A company's State Unemployment Tax Act (SUTA) rate in Florida is 2.7% on the first $7,000 of wages per employee. For an employee earning $45,000 annually, what is the SUTA tax liability?
Correct Answer
B) $189
SUTA applies only to the first $7,000 of wages per employee. $7,000 × 2.7% = $189. The remaining wages above $7,000 are not subject to SUTA tax.
Why This Is the Correct Answer
SUTA tax in Florida has a wage cap of $7,000 per employee per year, regardless of how much the employee actually earns. The tax rate of 2.7% only applies to the first $7,000 of wages. Once an employee earns more than $7,000, no additional SUTA tax is owed for that employee for the remainder of the year. This creates a maximum annual SUTA liability of $189 per employee ($7,000 × 2.7%).
Why the Other Options Are Wrong
Option A: $1,215
This incorrectly applies the 2.7% rate to the entire $45,000 annual salary ($45,000 × 2.7% = $1,215), ignoring the $7,000 wage cap that limits SUTA liability.
Option C: $378
This incorrectly applies the 2.7% rate to $35,000 ($945 ÷ 2.7% = $35,000), which has no basis in SUTA calculations and ignores the $7,000 wage cap.
Option D: $945
This appears to double the correct answer ($189 × 2 = $378), possibly confusing SUTA with other payroll taxes or miscalculating the wage base.
Memory Technique
Remember 'SUTA STOPS at Seven' - SUTA tax stops accumulating once an employee reaches $7,000 in wages, making the maximum annual SUTA per employee easy to calculate.
Reference Hint
Florida Construction Industry Licensing Board study materials, Chapter on Payroll Taxes and Employment Law, or IRS Publication 15 (Circular E) for federal unemployment tax guidance
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