Question

Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2017 rates were used for FUTA and SUTA.

Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers.

Example 5-7

Shu Company located in Arkansas had FUTA taxable wages of $130,000 and SUTA taxable wages (on first $12,000) were $210,000 with a 0.9 percent SUTA tax rate. The total unemployment taxes that Shu Company is liable for are:

FUTA tax – $130,000 × 0.6%	=	$780
SUTA tax – $210,000 × 0.9%	=	1,890
Total unemployment taxes		$2,670

Due to its experience rating, Ianelli, Inc., is required to pay unemployment taxes on its payroll as follows:

Under SUTA for Massachusetts on taxable payroll of $18,600, the contribution rate is 4%.

Under SUTA for New Hampshire on taxable payroll of $34,000, the contribution rate is 6.65%.

Under SUTA for Maine on taxable payroll of $81,800, the contribution rate is 2.9%.

Under FUTA, the taxable payroll is $117,000.

Compute the following; round your answers to the nearest cent.

a. SUTA taxes paid to Massachusetts	$_______
b. SUTA taxes paid to New Hampshire	$_______
c. SUTA taxes paid to Maine	$_______
d. FUTA taxes paid	$_______

Answer 1

a. SUTA taxes paid to Massachusetts = Taxable payroll x Contribution rate

= 18,600 x 4%

= $744

b. SUTA taxes paid to New Hampshire = Taxable payroll x Contribution rate

= 34,000 x 6.65%

= $2,261

c. SUTA taxes paid to Maine = Taxable payroll x Contribution rate

= 81,800 x 2.9%

= $2,372.2

d. FUTA taxes paid = Taxable payroll x Contribution rate

= 117,000 x 0.6%

= $702