Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2017 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 5-4

Total taxable earnings		$49,290.00
Net rate of tax (6.0% 5.4%)		0.6%
Amount of net FUTA tax		$295.74

Donner Company began its operations in September of the current year. During September, the company paid wages of $23,400. For the last quarter of the year, the taxable wages paid amounted to $64,700. None of the employees was paid more than $7,000 this year.

a. Is Donner Company liable for FUTA tax this year?

b. If your answer to part a above is "Yes", what is the net FUTA tax for the year? Round your answer to the nearest cent. $