In this step, you will walk through the process to compute net FUTA tax due. Bel

Question

In this step, you will walk through the process to compute net FUTA tax due. Below is a list of employees for Doolin Insurance Services, with the amount of qualifying earnings they have been paid during the calendar year. First determine the taxable earnings for each employee.

Next, total the taxable earnings from above and apply the current FUTA tax rate to determine the gross FUTA tax due. Round the FUTA tax to the nearest cent.

Finally, compute the SUTA credit and subtract it from the gross FUTA calculated in the prior step. Assume that state taxable wages are the same as federal taxable wages, and that Doolin Insurance Services is eligible for the entire SUTA credit. Round the SUTA tax credit and FUTA Due answers to the nearest cent.

Employee Name
Calendar earnings Year to Date
Taxable Earnings Faye Deering $35331.00 $ Manuel Estrada $11225.50 $ Jon Eskridge $6530.00 $ Janet Lee $54360.00 $

Explanation / Answer

FUTA is applicable on first $7000 @ 6% before taking credit Employee Name Calendar earnings Year to Date Taxable Earnings Faye Deering $35,331.00 $7,000 Manuel Estrada $11,225.50 $7,000 Jon Eskridge $6,530.00 $6,530 Janet Lee $54,360.00 $7,000 $27,530 Total taxable earnings $27,530 × Rate of FUTA tax 6 % Amount of Gross FUTA tax $1,651.80 Total state taxable earnings $27,530 × Rate of SUTA tax credit 5.40% % SUTA tax credit $1,486.62 Amount of net FUTA tax due $165.18 (1651.8-1486.62) If any doubt please comment

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