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28 August, 13:49

Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. John Gercke is an employee of The Woolson Company. During the first part of the year, he earned $6,800 while working in State A. For the remainder of the year, the company transferred him to State B where he earned $16,500. The Woolson Company's tax rate in State A is 4.2%, and in State B it is 3.15% on the first $7,000. Assuming that reciprocal arrangements exist between the two states, determine the SUTA tax that the company paid to: (Round your answers to two decimal places.)

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  1. 28 August, 14:31
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    State A: $285.60

    State B: $6.3

    Explanation:

    The computation of the SUTA tax is shown below:

    For State A:

    = Earned income * Company's tax rate

    = $6,800 * 4.2%

    = $285.60

    For State B:

    = Remaining income * Company's tax rate

    = $200 * 3.15%

    = $6.3

    The remaining income equal to

    = Taxable wages - State A earned income

    = $7,000 - $6,800

    = $200
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