Question

John Gercke is an employee of The Woolson Company. During the first part of the year, he earned $6,800 while working in State A. For the remainder of the year, the company transferred him to State B where he earned $16,500. The Woolson Company’s tax rate in State A is 4.2%, and in State B it is 3.15% on the first $7,000. Determine the SUTA tax that the company paid to State A. a. $285.60 b. $294 c. $220.50 d. $6.30 e. none of the above

Answer 1

Answer: Option (a) 285.60 is correct.

Explanation:

Given that,

Earning while working in state A = $6,800

and Woolson company's tax rate in state A = 4.2%

Hence,

John will have to pay tax on $6800 at a rate of 4.2%

⇒ $\frac{4.2}{100} \times 6800$

= 285.60 ⇒  This is the SUTA tax that the company paid to State A.

Therefore, Option (a) is correct.