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

1. 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:
2. FUTA $215,600 0.006=$1,293.60SUTA $255,700 0.056=14,319.20Total taxes$15,612.80
3. 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.
5. FUTA tax (both over $7,000) = $0.00
6. SUTA tax ($1,000 0.048)= $48.00
7. ($500 of each employee's pay is under the state taxable limit of $12,000)

Marlene Grady and Pauline Monroe are partners engaged in operating The G&M Doll Shop, which has employed the following persons since the beginning of the year:

V. Hoffman (general office worker)$2,900per monthA. Drugan (saleswoman)$17,000per yearG. Beiter (stock clerk)$176per weekS. Egan (deliveryman)$260per weekB. Lin (cleaning and maintenance, part-time)$155per week

Grady and Monroe are each paid a weekly salary allowance of $1,950.

The doll shop is located in a state that requires unemployment compensation contributions of employers of one or more individuals. The company is subject to state contributions at a rate of 3.1% for wages not in excess of $7,600.

Compute each of the following amounts based upon the 41st weekly payroll period for the week ending October 11.Round your intermediate calculations and final answers to the nearest cent. Use rounded answers in subsequent computations. If an amount is zero, enter "0".

a.Amount of FICA taxes (OASDI and HI) to be withheld from the earnings of each person.

Taxable

Earnings

OASDI

HIM. Grady$1,950.00$$P. Monroe1,950.00V. Hoffman669.23A. Drugan326.92G. Beiter176.00S. Egan260.00B. Lin155.00

b.Amount of the employer's FICA taxes for the weekly payroll.

Taxable payroll$OASDI$HI$

c.Amount of state unemployment contributions for the weekly payroll.

$

d.Amount of the net FUTA tax on the payroll.

$

e.Total amount of the employer's payroll taxes for the weekly payroll.

$

Feedback

a.Calculate the employees' OASDI and HI, considering the pay period and considering partner's salary is not tax under FICA.

b.Calculate employer's FICA taxes (OASDI and HI).

c.Determine SUTA taxable wages and multiply by SUTA rate. (Hint: Consider SUTA ceiling).

d.Determine FUTA taxable wages and multiply by net FUTA rate. (Hint: Consider FUTA ceiling).

e.Total employer's payroll taxes for the pay period.