A contractor's quarterly payroll is $180,000. The current California Employment Training Tax (ETT) rate is 0.1% on the first $7,000 of each employee's annual wages. With 12 employees, what is the maximum quarterly ETT liability?
Correct Answer
C) $210.00
ETT is 0.1% on first $7,000 per employee annually. Maximum annual ETT per employee is $7. For 12 employees quarterly: 12 × $7 = $84 annually, or $21 quarterly × 4 quarters = $84 annually. However, if wages exceed the cap, quarterly maximum would be 12 × $7 × 0.25 = $21 per quarter, but since it's 0.1% of $7,000 = $7 annually per employee, quarterly max is $21 per employee or $210 total if all employees earn over $7,000 annually.
Why This Is the Correct Answer
ETT is 0.1% on first $7,000 per employee annually. Maximum annual ETT per employee is $7. For 12 employees quarterly: 12 × $7 = $84 annually, or $21 quarterly × 4 quarters = $84 annually. However, if wages exceed the cap, quarterly maximum would be 12 × $7 × 0.25 = $21 per quarter, but since it's 0.1% of $7,000 = $7 annually per employee, quarterly max is $21 per employee or $210 total if all employees earn over $7,000 annually.
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