Chpt5Application5

Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers.   Example 5-5 Sutcliffe Company had taxable wages totaling $87,500. During the year, the company paid some of its state contributions after the January 31 cutoff of the following year. The penalty for tardiness is shown in the following calculation of the firm's net FUTA tax: Amount of gross FUTA tax ($87,500 × 6.0%)     $5,250.00 State taxable wages $87,500     Sutcliffe's SUTA tax rate × 5.4%     Sutcliffe's SUTA tax $  4,725     Breakdown of Sutcliffe's SUTA tax payments:       Before 1/31 cutoff—$3,000 × 100% credit     (3,000.00) After 1/31 cutoff—$1,725 × 90% credit     (1,552.50) Amount of net FUTA tax     $    697.50   If the company had made timely payments of its state contributions, the amount of its net FUTA tax would have been reduced to $525,…

Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers. Example 5-8 The Iqbal Company of Georgia had a FUTA taxable payroll of $215,600 and a SUTA taxable payroll of $255,700 with a 5.6 percent SUTA tax rate. The company would pay unemployment taxes of: FUTA $215,600 × 0.006 = $1,293.60 SUTA $255,700 × 0.056 = 14,319.20 Total taxes   $15,612.80 Kresloff Company has only two employees and is located in a state that has set an unemployment tax for the company of 4.8 percent on the first $12,000 of each employee’s earnings. Both employees are paid the same amount each week ($900) and have earned $11,500 up to this week’s pay. The unemployment taxes that the company must pay for this week’s pay would be $48.FUTA tax (both over $7,000) = $0.00SUTA tax ($1,000 × 0.048) = $48.00($500 of each employee’s pay is under the…

Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers.   Example 5-8 The Iqbal Company of Georgia had a FUTA taxable payroll of $215,600 and a SUTA taxable payroll of $255,700 with a 5.6 percent SUTA tax rate. The company would pay unemployment taxes of: FUTA $215,600 × 0.006 = $1,293.60 SUTA $255,700 × 0.056 = 14,319.20 Total taxes   $15,612.80 Kresloff Company has only two employees and is located in a state that has set an unemployment tax for the company of 4.8 percent on the first $12,000 of each employee’s earnings. Both employees are paid the same amount each week ($900) and have earned $11,500 up to this week’s pay. The unemployment taxes that the company must pay for this week’s pay would be $48.FUTA tax (both over $7,000) = $0.00SUTA tax ($1,000 × 0.048) = $48.00($500 of each employee’s pay is under the…

Since the SUTA rates changes are made at the end of each year, the available 2021 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers.   Example 5-11 To illustrate the tax saving that may be realized as a result of making voluntary contributions, consider the following case of Krane Company, which is subject to the unemployment compensation law of a state that uses the reserve-ratio formula to determine experience ratings. The following contribution rate schedule applies for 2023: Reserve Ratio Rate 0% to less than 1% 6.2% 1% to less than 1.4% 5.6% 1.4% to less than 1.8% 5.0% 1.8% to less than 2.2% 4.4% 2.2% to less than 2.6% 3.8% 2.6% to less than 3.0% 3.2% 3.0% and over 2.6% For the three 12-month periods ending on June 30, 2022, the company had an average annual taxable payroll of $330,000. This is the base that the state uses as the average payroll. As of June 30, 2022, the credits to…

Since the SUTA rates changes are made at the end of each year, the available 2022 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers. Example 5-10 The following unemployment tax rate schedule is in effect for the calendar year 2023 in State A, which uses the reserve-ratio formula in determining employer contributions: Reserve Ratio Contribution Rate 0.0% or more, but less than 1.0% 6.7% 1.0% or more, but less than 1.2% 6.4% 1.2% or more, but less than 1.4% 6.1% 1.4% or more, but less than 1.6% 5.8% 1.6% or more, but less than 1.8% 5.5% 1.8% or more, but less than 2.0% 5.2% 2.0% or more, but less than 2.2% 4.9% 2.2% or more, but less than 2.4% 4.6% 2.4% or more, but less than 2.6% 4.3% 2.6% or more, but less than 2.8% 4.0% 2.8% or more, but less than 3.0% 3.7% 3.0% or more, but less than 3.2% 3.4% 3.2% or more 3.1%   Hyram Company, which is located in State A, had an average…