Find the employer’s FICA deduction for each of the following employees. Find the amounts of the FUTA taxes for the current pay period for each of the following employees. Decimals for categories SS-0.062, Medicare-0.0145, (FUTA-0.0006 -$7000Cap) Show work Employees Year-to-Date Current Gross Social Security (0.062) Medicare (0.0145) Subject to FUTA (0.006) FUTA F. Todd $6959.28 $1088.64 T. Stanley $7,882.51 $827.44
Find the employer’s FICA deduction for each of the following employees. Find the amounts of the FUTA taxes for the current pay period for each of the following employees. Decimals for categories SS-0.062, Medicare-0.0145, (FUTA-0.0006 -$7000Cap) Show work Employees Year-to-Date Current Gross Social Security (0.062) Medicare (0.0145) Subject to FUTA (0.006) FUTA F. Todd $6959.28 $1088.64 T. Stanley $7,882.51 $827.44
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- Find the employer’s FICA deduction for each of the following employees.
- Find the amounts of the FUTA taxes for the current pay period for each of the following employees.
Decimals for categories SS-0.062, Medicare-0.0145, (FUTA-0.0006 -$7000Cap) Show work
Employees |
Year-to-Date |
Current Gross |
Social Security (0.062) |
Medicare (0.0145) |
Subject to FUTA (0.006) |
FUTA |
F. Todd |
$6959.28 |
$1088.64 |
||||
T. Stanley |
$7,882.51 |
$827.44 |
![11:02
ll LTE
155
+
Section 9.2 Find Employer Payroll T
155
maintain their own unemployment programs by making the federal unemployment tax rate that a
company pays depend on their state unemployment tax obligation.
Employers are required to pay both federal and state unemployment taxes. The official 2018
FUTA rate is 6.0% of the first $7,000 of each employee's gross earnings in each year.
If the employer pays it on time each quarter before FUTA taxes are due, the employer can
reduce the FUTA tax burden to 0.6%. This is because in all states except for "credit reduction
states," the Federal government allows a credit of 5.4% to offset what the employer pays in state
unemployment taxes. This means the maximum FUTA liability for many businesses is $42 per
employee ($7,000 * 0.6% = $42). It doesn't matter what the state tax rate is – the federal tax credit is
the same. However, the SUTA tax will vary depending on the state.
We will assume that all employers have reduced their tax burden to 0.6% for FUTA.
Federal Unemployment Tax (FUTA) Summary
Important Facts
A Unemployment taxes are paid solely by the employer. They are not deducted from an
employee's pay.
A The federal government does not pay any unemployment benefits.
A Unemployment benefits come from State Unemployment Taxes (SUTA).
A The employer will pay 0.6% of the first $7000 of each employee's annual pay to FUTA.
Each FUT problem involves two steps:
1. Finding how much of the current gross is subject to FUTA.
A Subtract the year-to-date from $7000.
o If this amount is more than the gross, the entire gross is taxed.
o If this amount is less than the gross, this is the amount taxed.
A If the year-to-date is already more than $7000, then $0 is subject to FUTA and the FUTA
itself is $0.
2. Finding how much the employer will pay in FUTA for that amount.
Possibility A.
The entire gross earnings are taxed.
Jake Johnson has a year-to-date of $4789. His gross this pay period is $789.
7000 – 4789 = 2211 which is more than 789, so 789 is taxed.
789(0.006) = $4.73 FUTA
Possibility B.
The employee will go over $7000 this pay period.
Judy Jackson has a year-to-date of $5997. Her gross this pay period is $1456.
7000 – 5997 = 1003 which is less than 1456 so 1003 is subject to FUTA.
1003(0.006) = 6.02 FUTA
Possibility C.
The employee has already gone over $7000.
Paul Paulson has a year-to-date of $10,567. His current gross is $2367.
Because his year-to-date is greater than $7000, $0 is subject to FUTA and the FUTA is $0.
p. 155](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffb7225f0-1639-4320-ac9c-bd2c182e9edc%2F52dd8c7a-7e21-4aaf-8c65-ba8bf8b813ea%2Ft32lfc6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:11:02
ll LTE
155
+
Section 9.2 Find Employer Payroll T
155
maintain their own unemployment programs by making the federal unemployment tax rate that a
company pays depend on their state unemployment tax obligation.
Employers are required to pay both federal and state unemployment taxes. The official 2018
FUTA rate is 6.0% of the first $7,000 of each employee's gross earnings in each year.
If the employer pays it on time each quarter before FUTA taxes are due, the employer can
reduce the FUTA tax burden to 0.6%. This is because in all states except for "credit reduction
states," the Federal government allows a credit of 5.4% to offset what the employer pays in state
unemployment taxes. This means the maximum FUTA liability for many businesses is $42 per
employee ($7,000 * 0.6% = $42). It doesn't matter what the state tax rate is – the federal tax credit is
the same. However, the SUTA tax will vary depending on the state.
We will assume that all employers have reduced their tax burden to 0.6% for FUTA.
Federal Unemployment Tax (FUTA) Summary
Important Facts
A Unemployment taxes are paid solely by the employer. They are not deducted from an
employee's pay.
A The federal government does not pay any unemployment benefits.
A Unemployment benefits come from State Unemployment Taxes (SUTA).
A The employer will pay 0.6% of the first $7000 of each employee's annual pay to FUTA.
Each FUT problem involves two steps:
1. Finding how much of the current gross is subject to FUTA.
A Subtract the year-to-date from $7000.
o If this amount is more than the gross, the entire gross is taxed.
o If this amount is less than the gross, this is the amount taxed.
A If the year-to-date is already more than $7000, then $0 is subject to FUTA and the FUTA
itself is $0.
2. Finding how much the employer will pay in FUTA for that amount.
Possibility A.
The entire gross earnings are taxed.
Jake Johnson has a year-to-date of $4789. His gross this pay period is $789.
7000 – 4789 = 2211 which is more than 789, so 789 is taxed.
789(0.006) = $4.73 FUTA
Possibility B.
The employee will go over $7000 this pay period.
Judy Jackson has a year-to-date of $5997. Her gross this pay period is $1456.
7000 – 5997 = 1003 which is less than 1456 so 1003 is subject to FUTA.
1003(0.006) = 6.02 FUTA
Possibility C.
The employee has already gone over $7000.
Paul Paulson has a year-to-date of $10,567. His current gross is $2367.
Because his year-to-date is greater than $7000, $0 is subject to FUTA and the FUTA is $0.
p. 155
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