Question

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

In April of the current year, Freeman Steel Company transferred Herb Porter from its factory in Nebraska to its plant in Ohio. The company's SUTA tax rates based on its experience ratings are 3.2% in Nebraska and 3.8% in Ohio. Both states base the tax on the first $9,000 of each employee's earnings. This year, Freeman Steel Company paid Herb Porter wages of $20,900; $2,800 were paid in Nebraska and the remainder in Ohio. Compute the following: round your answers to the nearest cent.

a. Amount of SUTA tax the company must pay to Nebraska on Porter's wages
$

b. Amount of SUTA tax the company must pay to Ohio on Porter's wages
$

c. Amount of the net FUTA tax on Porter's wages (Ohio is a credit reduction state-1.5%.)
$

Answer 1

Ans
a)	Compute the amount of state unemployment tax (SUTA) payable in the state N as follows
	Particulars	Amount ($)
	Amount of wages paid in State N	2,800
	Tax rate applicable in State N	3.20%
	state unemployment taxes payable as per state N ($2,800 X 3.2%)	89.60
	Thus , the amount of SUTA payable in State N is $89.60
b)	Compute the amount of state unemployment tax (SUTA) payable in the state O as follows
	Particulars	Amount
	Amount of wages paid in State O($20,900 - $2,800)	18,100
	Amount subjected to SUTA tax in State O ($9000 - 2,800)	6,200
	Tax applcable in state O	3.80%
	state unemployment taxes payable(SUTA) as per state O ($6,200 X 3.8%)	235.60
	Thus , the amount of SUTA payable in State O is $235.60
c)	Compute the Federal unemployment tax (FUTA) payable as follows
	Particulars	Amount
	Amount of wage received	20,900
	Tax rate applicable(FUTA)	0.60%
	Federal Unemployment Taxes Payable Gross ($20,900 x 0.6%)	125.4
	less:Creditfor tax paid in SUTA in State O (upto 1.5%)i.e, {6,200 x 1.5%}	93
	FUTA Tax Payable	32.4
	Thus the amount of FUTA tax payable is $32.4