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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

The federal unemployment tax (FUTA) is paid by the _____.

  1. a. Employee
  2. b. State government
  3. c. Local government
  4. d. Employer
  5. e. Employee and employer equally

To determine

Identify the person responsible for paying the federal unemployment tax (FUTA).

Explanation

Federal unemployment tax act (FUTA):

This is the act that enables the federal government to provide compensation to the unemployed people from the taxes collected from the employers, as a percentage of 6.0% on the first $7,000 of employees’ earnings. Federal government refunds the employers with 5.4% on FUTA, if the employers have paid SUTA. So, FUTA would be reduced to 0.6% for those employers.

Justification for the incorrect answer:

Option a, b, c, and e:

This is the act that enables the federal government to provide compensation to the unemployed people from the taxes collected from the employers, and not by the employee, state government, local government, employee and employer equally...

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