Roofling Company paid wages of $319,600 this year. Of this amount, $193,900 was
ID: 2722929 • Letter: R
Question
Roofling Company paid wages of $319,600 this year. Of this amount, $193,900 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 4.3% for Roofling Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent.
a. Amount of credit the company would receive against the FUTA tax for its SUTA contributions $
b. Amount that Roofling Company would pay to the federal government for its FUTA tax $
c. Amount that the company lost because of its late payments
Explanation / Answer
a.
Credit for SUTA contributions = 90% credit for state taxes paid late + Additional tax credit if rate were 5.4%
Credit for SUTA contributions = ($193,900 * 4.3% * 90%) + $193,900 * (5.4% - 4.3%) = $7,503.93 + $2,132.90 = $9,636.83
b.
Gross FUTA tax = $193,900 * 0.06 = $11,634
Net FUTA tax payable = Gross FUTA tax - Credit for SUTA contributions = $11,634 - $9,636.83 = $1,997.17
c.
Had the company paid its states taxes on time, it would have full credit instead of 90%.Hence it has lost 10% of its credit for state taxes.
Loss to the company because of late payments = $193,900 * 4.3% * 10% = $833.77
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