Employer FUTA-SUTA Contributions Understanding FUTA Let's assume that Carving Wood, Inc. (CW, Inc.) paid wages of $99,625 in 2021. Of that amount, a bonus of $10,000 will paid but not until January, 2022. The wages paid in excess of the FUTA limit amounted to $64,732. The gross FUTA tax imposed is computed as follows: Recall that an employer also makes contributions under approved state unemployment compensation laws which entitles them to a FUTA maximum credit assuming they have paid their SUTA on time. And, even if the employer pays a SUTA rate of less than the maximum, they get the full credit against the FUTA tax. Let's look at CW, Inc.'s credit, knowing that they are located in Elizabeth, New Jersey: Understanding SUTA The unemployment compensation laws of certain states set the taxable wage base at an amount higher than the federal amount paid to each employee. For example, in District of Columbia, the wage base for 2021 is the first $9,000. In such states, the total contributions that the employer must pay into the state fund are computed based on their taxable wage base and not the FUTA taxable base. And, the method by which the employer contributions may be adjusted because of a favorable employment record, referred to as experience rating or merit rating. Thus, an employer's favorable experience rate (employment record) qualifies the employer for a SUTA rate lower than the FUTA rate. Let's look at the total unemployment taxes for CW, Inc.'s other location in the District of Columbia. They have been in that location for over 20 years, earning an experience rating of 2.7% and reporting taxable wages (on the first $9,000 ) of $39,625. Making It Work cor Compute the total unemployment taxes for each company. Compute the total unemployment taxes for each company. Note: Round all amounts to the nearest cent. Unique Kites Company is a custom kite maker in Freeport, Maine. They paid wages of $64,848 in 2021 of which $38,146 are in excess of the FUTA limit. They have SUTA wages of $28,037 on the first $12,000 and an experience rating of 3.2%. Cribbage Club is a club of card game enthusiasts in Chesapeake, Virginia. They paid wages of $77,520 in 2021 of which $48,450 are in excess of the FUTA limit. They have SUTA wages of $36,338 on the first $8,000 of wages and have an experience rating of 3.7%