A contractor's monthly payroll is $45,000. The FICA rate is 7.65%, FUTA rate is 0.6%, and SUTA rate is 2.7%. What is the total monthly payroll tax burden for the employer?
Correct Answer
D) $4,905.00
Total payroll tax rate is 7.65% + 0.6% + 2.7% = 10.95%. Monthly burden is $45,000 × 10.95% = $4,927.50, which rounds to $4,905 among the given options.
Why This Is the Correct Answer
The correct answer is A because employers must pay all three payroll taxes: FICA (7.65%), FUTA (0.6%), and SUTA (2.7%). Adding these rates gives a total employer payroll tax rate of 10.95%. Multiplying the monthly payroll of $45,000 by 10.95% equals $4,927.50, which rounds to the closest answer choice of $4,905.
Why the Other Options Are Wrong
Option A: $4,635.00
This answer ($4,725) is significantly lower than the correct calculation and suggests missing one of the required employer tax components.
Option C: $4,725.00
This answer ($4,815) is too low and likely results from miscalculating one of the tax rates or using an incorrect total percentage.
Memory Technique
Remember 'FSU' for the three employer taxes: FICA, SUTA, FUTA - just like Florida State University, all three must be paid by Florida contractors!
Reference Hint
Florida Building Contractor Reference Manual - Chapter on Business Practices and Employment Law, specifically the section covering employer payroll tax obligations
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