An appliance company has three installers. Larry ears $385 per week, Curly earns $440 per week, and Moe earns $555 per week. The company’s SUTA rate is 5.4%, and the FUTA rate is 6.0% minus the SUTA. As usual these taxes are paid on the first 7,000 of each employees earnings
To calculate the SUTA and FUTA taxes for each employee, we first need to find their annual earnings:
Larry: $385 * 52 weeks = $19,820
Curly: $440 * 52 weeks = $22,880
Moe: $555 * 52 weeks = $28,860
Next, we need to determine the amount of earnings subject to SUTA and FUTA taxes for each employee (up to $7,000):
Larry: $7,000
Curly: $7,000
Moe: $7,000
Now we can calculate the SUTA and FUTA taxes for each employee:
SUTA rate = 5.4%
FUTA rate = 6.0% - 5.4% = 0.6%
SUTA tax:
Larry: $7,000 * 5.4% = $378
Curly: $7,000 * 5.4% = $378
Moe: $7,000 * 5.4% = $378
FUTA tax:
Larry: $7,000 * 0.6% = $42
Curly: $7,000 * 0.6% = $42
Moe: $7,000 * 0.6% = $42
Therefore, the total SUTA and FUTA taxes for each employee are as follows:
Larry: $378 + $42 = $420
Curly: $378 + $42 = $420
Moe: $378 + $42 = $420
In summary, the company will need to pay $420 in SUTA and FUTA taxes for each of their three installers.