In April of the curent year, Freeman Steel Company tranferred Herb Porter from its factory in Tennessee to its plant in South Carolina. The company's SUTA tax rates based on its experience rating are 3,2% in Tennessee and 3.8% in South Carolina. Both States base the tax on the first 7,000 of each employee's earning. This year, Freeman Steel Company paid Herb Porter wages of 9,900; 2,800 were paid in Tennessee and the remained in South Carolina.

A) Amount of Suta tax the company must pay to Tennessee on Herb Porter's wages.

9,900*3.2%= 316.80

B) Amount of SUTA tax the company must pay to South Carolina on Porter wages.

7100*3.8=269.80

c)Amount of the net FUTA tax on Porter's wages

9900*0.8%=79,20


Is this right.

c)Amount of the net FUTA tax on Porter's wages

9900*0.8%=79,20

Since the ceiling amount for wages is $7,000 for FUTA, you must deduct this amount; $9,900 - 7,000 = $2,900 taxable wages for FUTA; $2,900 X 0.8% = $23.20.

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Originally Posted by jeannewoods09

c)

Since the ceiling amount for wages is $7,000 for FUTA, you must deduct this amount; $9,900 - 7,000 = $2,900 taxable wages for FUTA; $2,900 X 0.8% = $23.20.

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It's the exact opposite of this. Taxes are paid on the first $7000 of wages, not on the amount above $7000.

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A) Amount of Suta tax the company must pay to Tennessee on Herb Porter's wages.

9,900*3.2%= 316.80

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If only $2800 of wages were paid in Tennessee, why would you have to pay SUTA on the entire $9900? It's also only paid on the first $7000 of wages, so nowhere would there be any tax beyond that $7000 limit, TN or SC either one.

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B) Amount of SUTA tax the company must pay to South Carolina on Porter wages.

7100*3.8=269.80

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That too is over the $7000 limit. This is also a little tricker because you would have to know SC's rules. Every state is different. SC might make the company "start over" on that $7000. That is, the $2800 from TN being irrelevant and not counting, and only counting the amount paid in SC. Or... they might consider the $2800 paid in TN as fulfilling the first $2800 of the $7000 limit, in which case there'd be tax on the $4200 difference.

You aren't getting the concept of the ceiling. That means the first $7000 per year of each employee's income is taxable for unemployment. No wages beyond $7000 are taxed - it stops.

SUTA is calculated on first $ 7000 at the rate of 3.2% in Tennessee so the Employer will pay 7000 X 3.2% = $224.00 on behalf of Herb Porter.

Since it is given both the states have no agreement they will have to to pay each state SUTA on first $ 7000 pay.

Thus Company will pay 2800 X 3.8% =$ 106.4 to S. Carolina on behalf of Porters wages.

For FUTA company will pay 7000 X 0.8% = $56.00 only.

SUTA is calculated on first $ 7000 at the rate of 3.2% in Tennessee so the Employer will pay 7000 X 3.2% = $224.00 on behalf of Herb Porter.

Since it is given both the states have no agreement they will have to to pay each state SUTA on first $ 7000 pay.

Thus Company will pay 2800 X 3.8% =$ 106.4 to S. Carolina on behalf of Porters wages.

For FUTA company will pay 7000 X 0.8% = $56.00 only.

Please check dates on the post you're digging up. I think OP is probably long gone.