The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $2,900 in the current period and had cumulative pay for prior periods of $5,800. What is the amount of unemployment taxes the employer must pay on this employee's wages for the current period?
A) $420.00.
B) $348.00.
C) $72.00.
D) $174.00.
E) $0.00.
C) $72.00.
Explanation: Earnings subject to tax in this period = $7,000 - $5,800 = $1,200
Unemployment Taxes = $1,200 * (0.006 + 0.054) = $72.00
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