Question

In September Manson Paint Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 3.5% of the first $7,000 of wages paid each employee. An analysis of the company's payroll for the year shows total wages paid of $179,560. The salaries of the president and the vice president of the company were $21,000 and $14,900, respectively, for the four-month period, but there were no other employees who received wages in excess of $7,000 for the four months. Included in the total wages were $870 paid to a director who only attended director meetings during the year, $6,290 paid to the factory superintendent, and $1,960 in employee contributions to a cafeteria plan made on a pretax basis-for both federal and state. In addition to the total wages of $179,560, a payment of $2,200 was made to Andersen Accounting Company for an audit it performed on the company's books in December. Compute the following; round your answers to the nearest cent. a. Net FUTA tax $ b. SUTA tax $  

Answer 1

	FUTA and SUTA taxable wages:
						$	$
	Total wages						179560
	Less:
	Non-taxable salary of president			(21000-7000)		14000
	Non-taxable salary of vice president			(14900-7000)		7900
	Salary to director (Not taxable)					870
	Employee contribution to cafeteria plan (Not a part of wages)					1960	24730
	FUTA and SUTA taxable wages						154830
a.	Net FUTA tax=154830*0.6%=$ 928.98
b.	SUTA tax=154830*3.5%=$ 5419.05
	Note:
	Payment made towards audit is not a part of wages.But it is in addition to wages.
	Hence,there is no requirement to deduct the same from total wages