Question

2: An employer in San Francisco, California, employs three individuals, whose taxable earnings to date (prior to the current pay period) are $3,400, $60,200, and $6,700. During the current pay period, these employees earn $2,200, $3,550, and $3,000, respectively. The applicable SUTA tax rate is 4.4%, and the California SUTA threshold is $7,000. FUTA tax = $ SUTA tax = $

Answer 1

Solution:

SUTA Rate : 4.4%

FUTA Rate : 0.6%

Threshold: $ 7000

Employee Earnings Through Prior Pay Period Earnings through current pay period Current earnings subject to FUTA & SUTA

1 $ 3400 $2200 $2200

2 $60200 $3550 NIL

3 $ 6700 $3000 $300

TOTAL $ 2500

FUTA = $2500 * 0.6% = $15

SUTA =$2500* 4.4%= $110

Working Notes:

1. For employee 1,the amount eligible for taxes is lesser of ( Threshold limit minus prior period earnings) VS current period earnings i.e. (7000- 3400) vs 2200 which is 2200.Similarly for employee 3: (7000-6700) vs 3000 which is 300