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Peroni Company paid wages of $169,300 this year. Of this amount, $113,700 was taxable for net...

Peroni Company paid wages of $169,300 this year. Of this amount, $113,700 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 Peroni Company would pay to the federal government for its FUTA tax

c. Amount that the company lost because of its late payments

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Answer #1

a.  (Taxable wages x SUTA rate x 90%) + [Taxable wages x (5.4% - SUTA rate)] = Total FUTA tax credit

Total FUTA tax credit = ($113,700 * 3.1% * 90%) + [$113,700 * (5.4% - 3.1%)] = $3,172.23 + $2,615.1 = $5,787.33

b. (Taxable wages x FUTA rate) - Total FUTA tax credit (part a above) = Net FUTA tax

Net FUTA tax = ($113,700 * 6%) - $5,787.33 = $6,822 - $5,787.33 = $1,034.67

c. Net FUTA tax - FUTA tax without penalty = penalty

Amount that the company lost because of its late payments = $1,034.67 - 10% of ($113,700 * 6%) = $1,034.67 - $682.2 = $352.47

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