Question

1. Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.

Sparks Company's SUTA rate for next year is 3.25% because its reserve ratio falls into the state's 10% to less than 12% category [(contributions - benefits paid) ÷ average payroll = $414,867 ÷ $3,521,790 = 11.78%]. If the next bracket (12% to less than 14%) would give the company a lower tax rate of 3.05%, what would be the least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate? Round your answer to two decimal places.
$_________

2. Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. In the first quarter of the year, Henry Gibson earned $3,000 in wages and reported $2,400 in tips to his employer. How much would the employer's FUTA tax be for the first quarter on Gibson? Round your answer to two decimal places. $____________

Answer 1

SUTA stands for state unemployment tax, not to be mistaken for FUTA(federal unemployment tax) . In every state employees are required to pay state unemployment tax.

For the sparkers campany to receive the lower rate tax of 3.05% from its current contributions, they would need to make at least another 15% contributions to employees

Average payroll 3521790 minimum qualification amont to qualify for bracket 12% to less than 14% minimum contributions

=3521790*12%minimum contributions

=422614.80

Present contributions paid by company =414867.00

Additional contributions =7747.80