1. Example 5-6
2. Yeldon Company has a $70,000 federal and state taxable payroll and has earned a reduced state tax rate of 4 percent. If none of its state tax payments are timely, the FUTA tax calculation is as follows:
3. Gross FUTA tax ($70,000 0.060)$4,200Less 90% credit for state taxes paid late ($70,000 0.04 90%)$2,520Less additional credit for state tax if rate were 5.4% [$70,000 (0.054 0.04)]980Total credit3,500Net FUTA tax$700
4. If Yeldon Company had made its SUTA payments before the due date of Form 940, the credit for the payments (4%) and the additional credit (1.4%) would have provided a total credit of $3,780 and a FUTA tax savings of $280.
5. Peroni Company paid wages of $170,900 this year. Of this amount, $114,000 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for Peroni Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following;round your answers to the nearest cent.
6. a.Amount of credit the company would receive against the FUTA tax for its SUTA contributions
7. $
8. b.Amount that Peroni Company would pay to the federal government for its FUTA tax
9. $
10. c.Amount that the company lost because of its late payments
11. $