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>> This is problem 5-6B.
In September 2013, Painter Wax Corporation began operations
in a state that requires new employers of one
or more individuals to pay a state unemployment tax rate
of 4.1 percent of the first $7,000
of wages paid to each employee.
This also happens to be the federal limit as well,
so that makes it a little easier.
An analysis of the company's payroll
for the year shows total wages paid of $212,640.
So that's our starting point.
And basically, I'm going to jump down
and show you how I would do this.
You are trying to determine what the net FUTA
and SUTA tax would be, and so, as we read these items,
we're going to see if we do anything with them in terms
of calculating the total salaries
that are subject to FUTA.
Salaries of the president and vice president
of the company were $25,000 and $15,000, respectively.
So I mean, the way you read that is, the president got $25,000,
vice president got $15,000 for the four-month period.
But there were no other employees who received wages
in excess of $7,000 for the four months.
Included in the total wages were $900 paid to a director
who only attended directors' meetings during the year.
That is not subject -- directors' fees are not subject
to FUTA, so we're going to start with our total wages
and subtract out the directors' fees.
Sixty-three hundred paid to the factory superintendent.
Okay, well, that's included in the $212,640,
and there's no exclusion for it, there's no they just threw
that in there just to kind of mess you up,
to see if you would freak out, but that's subject to FUTA tax.
And, $2,000 in employee contributions
to a cafeteria plan made on a pre-tax basis
for both federal and state.
So you're going to subtract out that $2,000,
because that's not subject to FUTA.
Now, what I didn't say up here is, the vice president
and president went over the $7,000,
so add they're two salaries together and subtract $14,000,
which is basically $7,000 for each of them.
So they've already paid FUTA on their $7,000 in that $14,000,
so that's why you end up with twenty-six hundred thousand.
Good grief: $26,000.
Okay? That's in excess, because these two equal $40,000,
and they only have to pay on the first $14,000
between the two of them.
The SUTA tax is exactly the same total,
the wages are $183,740 -- I didn't explain.
So here's your net amount for the FUTA.
You times it by the FUTA rate which is 6 percent,
.6 percent, so that's .006.
And then the SUTA rate is .041.
And so these are your two numbers.