate...
31. Use Table A to complete Table B. TABLE A On Taxable Income The Tax Rate Is Up to $27,050 20.0% From $27,051 to $65,550 27.5% From $65,551 to $136,750 30.5% From $136,751 to $297,350 35.5% Over $297,350 39.1% TABLE B Taxpayer Income Tax Amount Average Tax Rate Giannis $52,700 Sue $132,500 Damian $237,000 Breanna $315,250 Marginal Tax Rate
1. Use Table A to Complete Table B. Table A On Taxable Income The Tax Rate...
1. Use Table A to Complete Table B. Table A On Taxable Income The Tax Rate Is Up to $27,050 20.0% From $27,051 to $65,550 27.5% From $65,551 to $136,750 30.5% From $136,751 to $297,350 35.5% Over $297,350 39.1% Table B Taxpayer Income Tax Amount Average Tax Rate Mariginal Tax Rate Giannis $52,700 Sue $132,500 Damian $237,000 Breanna $315,250 2. Bryce loves baseball. During the entire baseball season (every day from mid-March until the end of October), Byrce will watch...
Consider an economy with a real income of $10,000, consumption spending of $7,000, and net tax...
Consider an economy with a real income of $10,000, consumption spending of $7,000, and net tax revenue of $2,000. a. Calculate domestic private saving and Suppose government spending is $2,000. What is the public saving? b. Continuing from part last part, what is national saving? c Continuing from part b, suppose net foreign investment is -$3,000. What is private domestic investment spending?
Consider an economy with a real income of $7,000, consumption spending of $5,000, and net tax...
Consider an economy with a real income of $7,000, consumption spending of $5,000, and net tax revenue of $1,000. a. Calculate domestic private saving b. Suppose government spending is $1,000. Calculate public saving. c. Continuing from part b, what is national saving? d. Continuing from part c, suppose net foreign investment is -$2,000. What is private domestic investment spending?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT