Question

# Peroni Company paid wages of \$167,600 this year. Of this amount, \$104,900 was taxable for net...

Peroni Company paid wages of \$167,600 this year. Of this amount, \$104,900 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 Peroni Company would pay to the federal government for its FUTA tax \$ c. Amount that the company lost because of its late payments \$

Note:

FUTA tax rate = 6%.

Credit against FUTA tax is allowable upto 5.4%.

In case of delay, credit equal to 90% of SUTA dues is allowable.

Credit for SUTA contributions = 90% credit for state taxes paid late + Additional tax credit if rate were 5.4%

Credit for SUTA contributions = (\$104,900 * 3.1% * 90%) + \$104,900 * (5.4% - 3.1%) = \$2926.71 + \$2,412.7 = \$5339.41

Gross FUTA tax = \$104,900 * 0.06 = \$6294

Net FUTA tax payable = Gross FUTA tax - Credit for SUTA contributions = \$6294 - \$5339.41 = \$954.59 = \$955

In case the company had paid its states taxes on time, then it would have received full credit instead of 90%. Thus, it has lost 10% of its credit for state taxes.

Loss to the company because of late payments = \$104,900 * 3.1% * 10% = \$325.19 = \$325

#### Earn Coins

Coins can be redeemed for fabulous gifts.