A contractor's quarterly SUTA (State Unemployment Tax Act) wages total $180,000 with a rate of 2.7%. What is the quarterly SUTA tax liability?
Correct Answer
B) $4,860
SUTA tax is calculated as: $180,000 × 2.7% = $4,860. This state unemployment tax is paid quarterly based on the applicable wage base and assigned tax rate.
Why This Is the Correct Answer
SUTA tax is calculated by multiplying the total quarterly wages by the assigned tax rate. The calculation is straightforward: $180,000 × 2.7% = $180,000 × 0.027 = $4,860. This represents the state unemployment tax liability that must be paid quarterly to the state unemployment insurance fund. The rate of 2.7% is applied to the entire wage base since it falls within typical SUTA wage base limits.
Why the Other Options Are Wrong
Option A: $4,680
This answer of $5,040 results from using an incorrect rate of 2.8% instead of the given 2.7% rate ($180,000 × 2.8% = $5,040).
Option C: $5,220
This answer of $5,220 results from using an incorrect rate of 2.9% instead of the given 2.7% rate ($180,000 × 2.9% = $5,220).
Option D: $5,040
This answer of $4,680 results from an incorrect calculation, likely using 2.6% instead of the given 2.7% rate ($180,000 × 2.6% = $4,680).
Memory Technique
Remember 'SUTA = Simple Unemployment Tax Addition' - just multiply wages times the given rate, no complex calculations needed.
Reference Hint
Look up payroll taxes and unemployment insurance in the Business and Finance chapter of your contractor reference manual.
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