A Florida contractor's SUTA rate is 2.7% on the first $7,000 of wages per employee. If the company has 5 employees who each earn more than $7,000 annually, what is the total SUTA tax liability?
Correct Answer
B) $945.00
SUTA tax = $7,000 × 5 employees × 2.7% = $945.00. The calculation applies to the wage base limit of $7,000 per employee.
Why This Is the Correct Answer
The correct answer is A ($945.00) because SUTA tax is calculated by multiplying the wage base limit ($7,000) by the number of employees (5) by the tax rate (2.7%). Since all employees earn more than $7,000, the full wage base applies to each employee. The calculation is: $7,000 × 5 × 0.027 = $945.00.
Why the Other Options Are Wrong
Option C: $1,890.00
Option C ($1,890.00) is incorrect because it's exactly double the correct answer, likely from either doubling the tax rate to 5.4% or miscounting 10 employees instead of 5.
Option D: $756.00
Option D ($756.00) is incorrect because it appears to use an incorrect tax rate calculation, possibly using 2.16% instead of the given 2.7% rate.
Memory Technique
Remember 'SUTA STOPS at Seven' - SUTA tax calculations always stop at the $7,000 wage base limit per employee, no matter how much more they earn.
Reference Hint
Look up 'Payroll Taxes' or 'State Unemployment Tax Act (SUTA)' in Chapter 4 - Business and Financial Management of your contractor reference manual.
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