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In: Accounting

Tom James has cumulative earnings of $6,825 and earned $750 during the current payroll period. The...

Tom James has cumulative earnings of $6,825 and earned $750 during the current payroll period. The FUTA tax is 0.6%, with a ceiling of $7,000. What is the employers federal unemployment tax liability for the current payroll:

a.$175.00

b.$10.50

c.$1.05

d.$105.00

Solutions

Expert Solution

Answer:
Taxable earnings for FUTA   =   $7,000 (-) $6,825
                                                        = $175
Employer tax liability for federal unemployment taxes
                                     =   Taxable earnings for FUTA   x FUTA tax rate
                                     = $175   x 0.6%
                                    =   $1.05
From given options, option (c) is correct i.e., $1.05

ekkarill92 answered 2 years ago
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