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3 October, 04:36

Coronado Industries, which has a taxable payroll of $1350000, is subject to FUTA tax of 6.2% that includes a state contribution rate of 5.4%. However, because of stable employment experience, the company's state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Coronado Industries?

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  1. 3 October, 05:32
    0
    = $37,800

    Explanation:

    Step 1: Bring out the important figures for the calculation

    Coronado Industries taxable payroll = $1,350,000

    Federal Unemployment Tax Act (FUTA) rate = 6.2%

    State Unemployment Tax Acy (SUTA) rate is 5.4% of the the FUTA's 6.2%

    Third very important information: SUTA has been reduced to 2%

    Step 2: Apply the information before the reduction

    FUTA rate = 6.2% - 5.4% = 0.8%

    Meaning FUTA = 0.8% x $1,350,000 = $10,800

    SUTA = 5.4% x 1,350,000 = 72,900

    Total = $83,700

    Step 3: Calculate the new total FUTA and SUTA based on reduction of SUTA to 2%

    First, FUTA remains constant

    = 0.8% of $1, 350,000 = $10,800

    Secondly, SUTA is now 2%

    = 2% (0.02) x $1,350,000 = $27,000

    Total amount of FUTA and SUTA for Coronado Industries

    = $10,800 + $27,000

    = $37,800
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